Specialty retailer Five Below offered a somewhat muted outlook for holiday sales despite posting impressive growth in third-quarter same-store sales and achieving record expansion in 2013.
The company has opened 60 new stores this year and its same-store sales grew 9% during the period ended Nov. 2. Of the new stores opened this year, 28 came online during the third quarter and 11 of those were in Dallas, a new market for the rapidly expanding company.
"We are pleased to have delivered another solid quarter, with a 28% increase in sales and a 35% increase in adjusted operating income. Our results once again demonstrate the appeal of the Five Below value proposition [of] trend-right product that targets our core teen and pre-teen customer at the $1 to $5 price points,” said company co-founder and CEO Thomas Vellios. “Our team successfully completed the new store program for 2013 with the opening of 60 net new stores, bringing our total store count to 304. We are ready for the all-important fourth quarter. With our broad assortment of giftable merchandise, we look forward to delighting our customers when they shop our stores this holiday season."
Despite those accomplishments, Vellios offered a modest outlook for the company’s fourth quarter sales performance with a forecast that envisions a 4% comp increase negatively affected by the compressed season and difficult prior year comparisons. Total sales are expected to range from $214 million to $217 million while profits on an adjusted basis are expected to range from $26.8 million to $27.9 million. Those figures were enough for the company to increase its full year sales forecast to a range of $538 million to $541 million from earlier guidance in the range of $531 million to $536 million. The company also increased its full-year profit forecast slightly to a range of adjusted net income of $37.9 million to $39 million, or 70 cents to 72 cents a share, compared to prior guidance of 68 cents to 71 cents a share.
In the third quarter, total sales grew nearly 28% to $110.7 million from $86.6 million. Net income adjusted to exclude expenses related stock options granted to the company’s founders increased 62.5% to $2.6 million, or five cents a share, from $1.6 million, or three cents a share.
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