Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the competitive dynamics of the industries where they participate, and buying companies that we would like to hold independently of how the price moves in the future. Most QC calls will be holds, and that is by design. Only a very sm ...

Citi Trends (CTRN) Q1 2026 Earnings Call June 03, 2025 09:00 AM ET Company Participants Nitza McKee - Senior Associate - IRKenneth Seipel - CEO & DirectorHeather Plutino - CFO & Executive VP Conference Call Participants Michael Baker - Managing Director, Senior Research AnalystWill Forsberg - Associate Analyst Operator Greetings, and welcome to the Citi Trends First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow t ...

Financial Data and Key Metrics Changes - Total sales for Q1 2025 increased by $15.4 million or 8.3% compared to Q1 2024, reaching $201.7 million [23] - Adjusted EBITDA for the quarter was $5.4 million, an increase of $6.2 million compared to Q1 2024, with a sales to EBITDA flow through of 40% [26] - Gross margin expanded by 90 basis points to 39.6%, driven by higher initial markup and lower freight costs [25] - Adjusted SG&A expenses totaled $74.4 million, or 36.9% of revenue, down from 39.1% in the prior period [25] Business Line Data and Key Metrics Changes - Comparable store sales grew by 9.9%, marking the third consecutive quarter of sequential improvement, with a two-year stack of 13% [24] - The plus-size business showed meaningful improvement, and the footwear category also experienced consistent top-line growth [9][10] - The accessory business was slightly below plan, prompting adjustments to better meet customer needs [9] Market Data and Key Metrics Changes - Strong performance was noted across all apparel and home categories, with many experiencing double-digit growth [8] - Increased traffic and mid-single-digit transaction count growth were observed, alongside improved conversion rates [24] Company Strategy and Development Direction - The company is in a three-phase strategic transformation: repair, execute, and optimize, aimed at building a high-performance company for sustainable profit growth [5][7] - Focus on enhancing product offerings, particularly in plus sizes and big men's apparel, while also improving trend relevancy in juniors and young men's categories [10][54] - Plans to open up to five new stores and remodel approximately 50 locations in the year, with a disciplined approach to fleet optimization [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, expecting full-year comparable store sales growth in the mid-single digits and gross margin expansion of approximately 200 basis points [28][29] - The current tariff environment presents both challenges and opportunities, with the company well-positioned to capitalize on market disruptions [20] Other Important Information - The company ended the quarter with no debt, $42 million in cash, and liquidity of approximately $117 million [27] - A new AI-based allocation system is being tested, with plans for a full rollout following the back-to-school season [14][15] Q&A Session Summary Question: Can you provide context on the change in closeout strategy? - The company is focusing on in-season closeouts and extreme value products, aiming for a long-term goal of making this segment incremental to top-line growth by about 10% [41][43] Question: Why is the full-year guidance below current comp trends? - The company is facing tougher comparisons in the back half of the year and is being cautious due to uncertainties in the macro environment [46][48] Question: Can you share insights on specific category performance? - All categories performed well in Q1, with particular strength in plus sizes and footwear, while the accessory business was slightly off plan [52][54] Question: What performance uplift has been seen from remodeled units? - Early performance from remodeled stores is promising and consistent with prior remodel classes, although it is still early to quantify [61]

Financial Performance - Comparable store sales growth of 9.9% and total year-over-year sales growth of 8.3%, or $15.4 million, to $201.7 million[1][6] - Adjusted EBITDA of $5.4 million, an increase of $6.2 million compared to the prior year, with a flowthrough of 40%[1][10] - Net income of $0.9 million, compared to a net loss of $3.4 million in Q1 2024, with diluted earnings per share of $0.11[6][10] - Adjusted operating income for Q1 2025 was $1,036 million, compared to a loss of $5,589 million in Q1 2024[22] - Adjusted net income for Q1 2025 was $1,418 million, improving from a loss of $2,663 million in Q1 2024[22] - Adjusted diluted earnings per share (EPS) for Q1 2025 was $0.17, compared to a loss of $0.32 in Q1 2024[22] - Adjusted EBITDA for Q1 2025 was $5,406 million, a significant increase from a loss of $796 million in Q1 2024[23] Inventory and Expenses - Merchandise inventory decreased by 7.6% to $109.9 million, with a 45% reduction in aged product compared to Q1 2024[10] - SG&A expenses leveraged 270 basis points compared to Q1 2024, reflecting disciplined cost controls amid increased sales[6][10] - Adjusted SG&A expenses for Q1 2025 were $74,404 million, compared to $72,831 million in Q1 2024[22] - The company incurred $402 million in cyber incident expenses during Q1 2025[22] - Other non-recurring expenses amounted to $885 million in Q1 2025, down from $1,380 million in Q1 2024[22] - The company reported an asset impairment of $64 million in Q1 2025, while there was no such expense in Q1 2024[22] Future Outlook - The company expects full-year comparable store sales growth in the mid-single digits, and EBITDA to be in the range of $6 million to $10 million, a significant improvement from 2024[11] - Plans to open up to 5 new stores and remodel approximately 50 stores during fiscal 2025[11] - Total liquidity at the end of Q1 2025 was approximately $117.0 million, with no debt and $41.6 million in cash[10][11] Operational Focus - The company continues to focus on enhancing customer experience and operational improvements to drive future growth[4][5] Interest and Tax - Interest income for Q1 2025 was $458 million, down from $849 million in Q1 2024[22] - The company did not report any income tax benefit in Q1 2025, compared to a benefit of $2,773 million in Q1 2024[22] Gross Margin - Gross margin improved to 39.6%, up 90 basis points from 38.7% in Q1 2024, driven by higher initial markup and lower shrink[6][10]

