Five Below, Inc.
) came up with better-than-expected second-quarter fiscal 2013
results. The quarterly earnings of 11 cents per share surpassed
the Zacks Consensus Estimate by a couple of cents and increased
almost threefold year over year.
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Including one-time charges, quarterly earnings came in at 7 cents
as against a loss of $3.41 per share in the prior-year period.
Robust top-line growth and increased margins drove the
better-than-expected results. However, rising expenses were a
Net sales increased 34.9% year over year to $117.1 million and
handily surpassed the Zacks Consensus Estimate of $113.0 million.
Comparable same store sales increased 6.6% as against an 8.6%
rise in the prior-year period, primarily driven by strong
performances across all categories. This quarter marks the 29th
consecutive quarter in which the company posted positive comps.
Gross profit increased 37.1% year over year to $39.4 million.
Gross profit margin expanded 60 basis points (bps) to 33.7%,
mainly due to occupancy expense leverage, partly offset by the
deleverage of distribution expenses from the new Olive Branch
Adjusted operating income jumped 55.2% to $9.7 million on a
year-over-year basis whereas operating margin expanded 110 bps to
During the quarter, the company opened 18 new outlets. At the end
of the quarter, the company had 276 stores in 19 states, a 22%
rise from the prior-year period.
Other Financial Aspects
This Zacks Rank #2 (Buy) company ended the quarter with cash and
cash equivalents of $21.1 million, notes payable of $19.5 million
and shareholders' equity of $82.0 million.
During the first-half of fiscal 2013, net cash used in operating
activities was $5.7 million and incurred capital expenditures of
Outlook for Third-Quarter 2013
For the third quarter, net sales are expected to be $107-$109
million based on the 24 new store openings and assumption of a
mid single-digit rise in comparable store sales.
Adjusted net income is expected to be around $1.5-$2.1 million
resulting in earnings per share (EPS) of 3-4 cents. On GAAP
basis, net income is expected to be in the band of $0.6-$1.2
million, coming to EPS of 1-2 cents.
For fiscal 2013, net sales are expected to be $531-$536 million
based on the 60 new store openings in the whole year and
assumption of a 5% rise in comparable store sales.
Adjusted net income is expected to be between $37.1 million and
$38.8 million, resulting in EPS of 68-71 cents. On GAAP basis,
net income is expected to be around $32.3-$34.0 million, with EPS
in the range of 60-63 cents.
The Zacks Consensus Estimate for the third quarter and fiscal
2013 stands at 4 cents and 71 cents, respectively.
Other Stocks to Consider
Other stocks worth considering in the retail sector include
Citi Trends, Inc.
). All of these carry a Zacks Rank #1 (Strong Buy).