On Wednesday, JPMorgan (NYSE:JPM) adjusted its outlook on Five Below (NASDAQ:FIVE), reducing the price target to $87 from the previous $122, while retaining a Neutral rating on the stock. The revision follows significant leadership changes at the discount retailer and a preannouncement of disappointing second-quarter sales.
Five Below announced the immediate appointment of Ken Bull as interim President and CEO, with Co-Founder and Non-Executive Chairman Thomas Vellios taking on the role of Executive Chairman to assist Bull. This leadership transition comes as Joel Anderson steps down from his positions as President, CEO, and member of the Board of Directors to pursue other interests.
The company also provided an update on its second-quarter performance, revealing a 5% decline in same-store sales to date. Five Below now expects a 6-7% drop in same-store sales for the quarter, a steeper decline than the mid-single-digit decrease previously guided on June 5 and below the -4.9% consensus estimate. The downturn in July was particularly sharp, with double-digit decreases contributing to the downturn.
As a result of these sales trends, Five Below anticipates second-quarter earnings per share (EPS) to be between $0.53 and $0.56. This forecast falls short of both the company's earlier guidance range of $0.57 to $0.69 and the average analyst prediction of $0.62. The retailer's latest financial outlook reflects the challenges it faces amid the transition in its executive leadership.
In other recent news, discount retailer Five Below has experienced significant changes in its financial outlook and leadership. Following the company's recent pre-announcement of its second-quarter financial results, several firms, including Goldman Sachs (NYSE:GS), Wells Fargo (NYSE:WFC), and Guggenheim, have revised their price targets for Five Below.
The company reported a 9.5% sales increase but also noted a 5.0% decline in same-store sales. Five Below has adjusted its second-quarter sales guidance to $820-$826 million, with same-store sales expected to drop between 6% and 7%. Earnings per share for the quarter are anticipated to be between $0.53 and $0.56.
Other firms, including BofA Securities, Telsey Advisory Group, Citi, Truist Securities, Morgan Stanley (NYSE:MS), and Loop Capital, have also revised their stance. These are the recent developments for Five Below.
InvestingPro Insights
In light of the recent developments at Five Below, including leadership changes and a downward revision in sales forecast, it's crucial to consider the company's financial health and market performance. According to InvestingPro data, Five Below has a market capitalization of $5.62 billion and is trading at a P/E ratio of 18.97, which suggests a high valuation relative to near-term earnings growth. Despite the challenges, the company has liquid assets that exceed its short-term obligations, indicating a degree of financial stability.
InvestingPro Tips highlight that analysts have revised their earnings downwards for the upcoming period, reflecting the uncertainty surrounding Five Below's future performance. Additionally, the stock is trading near its 52-week low and has seen a significant price drop over the last three months, with a 32.89% total return decline in that period. These factors may present a cautious outlook, yet it's noteworthy that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months.
For those considering an investment in Five Below, or for current shareholders looking to reassess their position, these insights could prove valuable. For a more comprehensive analysis, there are additional InvestingPro Tips available, and readers can explore these by visiting https://www.investing.com/pro/FIVE. To deepen your investment research, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering even more expert tips and data to inform your decisions.
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