Five Below Inc (FIVE) Reports Robust Fiscal 2023 Earnings with Store Expansion and Sales Growth
Net Sales: Q4 net sales increased 19.1% to $1.34 billion; Fiscal 2023 net sales rose 15.7% to $3.56 billion.
Comparable Sales: Q4 saw a 3.1% rise; Fiscal 2023 comparable sales grew by 2.8%.
Earnings Per Share (EPS): Q4 EPS up by 19% to $3.65; Fiscal 2023 EPS increased by 15% to $5.41.
Store Expansion: 63 new stores opened in Q4, totaling 1,544 stores; 204 new stores opened in Fiscal 2023.
Net Income: Q4 net income reached $202.2 million; Fiscal 2023 net income was $301.1 million.
Guidance: Fiscal 2024 net sales projected to be $3.97 billion to $4.07 billion; EPS expected to be $5.71 to $6.22.
Capital Expenditures: Gross capital expenditures anticipated to be approximately $365 million in fiscal 2024.
On March 20, 2024, Five Below Inc (NASDAQ:FIVE) unveiled its financial achievements for the fourth quarter and the full fiscal year of 2023, highlighting significant growth in net sales and earnings per share. The company's 8-K filing details these results and sets the stage for continued expansion in the coming year.
Five Below, a value-oriented retailer catering to teens and preteens, operated 1,544 stores across 43 states by the end of fiscal 2023. The retailer's diverse merchandise, mostly priced below $6, spans categories such as leisure, fashion and home, and party and snack, appealing to a broad customer base seeking value and variety.
Fiscal Performance and Strategic Growth
The fourth quarter saw net sales jump by 19.1% to $1.34 billion, with comparable sales increasing by 3.1%. The fiscal year echoed this positive trend with a 15.7% increase in net sales to $3.56 billion and a 2.8% rise in comparable sales. These figures reflect the company's strategic expansion, with 204 new stores launched in fiscal 2023, contributing to a robust store count and wider market reach.
Five Below's net income also saw a healthy uptick, with the fourth quarter reaching $202.2 million and the full year totaling $301.1 million. Diluted income per common share for the fourth quarter was $3.65, marking a 19% increase, while the annual EPS rose by 15% to $5.41. These financial achievements underscore the company's ability to grow its bottom line amidst a competitive retail landscape.
Challenges and Outlook
Despite the strong sales performance, Five Below faced challenges with higher than anticipated shrink headwinds, which tempered earnings to the lower end of the guidance range. President and CEO Joel Anderson acknowledged these challenges, stating:
"Holiday 2023 marked a strong end to the year for sales performance... The benefit of strong sales performance to our profitability was offset by higher than anticipated shrink headwinds, resulting in earnings at the low end of our guidance range."
Anderson also highlighted the company's proactive measures to mitigate shrink through initiatives based on 2023's learnings. Looking ahead, Five Below anticipates opening between 225 and 235 new stores in fiscal 2024, with net sales expected to range between $3.97 billion and $4.07 billion, and diluted EPS projected to be between $5.71 and $6.22.
Financial Statements Highlights
The balance sheet reflects a solid financial position, with total current assets at $1.20 billion and property and equipment net valued at $1.13 billion. Shareholders' equity stands at $1.58 billion, indicating a strong equity base. The cash flow statement shows net cash provided by operating activities at nearly $500 million, despite a net decrease in cash and cash equivalents due to significant investments in securities and capital expenditures.
Five Below's financial performance in fiscal 2023 demonstrates the company's resilience and strategic prowess in the retail sector. With a clear growth trajectory and a commitment to addressing operational challenges, Five Below is poised to continue its expansion and deliver value to both customers and investors.
Explore the complete 8-K earnings release (here) from Five Below Inc for further details.
This article first appeared on GuruFocus.
