Five Below's Strong Holiday Sales Prompts 6% Price Target Boost By This Analyst

  • KeyBanc analyst Bradley Thomas reiterated an Overweight rating on the shares of Five Below Inc FIVE and raised the price target from $188 to $200.
  • The company's Holiday Period sales increased 11.2% to $1.003 billion from $902.3 million, while comps increased by 0.9%, primarily driven by comparable transactions.
  • Last year, Holiday Period sales had increased 20.6% y/y, with comps up 7.7%, the analyst noted.
  • Management believes that FIVE's diverse eight worlds and WOW merchandise offering, along with increased and more targeted marketing, helped effectively highlight the tremendous value offered to customers.
  • Given the strong holiday performance, the company is now expecting Q4 to finish near the high end of its previously provided guidance for sales, comparable sales, and EPS, the analyst said.
  • On November 30, the company noted that it expects to complete 250 conversions to the permanent Five Beyond store format.
  • The analyst noted that the company now announced that it is moving fast to convert its fleet from the old prototype into the new Five Beyond store prototype, with 400 conversions expected in 2023.
  • Encouragingly, management noted that average ticket increases 2.0x for customers that shop the Five Beyond assortment, on average, compared to those that shop the non-Five Beyond assortment.
  • The analyst's bull case calls for healthy sales growth driven by strong merchandising and refined marketing, as well as successful new stores are the positive trends.
  • The analyst remains positive on the LT story, driven by new store openings and the expansion of the Five Beyond format, and views FIVE as one of the most compelling growth stories in the coverage.
  • Price Action: FIVE shares are trading higher by 0.63% at $188.00 on the last check Tuesday.
  • Photo Via Company
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