The stock market closed lower on Friday, ending its worst month of the year. Investors digested the latest reading of Personal Consumption Expenditure (PCE) price index that rose 0.1% in August and 3.9% year-on-year. On a annual basis, this was down from 4.2% in July and was reportedly the lowest recorded in a span of almost three years. The PCE is the Federal Reserve’s preferred inflation indicator.
Overall, S&P 500 dropped 0.3% to 4,288, while NASDAQ fell 0.1% to 13,219.
Tweet of the Day
Dollar General $DG issues – AI generated based on expert calls pic.twitter.com/hBk3ES74wg
— Kourosh (@kouroshshafi) September 29, 2023
Chart of the Day
Here is the one-year chart of Five Below (FIVE) as of September 20, 2023, when the stock was at $155.
Five Below is a dollar-store concept for kids and teens, that sells merchandise such as toys, games, party items, sports gear, clothes, candy & electronics for between $1 and $5.55 each.
Five Below’s stock has been dropping as retail stocks falter as consumers are controlling their spending in a tough economy. Management did mention macro pressures were facing its consumers, but it was not discussed much in the earnings call as the quarter was a good one. Still, the company continued to deliver good results, as last quarter’s profits grew 14% while sales increased 14%.
Like other brink-and-mortar retailers, FIVE is experiencing more store theft. Management is increasing its shrink reserve for the rest of the year, while it does physical inventory counts in the stores. FIVE guesses operating margin will only be impacted by -0.2% due to higher shrinkage.
FIVE is part of the Growth Portfolio.
