Five Below crushes earnings; shows strong momentum heading into holiday
Teen and tween fave Five Below blew past Street estimates in its third quarter, delivering better-than-expected top and bottom line for the fifth straight quarter and opening a record number of stores.
Net income increased 81.4% to $9.9 million, or $0.18 per share, in the quarter ended Oct. 28, compared to $5.4 million in the year-ago period. Analysts had estimated $0.13 per share.
Five Below’s net sales increased 28.9% to $257.2, from $199.5 million last year. Analysts had expected $244.93 million. Same-store sales rose 8.5%, also more than expected. Traffic rose 8.5%.
“We are extremely pleased with our third quarter results that exceeded the high end of our sales, comp and earnings outlook,” said Joel Anderson, CEO, Five Below. “This quarterly performance reflects a strong customer response to our WOW product, incredible price points, differentiated in-store experience and increasingly targeted marketing efforts. With the strength of our year-to-date performance, as well as our quarter-to-date momentum, we are raising our guidance for the year.”
Five Below opened 41 new stores in the third quarter, a record for the-fast-growing chain, giving it a total of 625 locations in 32 states. On the company’s quarterly call, Anderson said Five Below remains confident in its “2,000-plus store potential” and ability to achieve 20% top-line growth with 20% plus bottom-line growth through 2020.
Anderson also praised the chain’s real estate and construction teams, which he called “best-in-class.” He said opening 41 stores in one quarter was a “great test,” and that it did not produce any stress on the company.
Five Below raised its guidance for the fourth quarter and full year. For the full year, net sales are expected to be in the range of $1.264 billion to $1.276 billion, compared with earlier guided range of $1.236 to $1.248 billion. Same-store sales are projected to rise 5.7% to 6.5%, compared with earlier guidance of 3.5% to 4.5%.
Net income is expected to be in the range of $95.9 million to $99.7 million, with a diluted income per common share of $1.72 to $1.79, compared with the previous range of $1.62 to $1.66.
Big Lots tops Q3 earnings estimates
Big Lots reported better-than-expected third quarter earnings and raised its full-year forecast as its looks towards what it expects will be a successful holiday season.
The discounter reported income of $4.4 million, or $0.10 per diluted share, for the quarter ended Oct. 28, up from $1.38 million or $0.3 cents per share in the same quarter last year. This year’s results included a gain from an insurance settlement. Excluding the settlement, adjusted income totaled $2.5 million, or $0.06 per diluted share.
Same-store sales rose 1.0%. Net sales inched up 0.5% to $1.1 billion, a result of the comparable store sales increase partially offset by a lower store count year-over-year.
“In a challenging retail environment, the team delivered on our financial commitments with sales in line with our communicated guidance and EPS growth above our expectations,” said David Campisi, CEO and president of Big Lots, which operates 1,430 stores. “(Our core customer) continues to respond positively to our strategy focusing on ownable and winnable merchandise categories, improved merchandise presentations, and more consistent, friendly customer service and in-store execution.”
Big Lots boosted its earnings guidance for its current fiscal year. It is now projecting earnings of $4.23 to $4.28 per share, not including the insurance settlement, up from an August projection of $4.15 to $4.25 per share. It estimates 1% comparable-store sales increase and a 2% increase in total sales.
Ulta Beauty Q3 earnings top estimates, but outlook is mixed
The powerhouse that is Ulta Beauty delivered another strong quarter of earnings and revenue even as its same-store sales growth cooled.
Net income increased 19.5% to $104.6 million, or $1.70 a share, in the quarter ended Oct. 28, compared to $87.6 million, or $1.40 per share, in the year-ago period. Analysts had expected earnings of $1.66 a share.
Net sales increased 18.6% to $1. 34 billion from $1.13 billion last year. The retailer estimated approximately $14 million in lost sales due to Hurricanes Harvey and Irma.
Total same-store sales increased 10.3%, compared to an increase of 16.7% last year, and were driven by 6.0% transaction growth and 4.3% growth in average ticket. The company estimates that Hurricanes Harvey and Irma resulted in approximately 100 basis points of negative impact to comparable stores sales in the third quarter of fiscal 2017.
E-commerce sales grew 62.9% to $119.8 million from $73.6 million last year, representing 370 basis points of the total company comparable sales increase of 10.3%.
“Our third quarter results clearly demonstrate the strength and distinct advantages of the Ulta Beauty business model,” said Mary Dillon, CEO. “We delivered double digit comparable sales growth, in spite of a moderation in the growth rate of our largest category — makeup — and meaningful disruption from hurricanes. We flexed our merchandising and marketing plans, leveraged our consumer insights and CRM platform, and worked with our brand partners to create compelling offers for our guests.”
Ulta expects fourth-quarter sales between $1.93 million to $1.96 million, with a same-store sales increase of 8% to 10%. It estimated fourth-quarter per-share earnings between $2.73 to $2.78. Analysts were looking for earnings of $2.83 a share on sales of $1.93 billion and a same-store sales increase of 9.4%
During the third quarter, the retailer opened 48 stores. It ended the quarter with 1,058 stores.