[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial information for Citi Trends, Inc., including financial statements, management's discussion, market risk, and controls and procedures [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Citi Trends, Inc. for the period ended August 2, 2025, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with accompanying notes detailing significant accounting policies, financial instruments, and operational aspects [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents the condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of August 2, 2025, and February 1, 2025 | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Cash and cash equivalents | $50,397 | $61,085 | $(10,688) | | Inventory | $117,566 | $122,640 | $(5,074) | | Total current assets | $189,204 | $197,060 | $(7,856) | | Total assets | $457,408 | $462,769 | $(5,361) | | Total current liabilities | $167,376 | $174,391 | $(7,015) | | Total liabilities | $344,168 | $349,593 | $(5,425) | | Total stockholders' equity | $113,240 | $113,176 | $64 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the condensed consolidated statements of operations, outlining net sales, income (loss) from operations, and net income (loss) for the thirteen and twenty-six weeks ended August 2, 2025, and August 3, 2024 Thirteen Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------- | :--------- | | Net sales | $190,750 | $176,552 | $14,198 | 8.0% | | Income (loss) from operations | $3,517 | $(24,895) | $28,412 | N/A | | Net income (loss) | $3,818 | $(18,413) | $22,231 | N/A | | Basic net earnings (loss) per common share | $0.48 | $(2.21) | $2.69 | N/A | | Diluted net earnings (loss) per common share | $0.46 | $(2.21) | $2.67 | N/A | Twenty-Six Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------- | :--------- | | Net sales | $392,478 | $362,841 | $29,637 | 8.2% | | Income (loss) from operations | $4,006 | $(31,865) | $35,871 | N/A | | Net income (loss) | $4,689 | $(21,839) | $26,528 | N/A | | Basic net earnings (loss) per common share | $0.58 | $(2.63) | $3.21 | N/A | | Diluted net earnings (loss) per common share | $0.57 | $(2.63) | $3.20 | N/A | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes the condensed consolidated statements of cash flows, detailing cash activities from operations, investing, and financing for the twenty-six weeks ended August 2, 2025, and August 3, 2024 Twenty-Six Weeks Ended Cash Flow Summary | Activity | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Net cash used in operating activities | $(7,114) | $(13,996) | $6,882 (less used) | | Net cash provided by (used in) investing activities | $3,501 | $(5,552) | $9,053 (swing to provided) | | Net cash used in financing activities | $(7,075) | $(856) | $(6,219) (more used) | | Net decrease in cash and cash equivalents | $(10,688) | $(20,404) | $9,716 (smaller decrease) | | Cash and cash equivalents, End of period | $50,397 | $59,302 | $(8,905) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including retained earnings and treasury stock, for the periods presented - Total stockholders' equity increased slightly from **$113,176 thousand** at February 1, 2025, to **$113,240 thousand** at August 2, 2025[10](index=10&type=chunk)[18](index=18&type=chunk) - Retained earnings increased from **$275,901 thousand** to **$280,590 thousand** during the period[10](index=10&type=chunk)[18](index=18&type=chunk) - Treasury stock increased from **$(270,988) thousand** to **$(277,303) thousand**, reflecting share repurchases[10](index=10&type=chunk)[18](index=18&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes accompanying the financial statements, explaining significant accounting policies, financial instruments, and other relevant disclosures [1. Significant Accounting Policies](index=7&type=section&id=1.%20Significant%20Accounting%20Policies) This note describes the company's business, store count, and the basis of preparation for the unaudited interim financial statements - Citi Trends, Inc. is a leading off-price value retailer of apparel, accessories, and home trends, primarily for African American families in the United States[20](index=20&type=chunk) - As of August 2, 2025, the Company operated **590 stores** across 33 states[20](index=20&type=chunk) - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP for interim reporting[21](index=21&type=chunk) [2. Cash and Cash Equivalents/Concentration of Credit Risk](index=7&type=section&id=2.%20Cash%20and%20Cash%20Equivalents/Concentration%20of%20Credit%20Risk) This note defines cash equivalents and discusses the company's policies for managing cash and credit risk concentrations - Cash equivalents are defined as highly liquid investments with maturities of **three months or less** at the date of purchase[23](index=23&type=chunk) - The Company places its cash and cash equivalents in high credit quality banks and institutional money market funds, with some accounts exceeding federally insured limits[23](index=23&type=chunk) [3. Earnings per Share](index=7&type=section&id=3.