Retailer Five Below expects revenue of $1 billion in the fourth quarter
Last week, retailer Five Below Inc. (FIVE), specializing in selling a variety of goods worth up to $ 5 and up to $ 10, presented a report for the third quarter, which showed double-digit revenue growth.
Moreover, the company targets $1 billion in revenue in the fourth quarter. Five Below’s revenue in the third quarter increased by 28% year-on-year to $608 million. The drivers of growth were a 15 percent increase in comparable sales, which is responsible for half of the revenue and the opening of new stores.
Over the past period, the company has opened 52 new points of sale, bringing their total number to 1,173. Recall that the company plans to open about 2,500 of its stores in the United States. Another good news in the Five Below report was the announcement of high profitability, despite rising costs. Gross profit was $202 million, or 33% of sales.
Operating profit almost doubled to $43 million. One of the reasons for the growth is the emergence of a new category worth up to $ 10. In this niche, Five Below can present more expensive goods, for example, games and interior items. In addition, the strong results of the third quarter allowed the management of Five Below to give an optimistic forecast for the fourth quarter, including the pre-holiday season.
According to expectations, revenue in the fourth quarter will reach $1 billion, ensuring revenue growth to $2.8 billion for the whole year. In addition, net profit grew to $270 million compared to $123 million last year and $175 million in 2019. should result in earnings per share of between $4.82 and $4.94.
Note the fourth quarter, Five opened 17 new stores, and by the end of the year, there should be 170 more than at the end of 2020. The peculiarity of Five Below is that it increases sales equally well both through the opening of new stores and at the expense of existing facilities. All this can become the basis for future sustainable sales growth, at least in the medium term. At the auction on December 6, FIVE’s stock was worth $192.45.
