Post Earnings Coverage as Five Below Q3 EPS Rose 25%; Outperformed Expectations

Upcoming AWS Coverage on Michaels Companies Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 8, 2016 / Active Wall St. announces its post-earnings coverage on Five Below, Inc. (NASDAQ: FIVE). The Company posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on December 01, 2016. The Philadelphia, Pennsylvania-based company's net sales and diluted EPS rose 17.6% and 25% y-o-y, respectively. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Five Below's competitors within the Specialty Retail, Other space, The Michaels Companies, Inc. (NASDAQ: MIK), reported on December 06, 2016, its third quarter results. AWS will be initiating a research report on Michaels Cos. in the coming days.

Today, AWS is promoting its earnings coverage on FIVE; touching on MIK. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=FIVE

http://www.activewallst.com/registration-3/?symbol=MIK

Earnings Reviewed

Five Below reported net sales of $199.48 million in Q3 FY16, which was above the $169.69 million recorded in Q3 FY15. However, net sales for Q3 FY16 lagged behind market consensus estimates of $1.55 million. Due to comparable transaction, comparable store sales fell 0.2% during Q3 FY16 versus a 4.8% growth in comparable store sales in the prior year's same quarter.

The specialty value retailer' net income for Q3 FY16 came in at $5.45 million, or $0.10 per diluted share, compared to $4.34 million, or $0.08 per diluted share, in Q3 FY15. The company's net income per diluted share for Q3 FY16 topped Wall Street's consensus estimates of $0.09 per diluted share.
Five Below ended the quarter with 517 stores, adding 83 or 19% net new store, compared to 434 stores recorded at the end of Q3 FY15.

Operating Metrics

For Q3 FY16, the company's gross profit rose 21.3% to $64.00 million from $52.77 million in the year ago comparable period. The company's gross margin as a percentage of net sales increased by approximately 100 basis points to 32.1% primarily due to lower freight rates and leverage from its new distribution center opened in Q2 FY15.

Five Below's selling, general, and administrative (SG&A) expenses for Q3 FY16 came in at $55.37 million, compared to $45.77 million in Q3 FY15. The company's SG&A expenses increased approximately 80 basis points to 27.8% in Q3 FY16 from 27% in the previous year comparable period. The company attributed the rise in SG&A expenses to deleverage fixed expenses associated with the lower comp as well as costs related to the ecommerce business being launched in 2017 within California.

During the reported quarter, the company's operating income increased 23.4% to $8.36 million, or 4.3% of net sales, from $7.00 million, or 4.1% of net sales, in the last year's comparable quarter.

Cash Flow and Balance Sheet

In the nine months ended October 29, 2016, Five Below's net cash used in operating activities was $2.87 million compared to net cash used by operating activities of $1.51 million in the first three quarters of FY15. As on October 29, 2016, the company had cash and cash equivalents balance of $53.54 million compared to a balance of $18.08 million as on October 31, 2015.

Inventory as of October 29, 2016, stood at $228.18 million compared to $213.64 million at the end at the end of the third quarter FY15. Furthermore, average inventory per store decreased by approximately 10% y-o-y at the end of Q3 FY16.

Earnings Outlook

In its guidance for Q4 FY16, Five Below's expects sales to be in the range of $391 million to $397 million, with five net new stores. The company's forecasts Q4 FY16 comparable store sales to increase by 2% to 3%. Furthermore, net income for the quarter ending January 28, 2017, is projected to be in the range of $49.2 million to $50.6 million, with diluted earnings between $0.89 per share and $0.92 per share.

For full year FY16, Five Below anticipates sales to increase by 21% to the range of $1.00 billion to $1.01 billion with comparable store sales growth of 2.3% to 2.7%. The company anticipates net income in the range of $71.3 million to $72.7 million with a diluted income in the range of $1.29 per common share to $1.32 per common share. Furthermore, the company expects to end FY16 with 522 Five Below stores, an increase of approximately 19% from FY15 store count of 437.

Stock Performance

At the closing bell, on Wednesday, December 07, 2016, Five Below's share price finished the trading session at $43.84, rising 1.67% from its previous closing price of $43.12. A total volume of 892.51 thousand shares exchanged hands. The stock has rallied 18.78% and 51.70% in the last month and past twelve months, respectively. Furthermore, since the start of the year, shares of the company soared 36.57%. The stock is trading at a PE ratio of 38.15 and has a market capitalization of $2.41 billion.

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SOURCE: Active Wall Street