Five Below Q2 Profit Surges, But Stock Down On Outlook - Update

(RTTNews) - Discount retailer Five Below Inc (FIVE), Wednesday said its second-quarter profit more-than-doubled from last year driven mainly by a 30 percent surge in sales, with both earnings and revenues coming in ahead of Wall Street estimates.

Nevertheless, Five Below detailed a weak outlook for the third quarter but lifted its full year 2014 estimates. Following the announcement, the company's shares dropped a near 5 percent in after-hours trade on the Nasdaq.

Philadelphia, Pennsylvania-based Five Below's second-quarter profit rose to $8.3 million or $0.15 per share from $4.0 million or $0.07 per share last year. Analysts polled by Thomson Reuters estimated earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter surged 30.2 percent to $152.5 million from $117.1 million last year. Analysts had a consensus revenue estimate of $152.2 million for the quarter.

On a same-store basis, sales for the quarter increased 3.2 percent. The company opened 30 new stores and ended the quarter with 353 stores., up 28 percent from last year.

Five Below operates as a discount retailer, offering teens and pre-teen shoppers, products from headphones to fashion accessories, all priced at $5 or below.

CEO Thomas Vellios said, "As we head into the back half of the year and the important fourth quarter, we believe that we are well positioned from a merchandising, marketing and distribution standpoint."

Looking forward to the third quarter, the company expects earnings of $0.05 to $0.06 per share on revenues of $136 million to $138 million. Analysts currently expect earnings of $0.07 per share on revenues of $137 million.

For the full year, Five Below now projects adjusted earnings of $0.87 to $0.90 per share and revenues of $681 million to $687 million. Analysts currently estimate earnings of $0.90 per share on revenues of $684.77 million for the quarter.

The company earlier anticipated adjusted earnings of $0.86 to $0.89 per share and revenues of $675 million to $681 million.

FIVE closed Wednesday's trading at $42.35, up $0.65 or 1.56%, on the Nasdaq. The stock, however, dropped $1.95 or 4.60%, in the after-hours trade.