Five Below Inc. posted second-quarter results that suggest it knows what teens and tweens want to buy.
The company said net income for the three months ended July 30 rose 38 percent to $9.8 million, or 18 cents a diluted share, from $7.1 million, or 13 cents, a year ago. Net sales rose 20.8 percent to $220.1 million from $182.2 million, while comparable-store sales gained 3.1 percent. It also noted that operating income rose 36.1 percent to $15.7 million from $11.6 million in the quarter.
Wall Street analysts were expecting EPS of 17 cents on sales of $219.6 million.
Five Below said the company opened 33 stores and ended the quarter with 491 stores in 30 states.
Joel Anderson, chief executive officer, said, “Continued strength in new store performance and our 41st consecutive quarter of positive comp growth were accompanied by operating margin expansion resulting in a 38 percent increase in earnings per share.”
Anderson added that the company made “good progress against our strategic initiatives,” which included an e-commerce platform and the hiring of key team members.
For the third quarter, the company forecast diluted EPS of between 9 cents and 10 cents on a net sales range of $199 million to $202 million, based on the opening of 25 stores and presuming a comp gain of between 1 and 2 percent. For fiscal 2016, the company guided diluted EPS at between $1.28 and $1.32 on net sales in the $1 billion range. That presumes the opening of 85 stores for the full year and a 3 percent gain in comp sales.
Third-quarter EPS guidance was in line with analysts’ projections, but sales were lower than their consensus. Full-year forecasts were within range of Wall Street’s estimates.
Shares of Five Below closed down 0.6 percent to $44.56 in Nasdaq trading.
Five Below is considered a value retailer that sells apparel, accessories, beauty and home goods. The company targets the teen and tween demographic. It was once known as Cheap Holdings Inc. before it changed its name to Five Below Inc. in August 2002. The Philadelphia-based firm became a public company in July 2012.