Premarket trades Wednesday saw shares of Five Below (NASDAQ) fall more than 4 percent after the retailer issued a lower-than-expected quarterly EPS forecast.

Five Below reported a $2.49 increase from the $2.20 year ago period, and was just below the consensus estimate of $2.48. In the third quarter net sales reached $996.3 million, which was 16% higher YoY than the consensus analyst estimate of $1.01billion.

Company reported 1,190 locations, an increase of 1.4% QoQ. It was in line with consensus estimates. It also reported 17 new store openings during the same period. This was in line with our expectations.

Five Below is expecting Q1 EPS to be between 54c and 62c. This compares with the consensus estimate of 88c per shares. Comparable sales growth is expected from the company between 0%-2%, as opposed to analyst projections of 1.13%. In the first quarter, net sales are projected to be between $658 and $2.8 million. This is lower than the consensus estimate of $681.6 millions.

Five Below anticipates that EPS will range from $5.19 to $5.70 for the entire year, which is below analyst expectations of $5.86 per shares. The analyst estimates of $3.35 trillion are lower than the FY net sales.

It expects more than double sales, and to have doubled EPS by FY2025. It intends to open 1,000 stores by FY2025. These include 375-400 stores in the two following fiscal years. There will also be 550-600 stores added over the FY 2024 and FY 2025.

Discount store chain FIVE expects to double the stores’ number to over 3,500 by FY2030. FIVE has an operating margin goal of approximately 14%.

FIVE released a statement saying that they achieved sales growth comparable to our expectations, despite the challenging comparison with last year’s stimulation-fueled similar sales rise of 13.8%.

According to our discussions, Kate McShane of Goldman Sachs analysts believes that the new store target is lower than investors’ expectations.

The key questions we have are: the pace of SSS during the quarter, QTD trends; views on transportation and supply chains; outlook for new or existing markets given the updated store target; detail on store performance; Five Beyond uplift; drivers of the long-term mart expansion; and how price increases will be considered in light of the inflationary environment. McShane wrote in client note.

Joseph Feldman, a Telsey Advisory Group Analyst is positive because he believes that the soft outlook doesn’t harm the long-term story.

Feldman stated in a client letter that we believe the long-term story remains intact. This includes store growth and gains from new merchandising, like Five Beyond. Feldman also said that leverage of technology investments and technological innovation are all important.

By Senad Karaahmetovic