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5 Below shares fall on weak outlook

PHILADELPHIA (AP) -- Shares of Five Below, which operates $5-and-below stores aimed at young people, fell 5 percent in morning trading after the company said its fourth-quarter net income rose but its outlook came in below expectations.

THE SPARK: The Philadelphia company reported late Wednesday that net income for the quarter ended Feb. 2 rose sharply to $18.7 million, or 35 cents per share, from $2.8 million, or 17 cents per share, last year. Excluding one-time items, net income totaled 39 cents per share. Analyst expected earnings of 38 cents per share, according to FactSet.

Revenue rose 38 percent to $173.6 million from $125.8 million last year. Analysts expected $169.5 million.

THE BIG PICTURE: Five Below was founded in 2002 and operates 192 stores in 16 states. All of its products, which include flip flops, sunglasses and nail polish, are priced at $5 or less.

The company, which went public in July, also reported that for the year ended Feb. 2, the company reported a loss of $45.4 million, or $1.28 per share, compared with net income of $56,000, or break-even per share. Revenue rose 41 percent to $418.8 million from $297.1 million last year.

It gave an outlook that disappointed investors. For the first quarter, the Memphis, Tenn.-based company expects net income of break even to a penny per share. Analysts expect 5 cents per share. It expects revenue of $92 million to $94 million. Analysts expect $93.3 million. Analysts expect $93.3 million.

For the fiscal year, the company expects earnings of 62 cents to 65 cents per share, excluding one-time items, on revenue of $516 million to $521 million. Analysts had expected 67 cents per share on revenue of $532.1 million.

A Five Below spokesman did not return a call for comment.

SHARE ACTION: Shares fell $2, or 5.1 percent, to $37.16 during midday trading. The stock has traded between $25 and $43.04 during the past 52 weeks.