Shares of Five Below Inc. (FIVE) dropped over 5% in the extended session on Wednesday following the company’s second-quarter sales report that fell short of Wall Street expectations. The retailer also revised its guidance for the year to account for “shrink,” which refers to the loss of items due to theft, fraud, or employee error.
Quarterly Performance
In the quarter, Five Below reported earnings of $46.8 million, or 84 cents a share, compared to $41.3 million, or 74 cents a share, in the same quarter last year. Despite the increase in earnings, sales of $759 million represented a 14% growth, falling slightly below analysts’ consensus of $760 million. However, the company saw a positive trend in same-store sales, which increased by 2.7%.
Revised Guidance
While Five Below continues to maintain its sales outlook, it is adjusting its earnings guidance to account for an anticipated increase in shrink reserves. Chief Executive Joel Anderson emphasized the company’s commitment to sourcing exceptional products, improving its supply chain, opening new stores at a record pace, and building upon the success of its Five Beyond store format.
Full-Year Expectations
Five Below projects full-year sales to be within the range of $3.50 billion and $3.57 billion. As for net income, the company expects it to fall between $295 million and $311 million.
Despite the disappointing sales report, shares of Five Below ended the regular trading day with a slight increase of 0.2%.
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