Shares of discount retail chain Five Below (FIVE 13.46%) jumped on Thursday after the company announced financial results for the third quarter of 2024 and named a new CEO. As of 10 a.m. ET, Five Below stock was up 11% and hitting its highest price in almost six months.
Getting back on track
Just three months ago, Five Below’s management said that it would have $800 million in Q3 net sales, at best. But it just reported net sales of $844 million, which was up nearly 15% year over year. The difference-maker was its same-store sales. Management had expected a drop but it squeaked out a 0.6% gain instead.
Back in July, Five Below’s sales were slumping and longtime CEO Joel Anderson abruptly resigned, which led to a sharp drop in Five Below’s stock price. Today, investors are encouraged with Winnie Park being named as the new CEO. Park has been the CEO of apparel chain Forever 21 for the past nearly three years. But she also has experience with discount retail, having served on the board of directors for Dollar Tree since 2020.
With sales back on track and leadership questions answered, investors were feeling good about Five Below stock today.
What’s next for Five Below?
Five Below didn’t just beat expectations in Q3, it also raised guidance. Granted, management still expects same-store sales to fall in the upcoming fourth quarter. But there are also five fewer shopping days this year compared to last year, which accounts for much of this forecast.
Five Below’s management expects up to $250 million in full-year net income, which would be down from the $301 million in net income it had in 2023. But $250 million is still substantial for the company considering its market cap is only $6.6 billion. Moreover, the company is still opening new locations at a fast pace, which will likely push profits much higher in coming years. And if profits trend higher long-term, then I don’t think today will be the last good day for shareholders.
