Total sales of $173.6 million
Significant sequential comparable store
sales improvement from Q1 2023
Strong gross margin of 38.2%, expansion of
150 basis points from Q1 2023
Total liquidity of approximately $141
million and no debt
Company reiterates fiscal year 2023
guidance
Citi Trends, Inc. (NASDAQ: CTRN), a leading specialty value
retailer of apparel, accessories and home trends for way less spend
primarily for African American and multicultural families in the
United States, today reported results for the second quarter ended
July 29, 2023.
Financial Highlights – Second Quarter
2023
- Total sales of $173.6 million decreased 6.2% vs. Q2 2022;
Comparable store sales decreased 5.3% compared to Q2 2022, an 880
bps improvement to Q1 2023
- Gross margin of 38.2% vs. 38.1% in Q2 2022; 150 bps increase to
Q1 2023
- Operating loss of $7.9 million, or a loss of $7.8 million as
adjusted*, compared to operating loss of $3.3 million in Q2
2022
- Net loss per share of ($0.61), or adjusted net loss per share*
of ($0.60), vs. net loss per share of ($0.31) in Q2 2022
- Quarter-end total dollar inventory decreased 5.4% compared to
Q2 2022
- Total liquidity of approximately $141 million at the end of the
quarter, made up of $65.8 million of cash, no borrowings under a
$75 million credit facility, and no debt
- During Q2 2023, the Company opened 5 new stores, closed 2
underperforming locations and remodeled 8 stores, ending the
quarter with 611 stores
Financial Highlights – 26 weeks ended
July 29, 2023
- Total sales of $353.2 million decreased 10.2% vs. 2022;
Comparable store sales decreased 10.0% compared to 2022
- Gross margin of 37.5%, or 37.6% as adjusted*, vs. 38.6% in
2022
- Operating loss of $17.4 million, or a loss of $15.7 million as
adjusted*, compared to operating income of $36.3 million in 2022,
or $1.4 million as adjusted*
- Net loss of $11.7 million, or $10.4 million as adjusted*,
compared to net income of $27.7 million in 2022, or $1.0 million as
adjusted*
- Adjusted EBITDA* of ($6.3) million vs $12.1 million in
2022
- Net loss per share of ($1.42), or adjusted net loss per share*
of ($1.27), vs. diluted earnings per share of $3.34 in 2022, or
$0.12 as adjusted*
Chief Executive Officer
Comments
David Makuen, Chief Executive Officer, commented, “We are
pleased with our second quarter results that reflect positive
momentum for both the top line and gross margin, against a
continued challenging macro backdrop. The quarter was highlighted
by significant sequential comparable store sales acceleration from
the first quarter, a strong gross margin of 38.2% and well managed
expenses. Importantly, we experienced improved traffic levels and
strong conversion throughout the quarter, signaling that our
product assortment, strengthened by our strategic inventory rebuild
in key areas of the business, is resonating with our loyal
customers.”
Mr. Makuen continued, “I am incredibly proud of how our team
managed the business, while maintaining a laser focus on our
strategic priorities and taking decisive actions that reflect our
deep connection and understanding of our customers. While the
discretionary landscape remains under pressure, we are reiterating
our guidance for the fiscal year that incorporates our continued
efforts to improve what we can control. We are excited about our
back-to-school and early Fall assortments showcased in our unique
in-store experience that positions Citi Trends as a one-stop
solution for trends for the entire family in their local
neighborhoods.”
Capital Return Program
Update
In the second quarter of 2023, the Company did not repurchase
any shares of its common stock. At the end of the second quarter of
2023, $50.0 million remained available under the Company’s share
repurchase program.
Guidance
The Company is reiterating its outlook for fiscal 2023 as
follows:
- Full year total sales are expected to be in the range of
negative mid single-digits to negative low single-digits as
compared to fiscal 2022
- Full year gross margin expected to be in the high thirties
- Full year EBITDA* expected to be in the range of $5 million to
$20 million
- The Company plans to open 5 new stores, remodel 10 to 20 stores
and close 10 to 15 underperforming stores in the year
- Full year capital expenditures are expected to be in the range
of $15 million to $20 million
- Year end cash balance is expected to be in the range of $85
million to $105 million
Investor Conference Call and
Webcast
Citi Trends will host a conference call today at 9:00 a.m. ET.
The number to call for the live interactive teleconference is (415)
226-5356. A replay of the conference call will be available until
August 29, 2023, by dialing (800) 633-8284 and entering the
passcode, 22027692.
The live broadcast of Citi Trends' conference call will be
available online at the Company's website, cititrends.com, under
the Investor Relations section, beginning today at 9:00 a.m. ET.
The online replay will follow shortly after the call and will be
available for replay for one year.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and trends
that have occurred after quarter-end. The Company’s responses to
questions, as well as other matters discussed during the call, may
contain or constitute information that has not been disclosed
previously.
