06:25 AM EDT, 03/21/2024 (MT Newswires) -- Five Below ( FIVE ) shares dropped early Thursday as the discount retailer outlined a downbeat full-year outlook following fiscal fourth-quarter results that were below analysts' estimates as shrink headwinds weighed.

For fiscal 2024, Five Below ( FIVE ) expects earnings to be in a range of $5.71 to $6.22 a share and sales to be between $3.97 billion and $4.07 billion. The consensus on Capital IQ is for EPS of $6.21 a share and revenue of $4.07 billion. Comparable sales are set to be flat to up 3%. The retailer is seeking to launch about 225 to 235 new stores. The stock fell 13% in premarket trading.

"We have implemented additional shrink mitigation initiatives based on our 2023 learnings," Chief Executive Joel Anderson said in a statement. Shrink refers to inventory lost due to theft or internal issues. "However, we expect the resulting benefits to take some time to realize, and therefore, we have not included any associated improvement in our outlook this year."

In the most recent quarter, EPS came in at $3.65, up from $3.07 the year before, the company said late Wednesday. The bottom line missed the Capital IQ-polled consensus of $3.78. Sales climbed 19% to $1.34 billion, but were just shy of the Street's view for $1.35 billion.

"The benefit of strong sales performance to our profitability was offset by higher-than-anticipated shrink headwinds, resulting in earnings at the low end of our guidance range," Anderson said.

Same-store sales rose 3.1%, just above analysts' forecast, boosted by a 3.9% increase in transactions partially offset by a 0.8% decrease in average ticket, Chief Financial Officer Kristy Chipman said during an earnings call, according to a Capital IQ transcript. "The ticket trends we have seen in recent quarters continued in the fourth quarter, as lower units per transaction were partially offset by higher (average unit retail)," she said.

Gross margin expanded by roughly 90 basis points to 41.2%, mainly driven by lower inbound freight and leverage on fixed costs due to an extra week in the fiscal year, Chipman told analysts. "We expect margin improvement in our margin profile as we move into (the second quarter) and (third quarter)," she said.

The company anticipates per-share profit of $0.58 and $0.69 for the ongoing quarter with sales of $826 million to $846 million. The consensus on Capital IQ is for EPS of $0.67 and revenue of $842.3 million. Same-store sales are seen ranging from being flat to a 2% increase, while analysts are currently projecting a gain of 2%.

Price: 182, Change: -26.97, Percent Change: -12.91