On September 3, Mad Money host Jim Cramer was bullish on Five Below, Inc. after the retailer delivered a strong fiscal second quarter and raised its full-year outlook, only to see its shares reverse an early rally. The stock climbed more than 5% Thursday morning before closing at $239.96, down 1.3%. Cramer called the reversal "a mistake," as he said that investors were overlooking the strength of the earnings report because of concerns about oil prices and the consumer. Five Below's second-quarter net sales rose 22.9% year over year to $1.26 billion, while comparable sales increased 14.1%. Adjusted diluted EPS jumped to $1.68 from $0.81, beating consensus estimates. Management raised fiscal 2026 revenue guidance to $5.63 billion-$5.71 billion from $5.40 billion-$5.48 billion and adjusted diluted EPS guidance to $9.83-$10.31 from $8.65-$9.05. Comparable-sales guidance increased to 10%-12% from 6%-8%. However, the company faces slowing comparable sales and tariff risks. Comparable sales rose 22.7% in the first quarter before slowing to 14.1% in the second, and management's third-quarter outlook calls for another step down to 8%-10%. The company benefited from tariff refunds, recording a $163.6 million reduction in cost of goods sold from IEEPA tariff refunds during the first half of fiscal 2026, plus $5.9 million of related interest income, but its updated outlook does not assume additional refunds. Five Below trades at a forward P/E of 25.19, and Loop Capital downgraded it to Hold from Buy on August 25 while maintaining a $250 price target, citing valuation concerns. Cramer argued that the slower comparable-sales growth is being viewed without enough context, noting that most retailers would have killed for 14% growth while lapping a 12.4% increase in the year-ago quarter. He also pointed to execution under CEO Winnie Park, who took over at the end of 2024, and noted that Five Below has beaten comparable-sales expectations in all six quarters since she became CEO. The company opened 52 net new stores in the second quarter, bringing its total to 2,022. Cramer said Five Below was trading at roughly 27.5 times fiscal-year earnings before the report and then at less than 24 times after it. He concluded, "I think that Five Below is a buy, buy, buy."
Five Below IncStrong Q2 earnings and raised guidance, though shares fell on oil/consumer concerns.
