Diamonds and Dogs

6/7/18

Five Below (FIVE) gets a high five. The retailer, which sells only products for $5 or less, is jumping 20% to new highs following better than expected earnings. Five Below beat earnings estimates as sales rose 27.2% year/year to $296.32 million ahead of estimates. Comparable-store sales in the quarter increased 3.2% which led to the strong sales growth. The company opened 33 stores in the quarter, as the store base has expanded by 19% over the past year. Thanks to strong performance from new stores and the comparable-sales growth, gross margin increased 110 basis points to 32.8%. The CEO Joel Anderson expected to eventually open 2,500-plus nationwide stores. Currently, Five Below has just 658 stores today, meaning it still sees a long growth path ahead.

J.M. Smucker (SJM) is under pressure. The retailer known for jellies and jams is down 5% to anew 52 week low and four year low due to missing earnings expectations and giving mixed guidance going forward.  The name-brand company has been under pressure recently as Canada announced potential retaliatory tariffs on jam and other products, one of the company's most well-known products. Trade tensions between the U.S. and one of its partners under the North American Free Trade Agreement continue to escalate as President Donald Trump joins other members of the G-7 in Canada to discuss global economic goals this week.