The stock market closed mixed on Thursday as NVIDIA (NVDA) released its earnings. The AI chipmaker beat analysts’ estimates in terms of revenues and net income.
Overall, S&P 500 was flat at 5,592, while NASDAQ fell 0.2% to 17,516.
Chart of the Day
Here is the one-year chart of Five Below (FIVE) as of August 6, 2024, when the stock was at $66.
Five Below faced weak profits, reduced traffic, and shrinkage issues despite revenue growth last quarter. The company reported 10% profit growth on 12% revenue growth, and a 2% decline in same-store sales. Sales were up due to more stores, but sales per store were down, which is a bad sign. Negative same-stores sales were the result of a decline in transactions per store. Management stated that consumers were buying needs, which is not good for a party supply store with a lot of impulse items for sale. Five Below blamed years of inflation on food, fuel, and rent as the reason for the poor results. Meanwhile, shoplifting remains high. Management has a new format which is expected to lower shrinkage, and it is expected that nearly 80% of stores will adapt this new format by the end of 2024. The company also tested several strategies in about 70 stores, including receipt checks at the door, adding guards, and extra upfront labor. David Sharek, Founder of School of Hard Stocks, is skeptical that Five Below can really get a handle on shoplifting, as the government is allowing shoplifting to happen.
Five Below is part of the Growth Portfolio.
