Five Below, Inc. (FIVE Quick QuoteFIVE - Free Report) reported fourth-quarter fiscal 2024 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. Net sales increased and earnings decreased year over year. As a result, shares of FIVE rose 12.6% during the after-market trading session yesterday.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The company ended the year with fiscal fourth-quarter sales and earnings surpassing expectations. The holiday period was approached with a focus on introducing newer, trend-right, value-driven products while enhancing operational execution and the in-store experience. Early positive results from these efforts were encouraging, setting a strong foundation for fiscal 2025.

More on Five Below’s Q4 Results

Five Below posted adjusted earnings per share of $3.48 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $3.38. However, the figure decreased 0.6% from $3.65 reported in the year-ago quarter.

Net sales of $1,390.9 million increased 4% year over year. Also, this metric surpassed the Zacks Consensus Estimate of $1,372 million. Comparable sales (comps) decreased 3% year over year, due to a 1.9% drop in comparable transactions and a 1% decline in the comparable average ticket.

Insight Into Margins and Costs of FIVE

Adjusted gross profit grew 2.1% year over year to $563.2 million. We note that the adjusted gross margin decreased approximately 70 basis points (bps) year over year to 40.5%, which came above our estimation of 40.3%. 

This decrease was primarily due to fixed cost deleverage from the negative comps and the timing of certain product costs. This was partially offset by a lower shrink, caused by last year’s reserve true-up and a slightly improved shrink rate in stores that conducted inventory counts this January. 

We note that selling, general and administrative (SG&A) expenses rose 8.5% to $267 million. Also, SG&A expenses, as a percentage of net sales, increased approximately 80 bps to 19.2%. This was primarily caused by fixed cost deleverage from the negative comps, increased store wages and an investment in store hours, partially offset by lower incentive compensation. We estimated SG&A expenses to rise 10.8% year over year for the quarter under review.

Adjusted operating income was $253.3 million compared with $268.4 million in the fourth quarter of fiscal 2023. The adjusted operating margin decreased approximately 190 bps to 18.2%. We estimated the adjusted operating margin to decline 220 bps year over year to 17.9% for the fiscal fourth quarter.

FIVE’s Financial Snapshot: Cash and Equity Overview

Five Below ended the fiscal fourth quarter with cash and cash equivalents of $331.7 million and short-term investment securities of $197.1 million. Total shareholders’ equity was $1.81 billion as of Feb. 1, 2025. The company repurchased approximately 267,000 shares in fiscal 2024 for about $40 million.

Five Below Provides Q4 Store Update

The company opened 22 net new stores and ended the quarter with a total of 1,771 stores across 44 states. This represents a 14.7% increase in the number of stores from the end of the fourth quarter of fiscal 2023.

The company plans to open approximately 150 stores by the end of fiscal 2025, thereby taking the total count to 1,921 stores.

FIVE Stock Past Three-Month Performance

Image Source: Zacks Investment Research

What Lies Forward in Q1 for FIVE?

For the first quarter of fiscal 2025, total sales are expected to be between $905 million and $925 million, representing 12.7% growth at the midpoint compared with the fiscal first quarter of last year. Approximately 50 new store openings are planned for the quarter and comps are projected to be between flat and up 2%. 

The adjusted operating margin at the midpoint is expected to be 4% compared with 4.7% in the year-ago quarter, with the decline primarily caused by SG&A deleverage due to investments in-store labor and depreciation. However, this deleverage is being partially offset by a gross margin improvement of 40 bps, benefiting from lower reserves on aged inventory.

Net income is projected to range from $25 million to $31 million, while adjusted net income is expected to be between $28 million and $34 million. Earnings per share are anticipated to be between 44 cents and 55 cents. Adjusted earnings per share for the fiscal first quarter are expected to range from 50 cents to 61 cents compared with 60 cents in the prior year period.

Five Below’s Fiscal 2025 Outlook

For fiscal 2025, the company expects sales to be between $4.21 billion and $4.33 billion, reflecting a 10.1% increase at the midpoint. Comps are projected to be between flat and up 3%. 

The adjusted operating margin at the midpoint is anticipated to be approximately 7.3%, representing a decline of about 180 bps year over year, with more than half of this decline attributed to the net impact of tariffs. 

Net income is projected to be between $216 million and $250 million, while adjusted net income is expected to range from $227 million to $261 million. Earnings per share are anticipated to be between $3.90 and $4.52. Adjusted earnings per share are expected to range from $4.10 to $4.72 compared with $5.04 reported in fiscal 2024. 

Capital expenditures are projected to be between $210 million and $230 million, excluding tenant allowances, which account for new store openings and investments in systems and infrastructure.

Shares of this Zacks Rank #3 (Hold) company have lost 24.1% in the past three months compared with the industry’s 13.9% decline.

Key Picks

Some better-ranked stocks are The Gap, Inc. (GAP Quick QuoteGAP - Free Report) , Urban Outfitters Inc. (URBN Quick QuoteURBN - Free Report) and Deckers Outdoor Corporation (DECK Quick QuoteDECK - Free Report) .

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from the fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift items. It sports a Zacks Rank of 1 at present. The company delivered a 16.9% earnings surprise in the last reported quarter.

The consensus estimate for URBN’s fiscal 2025 earnings and revenues indicates growth of 11.8% and 6%, respectively, from the fiscal 2024 reported levels. URBN delivered a trailing four-quarter average earnings surprise of 28.4%.

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21% and 15.6%, respectively, from the year-ago actuals. Deckers delivered a trailing four-quarter average earnings surprise of 36.8%.