About Citi Trends
Citi Trends, Inc. is a leading specialty value retailer of
apparel, accessories and home trends for way less spend primarily
for African American and multicultural families in the United
States. The Company operates 611 stores located in 33 states. For
more information, visit cititrends.com or your local store.
*Non-GAAP Financial
Measures
The historical non-GAAP financial measures discussed herein are
reconciled to their corresponding GAAP measures at the end of this
press release. The Company is unable to provide a full
reconciliation of the forward-looking non-GAAP financial measure
used in 2023 guidance without unreasonable effort because it is not
possible to predict certain of its adjustment items with a
reasonable degree of certainty. This information is dependent upon
future events and may be outside of the Company’ control and its
unavailability could have a significant impact on its financial
results.
Forward-Looking
Statements
All statements other than historical facts contained in this
news release, including statements regarding the Company’s future
financial results and position, business policy and plans,
objectives and expectations of management for future operations and
capital allocation expectations, are forward-looking statements
that are subject to material risks and uncertainties. The words
"believe," "may," "could," "plans," "estimate," “expects,”
"continue," "anticipate," "intend," "expect," “upcoming,” “trend”
and similar expressions, as they relate to the Company, are
intended to identify forward-looking statements, although not all
forward-looking statements contain such language. Statements with
respect to earnings, sales or new store guidance are
forward-looking statements. Investors are cautioned that any such
forward-looking statements are subject to the finalization of the
Company’s quarter-end financial and accounting procedures, are not
guarantees of future performance or results, and are inherently
subject to risks and uncertainties, some of which cannot be
predicted or quantified. Actual results or developments may differ
materially from those included in the forward-looking statements as
a result of various factors which are discussed in our Annual
Reports and Quarterly Reports on Forms 10-K and 10-Q, respectively,
and any amendments thereto, filed with the Securities and Exchange
Commission. These risks and uncertainties include, but are not
limited to, uncertainties relating to general economic conditions,
including inflation, energy and fuel costs, unemployment levels,
and any deterioration whether caused by acts of war, terrorism,
political or social unrest (including any resulting store closures,
damage or loss of inventory) or other factors; changes in market
interest rates and market levels of wages; natural disasters such
as hurricanes; uncertainty and economic impact of pandemics,
epidemics or other public health emergencies such as the ongoing
COVID-19 pandemic; transportation and distribution delays or
interruptions; changes in freight rates; the Company’s ability to
attract and retain workers; the Company’s ability to negotiate
effectively the cost and purchase of merchandise inventory risks
due to shifts in market demand; the Company’s ability to gauge
fashion trends and changing consumer preferences; consumer
confidence and changes in consumer spending patterns; competition
within the industry; competition in our markets; the duration and
extent of any economic stimulus programs; changes in product mix;
interruptions in suppliers’ businesses; the ongoing assessment and
impact of the cyber disruption we identified on January 14, 2023,
including legal, reputational, financial and contractual risks
resulting from the disruption, and other risks related to
cybersecurity, data privacy and intellectual property; temporary
changes in demand due to weather patterns; seasonality of the
Company’s business; the results of pending or threatened
litigation; delays associated with building, remodeling, opening
and operating new stores; and delays associated with building and
opening or expanding new or existing distribution centers. Any
forward-looking statements by the Company, with respect to
guidance, the repurchase of shares pursuant to a share repurchase
program, or otherwise, are intended to speak only as of the date
such statements are made. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the Securities and Exchange Commission, the
Company does not undertake to publicly update any forward-looking
statements in this news release or with respect to matters
described herein, whether as a result of any new information,
future events or otherwise.
CITI TRENDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share
data) Thirteen Weeks Ended July 29, 2023
July 30, 2022 July 31, 2021 Net sales
$
173,554
$
185,012
$
237,281
Cost of sales (exclusive of depreciation shown separately
below)
(107,226
)
(114,589
)
(140,542
)
Selling, general and administrative expenses
(69,543
)
(68,481
)
(75,383
)
Depreciation
(4,708
)
(5,272
)
(4,994
)