Financial Performance - Total sales for fiscal 2024 were $753.1 million, representing a 0.7% increase from $747.9 million in fiscal 2023, driven by a 3.4% increase in comparable store sales [162]. - The net loss for fiscal 2024 was $43.2 million, compared to a net loss of $12.0 million in fiscal 2023, influenced by a $16.5 million valuation allowance on deferred tax assets and strategic investments [168]. - Selling, general and administrative expenses increased by $15.7 million, or 5.5%, to $300.2 million in fiscal 2024, with SG&A as a percentage of sales rising to 39.9% [164]. - Cost of sales increased by $8.2 million, or 1.8%, to $471.0 million in fiscal 2024, with cost of sales as a percentage of net sales at 62.5% [163]. Store Operations - The company operated 591 stores at the end of fiscal 2024, having opened 1 new store, remodeled 35 stores, and closed 12 stores during the year [151]. - The company expects to accelerate square footage expansion in the range of 6% to 10% annually over time, focusing on maximizing productivity in existing stores [154]. Cash Flow and Investments - Cash used in operating activities was $3.8 million in fiscal 2024, a decrease from $9.6 million in fiscal 2023, with significant sources including a $7.8 million reduction in inventory [175]. - Cash used in investing activities was $10.1 million in fiscal 2024, down from $13.4 million in fiscal 2023, entirely for purchases of property and equipment [177]. - Cash used in financing activities was $4.7 million in fiscal 2024, including $3.8 million for share repurchases [178]. - In fiscal 2024, the company returned $3.8 million to shareholders through share repurchases [173]. Inventory Management - Inventory at the end of fiscal 2024 was $122.6 million, a decrease from $130.4 million in fiscal 2023, due to a strategic inventory reset [171]. - Inventory shrink as a percentage of sales was 1.7% in fiscal 2024, up from 1.0% in fiscal 2023 and 0.7% in fiscal 2022 [181]. - The allowance for inventory shrink was $5.2 million as of February 1, 2025, compared to $3.9 million as of February 3, 2024 [181]. Financial Position - The company ended fiscal 2024 with cash of $61.1 million and no debt, down from $79.7 million at the end of the previous year [169]. - The company has a revolving credit facility with a $75 million credit commitment and no borrowings as of the end of fiscal 2024 [174]. - As of February 1, 2025, the company's contractual commitments for operating leases totaled $289.3 million, with $60.7 million due within 12 months [179]. Accounting and Compliance - The company is evaluating the impact of new accounting standards on its consolidated financial statements, including ASU 2023-09 and ASU 2024-03 [182][183]. - The company sources all products in U.S. Dollars and is not directly subject to foreign currency exchange rate fluctuations [184].

Group 1 - The core investment strategy of Quipus Capital focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective rather than market-driven dynamics [1] - Quipus Capital emphasizes understanding the long-term earnings power of companies and the competitive dynamics within their industries [1] - The majority of recommendations from Quipus Capital will be holds, indicating a cautious approach to investment opportunities [1] Group 2 - The articles produced by Quipus Capital aim to provide valuable information for future investors while maintaining a healthy skepticism towards a generally bullish market [1] - The company believes that only a small fraction of companies should be considered a buy at any given time [1]

Citi Trends (CTRN) Q4 2025 Earnings Call March 18, 2025 05:33 PM ET Company Participants Nitza McKee - Senior Associate - IRKenneth Seipel - CEO & DirectorHeather Plutino - CFO, Principal Financial Officer, Principal Accounting Officer & Executive VP Conference Call Participants Jeremy Hamblin - Senior Research AnalystMichael Baker - Managing Director, Senior Research Analyst Operator Greetings. Welcome to Cititrans Fourth Quarter twenty twenty four Earnings Conference Call. Associate, ICR. Thank you. You m ...

