Discount retailer Five Below skids aftermarket on 2nd-quarter sales and 3rd-quarter outlook

Shares of discount retailer Five Below skidded in aftermarket trading after the company reported disappointing second-quarter sales and offered a soft forecast for the current quarter.

Five Below focuses on teen and pre-teen customers, pricing all of its items at $5 or less, and it is opening new stores at a fast clip: At the end of the quarter it had almost twice as many stores as it did three years ago. But the company said a key measurement of performance at older stores came in below its expectations in the latest quarter.

The Philadelphia-based company's stock sank $3.38, or 8.9 percent, to $34.63 aftermarket.

Five Below said its profit and sales were hurt by the elimination of a summer circular and shipping delays stemming from closing of its old East Coast distribution center. Its net income fell 15 percent to $7.1 million, or 13 cents per share, while revenue climbed 19 percent to $182.2 million.

Analysts had forecast net income of 13 cents per share and $185 million in revenue, according to Zacks Investment Research.

Five Below said sales at stores open at least a year rose 3 percent during the quarter. That measurement is considered an important indicator of retailer health because it strips out results from stores that opened or closed within the last year. According to FactSet, analysts were expecting growth of 4.5 percent. The company opened 32 stores over the three months that ended on Aug. 1, giving it 417 locations at the end of the quarter.

Five Below said it expects a profit of 6 to 7 cents per share on $164 million to $167 million in revenue in the current fiscal quarter. FactSet says analysts expected net income of 8 cents per share and $167.5 million in revenue.

The company still expects an annual profit of $1.03 to $1.06 per share, with revenue ranging from $820 million to $828 million. It plans on opening a net of 70 stores.

Through the close of regular-session trading Wednesday, Five Below Inc. shares had fallen 7 percent in 2015.


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