03:26 PM EDT, 08/29/2024 (MT Newswires) -- Five Below's ( FIVE ) repositioning could take longer than expected, possibly leading to weaker performance in the near term, Oppenheimer said in a note Thursday.

Five Below ( FIVE ) is slowing store expansion to 150-180 openings in 2025, down from 230, cutting its product range by up to 20%, and expects mid-single-digit sales declines for 2024. Oppenheimer views Wall Street's 2025 improvement forecasts as overly "optimistic."

"While we commend leadership upon efforts to quickly address short-comings in the [company's] operating strategy, we are now more concerned that successful repositioning at the company will take time and portend even weaker results, nearer term," Oppenheimer said.

Five Below ( FIVE ) reported a 36% drop in Q2 adjusted earnings per share to $0.54, with comparable sales down 5.6%, leading the firm to lower its 2024 EPS forecast for Five Below ( FIVE ) to $4.35 and revise 2025 EPS to $4.45, citing reduced store openings and continued cost pressures.

Oppenheimer reiterated its perform rating for Five Below ( FIVE ).

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