Financial Data and Key Metrics Changes - The company reported total sales of approximately $211 million for Q4 2024, with comparable store sales growth of 6.4%, reflecting a sequential improvement from Q3 [6][13] - Gross margin rate expanded by 60 basis points to 39.7% compared to Q4 2023, driven by strong customer traffic and improved product offerings [14][41] - Inventory levels decreased by 6% year-over-year, indicating a fresher inventory position [15][53] Business Line Data and Key Metrics Changes - The footwear business registered high-single-digit growth, driven by strong customer acceptance of extreme off-value price branded buys [18] - Non-apparel categories such as giftables and family basics performed well, while children's apparel continued to grow [17] - The plus-size apparel segment experienced challenges due to execution issues, which are expected to improve by Q2 2025 [17] Market Data and Key Metrics Changes - The company has identified significant opportunities to expand its product assortment to cater to average- and higher-income customers within its African-American customer base [8][20] - The strategic focus on trendy fashions and recognizable brands has resonated well with customers, leading to increased loyalty and transaction sizes [7][21] Company Strategy and Development Direction - The company is transitioning from the repair phase to the execute phase of its strategic journey, focusing on consistent execution capabilities and best practices [11][55] - A three-tiered product strategy is being implemented to enhance product assortment and meet diverse customer needs [19] - The company plans to remodel at least 50 stores in 2025 and is conducting market studies for future expansion [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, including potential changes in tariffs and taxes [32][34] - The company anticipates positive free cash flow generation in fiscal 2025, marking a critical milestone in its financial transformation [30][51] - Full-year comparable sales growth is expected to be in the low- to mid-single digits, with gross margin expected to expand by at least 220 basis points [56] Other Important Information - The company maintains a healthy balance sheet with $61 million in cash and no debt, providing flexibility for strategic initiatives [29][51] - The Board approved a $50 million share repurchase program, with $10 million already invested [30][52] Q&A Session Summary Question: Sales trends and market share - Management highlighted the addition of off-price to the business model and improved price value equation as key drivers for sustaining momentum into 2025 [65][66] Question: Off-price business growth - Currently, off-price accounts for 1% to 2% of the business, with expectations to grow to around 10% in the long term [70][71] Question: Brand name deals - The company is focusing on securing deals with well-known brands across various categories, emphasizing extreme pricing [76][78] Question: EBITDA increase components - Management outlined that the anticipated EBITDA increase of $19 million to $23 million will come from sales growth, margin expansion, and leveraging SG&A [89][95] Question: Sales guidance and flow-through - The low base of sales and SG&A is expected to support the guidance of low- to mid-single-digit comp sales, with potential for additional sales above that range [96][98]

Sales Performance - Q4 2024 total sales reached $211.2 million, with comparable store sales growth of 6.4% and average store inventory down 6.7%[1] - Fiscal 2024 total sales amounted to $753.1 million, reflecting a 0.7% increase compared to the previous year[5] - Net sales for the fourth quarter of fiscal year 2025 were $211,172, a decrease of 1.5% compared to $215,179 in the same quarter of the previous year[18] - For the fiscal year 2025, net sales were $753,079, an increase of 0.2% from $747,941 in fiscal year 2024[18] Profitability and Loss - The company reported a net loss of $(43.2) million for fiscal 2024, compared to a net loss of $(12.0) million in 2023[5] - The company reported a net loss of $14,177 for the fourth quarter, compared to a net income of $3,551 in the fourth quarter of fiscal year 2024[18] - The company reported a basic net loss per common share of $5.19 for fiscal year 2025, compared to a basic net income per common share of $7.17 in fiscal year 2024[18] Gross Margin - Q4 2024 gross margin was 39.7%, an increase of 60 basis points from Q4 2023[5] - Full year gross margin for fiscal 2025 is expected to expand by a minimum of 220 basis points compared to 2024[11] - The adjusted gross margin for fiscal year 2025 was 37.5%, down from 38.1% in fiscal year 2024[24] EBITDA - Adjusted EBITDA for Q4 2024 was $7.1 million, down from $10.0 million in Q4 2023[5] - Adjusted EBITDA for the fourth quarter of fiscal year 2025 was $7,098, down from $9,989 in the fourth quarter of fiscal year 2024[23] Liquidity and Debt - The company ended fiscal 2024 with liquidity of approximately $136 million, including $61 million in cash and no debt[1] - Cash and cash equivalents decreased to $61,085 as of February 1, 2025, from $79,706 as of February 3, 2024[20] Future Outlook - For fiscal 2025, the company expects low to mid-single digit comparable store sales growth and EBITDA improvement of $19 million to $23 million compared to fiscal 2024[11] - The company plans to remodel approximately 50 stores and open up to 5 new locations in fiscal 2025[11] Assets and Liabilities - Total assets decreased to $462,769 as of February 1, 2025, from $518,721 as of February 3, 2024[20] - Total liabilities decreased to $349,594 as of February 1, 2025, compared to $361,015 as of February 3, 2024[20] Share Repurchase - In Q4 2024, the company repurchased 145,238 shares for a total of $3.8 million, with $46.2 million remaining under the share repurchase program[8] Asset Impairment - The company incurred asset impairment charges of $701 in the fourth quarter of fiscal year 2025, compared to $873 in the same quarter of the previous year[18]

Core Viewpoint - Purcell & Lefkowitz LLP is investigating Citi Trends, Inc. to determine if the company's directors breached their fiduciary duties related to recent corporate actions [1] Group 1 - The investigation is being conducted on behalf of Citi Trends's shareholders [1] - The law firm specializes in representing shareholders who are victims of securities fraud and corporate misconduct [3] - Shareholders interested in their rights and options can obtain additional information free of charge [2]