Discount clothing retailer Five Below ($FIVE) is set to report earnings Wednesday June 5 after the market closes - and it could buck the mother of all 2019 earnings trends.
The Pennsylvania-based retailer is seeing expectations from a group of analysts tracked by Zacks Investment Research of EPS $0.35.
At a time when virtually every company dependent on a brick-and-mortar location for clothing sales disappointed on earnings and have been battered on public markets, Five Below's business model (of selling nearly everything in the store for $5 or less, and doing so at cheaper real estate price points) has guided the stock higher for years as other competitors have faltered, losing foot traffic and shuttering locations to offset poor performance. Here is how Five Below stays above the fray.
Keep 'Em Comin'
Five Below has managed to keep foot traffic steady over time, going to June 1 - something that other brands, which disappointed investors, have struggled to do in 2019. Part of this can be chalked up to its clever strategy of doing things like handing out "scratch-offs" for discounts to its young consumers to lure them into the store. It is measured here via the Facebook ($FB) Were Here Count, or how many check-ins and mobile device location shares a store or group of stores have over time.
Thinknum tracks companies' data including job postings, social and web traffic, product sales and app ratings to create data sets that measure factors like hiring, revenue and foot traffic. Data may not be fully comprehensive (we track what is available on the web), but it can be used to gauge performance factors like staffing and sales.
Keep Growin'
Five Below has been on a continual growth trajectory through the month of May and into early June, judging by its LinkedIn ($MSFT) Employee Count. That the graph hasn't had any downward breaks (especially in the month leading up to earnings) suggest that Five Below hasn't cut jobs - another positive sign for investors. We have seen other retailers that boosted job postings perform well this earnings season, as well.
The company said in sequential annual federal filings that it aims to pursue growth to as many as 2,500 stores; and that as of February it had 753 stores. Our data reflects that this number rose to more than 800 in April, so growth has continued into the quarter for which Five Below will report earnings.
Every year for at least the last five years, according to federal filings, Five Below has pursued to continually open more stores than the year prior - and if that pattern holds true, it represents a very rare growth play right now.
Shares of Five Below are trading above key benchmarks; the stock is up nearly 20% this year, and the company heads into its earnings report on a string of beats. Although investors have soured on a number of retail investments, the Philadelphia discounter may have come up with the right strategy in an otherwise ailing sector.
