Five Below Inc (NASDAQ: FIVE) stock rose over 7.4% on 29th August, 2019 (as of 11:45 am GMT-4; Source: Google finance) on solid second quarter of FY 19. Sales were within the guidance range and while the comp performance was below expectations, strong new store performance enabled the company to deliver earnings per share near the high end of the guidance range. The company plan to open 150 new stores for the year which is at the high end of the original store growth target for 2019. During Q2, FIVE opened 44 new stores which is four more than planned. FIVE ended the quarter with 833 stores an increase of 141 stores or 20% versus 692 stores at the end of the second quarter of 2018. Comparable sales increased by 1.4% driven by an increase in comp transactions of 1%.
Moreover, Operating margin for the second quarter declined by approximately 10 basis points over 2018. Gross profit for the second quarter increased 20.1% to $146.2 million from $121.8 million reported in the second quarter of 2018. Gross margin was 35%, which was flat over last year. Ramp-up costs associated with the Southeast DC combined with occupancy deleverage on the comp results were offset by the timing of certain merchandise costs which shifted into Q3. Overall, net income increased 15% to $28.8 million versus $25.1 million last year. FIVE ended the second quarter was $270 million in cash, cash equivalents and investments and no debt. During the second quarter, the company had repurchased approximately 146,000 shares at a total cost of $16.6 million
FIVE in the second quarter of FY 19 has reported the adjusted earnings per share of 50 cents, which is in line with the analysts’ estimates for the adjusted earnings per share of 50 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 20 percent to $417.4 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $422.5 million. The revenue growth is driven by continued outperformance of the new stores and a comp of 1.4%.
For the third quarter ending in November, Five Below expects the revenue to be in the range of $369 million to $374 million. Analysts surveyed by Zacks had expected revenue of $364.4 million.
The company expects full-year earnings to be $3.08 to $3.19 per share, with revenue ranging from $1.87 billion to $1.89 billion.