Why Is Five Below (FIVE) Down 14.6% Since Last Earnings Report?

Core Viewpoint - Five Below's recent earnings report for Q3 fiscal 2024 showed strong performance, with both net sales and earnings exceeding expectations, despite a recent decline in share price [2][5][21]. Financial Performance - Adjusted earnings per share for Q3 were 42 cents, significantly surpassing the Zacks Consensus Estimate of 16 cents, and reflecting a 61.5% increase from 26 cents in the same quarter last year [5]. - Net sales reached $843.7 million, marking a 14.6% year-over-year increase and exceeding the Zacks Consensus Estimate of $801 million [6]. - Comparable sales increased by 0.6% year over year, driven by a 1.2% rise in comp ticket, although transaction volume declined by 0.6% [6]. Margin Analysis - Adjusted gross profit grew by 25.7% year over year to $280.1 million, with the adjusted gross margin increasing approximately 290 basis points to 33.2% [7]. - SG&A expenses rose 24.4% to $215.4 million, with SG&A as a percentage of net sales increasing approximately 200 basis points to 25.5% due to higher payroll expenses and fixed-cost deleverage [8]. - Adjusted operating income was $27.6 million, up from $16.1 million in Q3 fiscal 2023, with an adjusted operating margin increase of approximately 110 basis points to 3.3% [9]. Store Expansion - Five Below opened 82 new stores, bringing the total to 1,749 stores across 44 states, representing an 18.1% increase from the previous year [11]. - The company plans to open approximately 227 new stores by the end of fiscal 2024, aiming for a total of 1,771 stores [11]. Future Guidance - For Q4 fiscal 2024, net sales are expected to be between $1.35 billion and $1.38 billion, indicating growth of 5-7%, with a projected 3% to 5% decrease in comparable sales [12]. - Adjusted gross margin is anticipated to decline approximately 90 basis points, while adjusted SG&A as a percentage of sales is forecasted to increase about 120 basis points [13][14]. - Net income for Q4 is expected to range between $174 million and $184 million, with adjusted earnings per share projected between $3.15 and $3.33 [15]. Full Year Outlook - For fiscal 2024, net sales are expected to grow between 9% and 10%, reaching $3.84 billion to $3.87 billion, with an estimated 3% decrease in comparable sales [16]. - Full-year net income is projected to be between $240 million and $250 million, with adjusted net income expected to fall between $265 million and $275 million [18].