Investing.com -- Five Below fell sharply in premarket trading Wefdnesday after discount retailer announced that its CEO Joel Anderson had stepped down and pre-announced guidance for Q2 that fell short of estimates.
Five Below Inc (NASDAQ:FIVE) fell more than 15% in early trading following the news.
The company named chief operation officer Kenneth Bull as interim CEO.
Five Below also said it now expects sales for the fiscal second quarter ending Aug. 3, to be in the range of $820 million to $826M and a 6% to 7% decrease in comparable sales. That would fall short of analyst expectations for revenue of $836.6M.
Earnings per diluted share was expected to be in the range of $0.53 to $0.56, missing estimates of $0.63 a share.
The weaker guidance comes as the company saw comparable sales fall 5.0% in the 10-week period ended Jul. 13, compared with same period ended Jul. 15, 2023.
In response to the news, several Wall Street firms cut their ratings on FIVE stock.
Citi downgraded the shares from Buy to Neutral and cut its price target from $175 to $92, saying the Q2 guidance suggests "an expected weakening of trends in 2H July."
"We expect price investments to begin quickly and as a result, we are significantly lowering our 2H estimates," Citi analysts added. "Beyond the near-term, we see risk to mgmt cutting long-term store growth targets and expect a choppy road back to positive comp growth."
Elsewhere, Truist Securities analysts also downgraded Five Below stock from Buy to Neutral, stressing that recent announcements have "completely eroded" their confidence in the company's prospects.
Analysts at Evercore ISI and Morgan Stanley (NYSE:MS) also reduced their ratings on FIVE shares and slashed price targets.