(Loss) income from operations
(7,923
)
(3,330
)
16,362
Interest income
887
2
2
Interest expense
(77
)
(78
)
(77
)
(Loss) income before income taxes
(7,113
)
(3,406
)
16,287
Income tax benefit (expense)
2,081
870
(3,797
)
Net (loss) income
$
(5,032
)
$
(2,536
)
$
12,490
Basic net (loss) income per common share
$
(0.61
)
$
(0.31
)
$
1.37
Diluted net (loss) income per common share
$
(0.61
)
$
(0.31
)
$
1.36
Weighted average number of shares outstanding Basic
8,225
8,165
9,088
Diluted
8,225
8,165
9,178
Twenty-Six Weeks Ended July 29, 2023
July 30, 2022 July 31, 2021 Net sales
$
353,242
$
393,227
$
522,662
Cost of sales (exclusive of depreciation shown separately
below)
(220,885
)
(241,600
)
(304,333
)
Selling, general and administrative expenses
(140,350
)
(139,507
)
(153,275
)
Depreciation
(9,389
)
(10,717
)
(9,691
)
Gain on sale-leasebacks
—
34,920
—
(Loss) income from operations
(17,382
)
36,323
55,363
Interest income
1,910
2
6
Interest expense
(152
)
(154
)
(124
)
(Loss) income before income taxes
(15,624
)
36,171
55,245
Income tax benefit (expense)
3,957
(8,504
)
(11,858
)
Net (loss) income
$
(11,667
)
$
27,667
$
43,387
Basic net (loss) income per common share
$
(1.42
)
$
3.34
$
4.68
Diluted net (loss) income per common share
$
(1.42
)
$
3.34
$
4.63
Weighted average number of shares outstanding Basic
8,203
8,284
9,269
Diluted
8,203
8,284
9,374
CITI TRENDS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) (in thousands) July 29, 2023
July 30, 2022 Assets: Cash and cash equivalents
$
65,820
$
27,914
Inventory
134,473
142,101
Prepaid and other current assets
19,795
17,728
Property and equipment, net
59,084
72,450
Operating lease right of use assets
240,151
237,556
Deferred tax assets
6,101
2,538
Other noncurrent assets
1,083
1,252
Total assets
$
526,507
$
501,539
Liabilities and Stockholders' Equity: Accounts payable
$
93,680
$
82,956
Accrued liabilities
28,383
33,797
Current operating lease liabilities
46,540
47,547
Other current liabilities
1,259
1,205
Noncurrent operating lease liabilities
198,525
200,220
Other noncurrent liabilities
2,167
2,204
Total liabilities
370,554
367,929
Total stockholders' equity
155,953
133,610
Total liabilities and stockholders' equity
$
526,507
$
501,539
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
(in thousands, except per share data) The
Company makes reference in this release to adjusted gross margin,
adjusted operating income, adjusted net income, adjusted earnings
per share and adjusted EBITDA. The Company believes these
supplemental measures reflect operating results that are more
indicative of the Company's ongoing operating performance while
improving comparability to prior and future periods, and as such,
may provide investors with an enhanced understanding of the
Company's past financial performance and prospects for the future.
This information is not intended to be considered in isolation or
as a substitute for net income or earnings per diluted share
prepared in accordance with generally accepted accounting
principles (GAAP).
Thirteen WeeksEnded July 29, 2023
Reconciliation of Adjusted Operating Loss Operating loss
$
(7,923
)
Cyber incident expenses
163
Adjusted operating loss
$
(7,760
)
Thirteen WeeksEnded July 29, 2023
Reconciliation of Adjusted Diluted EPS Diluted loss per
share
$
(0.61
)
Cyber incident expenses
0.02
Tax effect
(0.01
)
Adjusted diluted loss per share
$
(0.60
)
Twenty-SixWeeks Ended July 29, 2023
Reconciliation of Adjusted Gross Margin Net sales
$
353,242
Cost of sales
(220,885
)
Gross profit
$
132,357
Gross margin
37.5
%
Cyber incident expenses
$
513
Adjusted gross profit
$
132,870
Adjusted gross margin
37.6
%
Twenty-Six Weeks Ended July 29, 2023 July
30, 2022 Reconciliation of Adjusted Operating (Loss)
Income Operating (loss) income
$
(17,382
)
$
36,323
Cyber incident expenses
1,723
—
Gain on sale-leaseback
—
(34,920
)
Adjusted operating (loss) income
$
(15,659
)
$
1,403
Twenty-Six Weeks Ended July 29, 2023 July
30, 2022 Reconciliation of Adjusted Net (Loss) Income
Net (loss) income
$
(11,667
)
$
27,667
Cyber incident expenses
1,723
—
Gain on sale-leaseback
—
(34,920
)
Tax effect
(436
)
8,210
Adjusted net (loss) income
$
(10,380
)
$
957
Twenty-Six Weeks Ended July 29, 2023 July
30, 2022 Reconciliation of Adjusted Diluted EPS Diluted
(loss) earnings per share
$
(1.42
)
$
3.34
Cyber incident expenses
0.21
—
Gain on sale-leaseback
—
(4.22
)
Tax effect
(0.05
)
0.99
Adjusted diluted (loss) earnings per share
$
(1.27
)
$
0.12
Twenty-Six Weeks Ended July 29, 2023 July
30, 2022 Reconciliation of Adjusted EBITDA Net (loss)
income
(11,667
)
27,667
Interest income
(1,910
)
(2
)
Interest expense
152
154
Income tax (benefit) expense
(3,957
)
8,504
Depreciation
9,389
10,717
Cyber incident expenses
1,723
—
Gain on sale-leaseback
—
(34,920
)
Adjusted EBITDA
$
(6,270
)
$
12,120
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230822705414/en/
Tom Filandro/Rachel Schacter ICR, Inc.
CitiTrendsIR@icrinc.com
Citi Trends (NASDAQ:CTRN)
Historical Stock Chart
From Apr 2024 to May 2024
Citi Trends (NASDAQ:CTRN)
Historical Stock Chart
From May 2023 to May 2024