Why Five Below Stock Price Crashed This Week
The stock is currently down 67% from its all-time high.
stock of Below 5 (five 2.06%) It’s down a whopping 25% this week, according to data from S&P Global Market Intelligence. The discount children’s jewelry retailer just lost its CEO and now projects abysmal same-store sales growth for 2024. Five Below stock, down 67% from its high, is currently the worst performer among publicly traded companies.
Here’s why stocks fell again this week:
Outgoing CEO and sluggish same-same sales growth
On July 16th of this week, Five Below issued a press release that sent its stock price plummeting. The company announced that its current CEO, Joel Anderson, was stepping down from his position. He decided to become CEO. petco. Chief Operating Officer Kenneth Bull will take over as interim CEO. Investors hate uncertainty in management, so it’s no surprise that the stock is falling on the news.
Worse yet is the company’s update on its 2024 business. The company now expects comparable sales growth (same-store sales growth) to decline 6% to 7% in the second quarter, which ends in early August. A decline in comparable sales is the worst thing that can happen to a retailer. Real retail requires strong customer traffic and spending to achieve profitability and operating leverage against fixed costs and real estate costs. Five Below is currently trending sharply in the wrong direction.
It’s hard to pinpoint exactly why this slowdown is happening, but some investors believe it could be due to the massive influx of discount e-commerce apps like Temu and its imitators. Families can now buy trinkets from these online stores, which could be taking away traffic from Five Below.
The stock price has dropped, is it worth buying?
Five Below investors have had a tough year in 2024. The stock currently trades at a cheap-looking trailing price-to-earnings (P/E) ratio of just 14.5, or about half that. SNP500 average.
However, it is unclear what Five Below’s revenue trajectory will be in the coming years. A 6% to 7% decline in comparable sales would likely result in even more significant declines in revenue for the remainder of 2024 and into 2025. Unless Five Below can address its traffic issues, revenue will continue to decline for the next several years. And it is unclear when (if ever) these same-store sales growth issues will subside.
For this reason, it might be best to avoid Five Below stock for now.