%20Earnings%20per%20Share) This note details the calculation of basic and diluted earnings per common share, including the treatment of potentially dilutive securities - Basic earnings per common share are calculated using the weighted average number of common shares outstanding[24](index=24&type=chunk) - Diluted earnings per common share include the dilutive effect of potentially dilutive securities, such as nonvested restricted stock, unless antidilutive during loss periods[24](index=24&type=chunk) Weighted Average Shares Outstanding (Diluted) | Period | August 2, 2025 | August 3, 2024 | | :--------------------- | :------------- | :------------- | | Thirteen Weeks Ended | 8,313,841 | 8,336,629 | | Twenty-Six Weeks Ended | 8,242,148 | 8,294,593 | [4. Revolving Credit Facility](index=8&type=section&id=4.%20Revolving%20Credit%20Facility) This note provides information on the company's revolving credit facility, including its amendment, commitment, and current utilization - The revolving credit facility was amended on April 10, 2025, extending its maturity date to **April 10, 2030**[27](index=27&type=chunk) - The facility provides a **$75 million** credit commitment and a **$25 million** uncommitted 'accordion' feature[27](index=27&type=chunk) - As of August 2, 2025, the Company had **no borrowings** under the credit facility and **$2.2 million** of letters of credit outstanding[30](index=30&type=chunk) [5. Impairment of Assets](index=8&type=section&id=5.%20Impairment%20of%20Assets) This note details non-cash impairment expenses related to underperforming stores, specifying the affected asset categories - Non-cash impairment expense related to underperforming stores totaled **$0.3 million** in the first half of 2025, a decrease from **$1.3 million** in the first half of 2024[31](index=31&type=chunk) - The 2025 impairment consisted of **$0.2 million** for leasehold improvements and fixtures and equipment, and **$0.1 million** for operating lease right-of-use assets[31](index=31&type=chunk) [6. Income Taxes](index=8&type=section&id=6.%20Income%20Taxes) This note explains the company's income tax accounting, deferred tax assets, valuation allowance, and the impact of recent tax law changes - Income taxes are accounted for under the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[32](index=32&type=chunk) - A valuation allowance is maintained due to sufficient negative evidence regarding the realizability of deferred tax assets[35](index=35&type=chunk) - The 'One Big Beautiful Bill Act,' signed July 4, 2025, includes changes to federal tax law allowing more favorable deductibility of certain business expenses starting in 2025, which the Company expects to utilize[36](index=36&type=chunk) [7. Commitments and Contingencies](index=10&type=section&id=7.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal proceedings and management's assessment of their potential financial impact - The Company is from time to time involved in various legal proceedings incidental to the conduct of its business[37](index=37&type=chunk) - Management is not aware of any legal proceedings pending or threatened that are expected to have a material adverse effect on the Company's financial condition, results of operations, or liquidity[38](index=38&type=chunk) [8. Stock Repurchases](index=10&type=section&id=8.%20Stock%20Repurchases) This note provides details on stock repurchase activities and the remaining authorization under the company's repurchase program Stock Repurchases (Twenty-Six Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Total number of shares purchased | 251 | — | | Total investment (in thousands) | $6,315 | — | - As of August 2, 2025, **$40.0 million** remained available under the Company's stock repurchase authorization[40](index=40&type=chunk) [9. Recent Accounting Pronouncements](index=10&type=section&id=9.%20Recent%20Accounting%20Pronouncements) This note discusses recently issued accounting standards and the company's ongoing evaluation of their potential impact on financial reporting - ASU 2023-09, 'Improvement to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, requires additional income tax rate reconciliations and taxes paid disclosures[41](index=41&type=chunk) - ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, requires disaggregation of certain income statement expenses[42](index=42&type=chunk) - The Company is currently evaluating the impact of both new standards on its consolidated financial statements and related disclosures[41](index=41&type=chunk)[42](index=42&type=chunk) [10. Revenue](index=12&type=section&id=10.%20Revenue) This note describes the company's primary revenue sources, recognition policies, and disaggregation of net sales by product division - The Company's primary revenue source is from the sale of clothing and accessories, with performance obligations satisfied immediately upon customer payment and merchandise receipt[44](index=44&type=chunk) - Revenue from layaway sales is recognized when merchandise is paid for and control is transferred to the customer[44](index=44&type=chunk) Revenue Disaggregation by Division (Thirteen Weeks Ended August 2, 2025) | Division | Percentage of Net Sales | | :---------------- | :---------------------- | | Womens | 27 % | | Kids | 22 % | | Mens | 18 % | | Accessories & Beauty | 17 % | | Home & Lifestyle | 9 % | | Footwear | 7 % | [11. Leases](index=12&type=section&id=11.%20Leases) This note details the company's lease arrangements for retail stores, distribution centers, and equipment, including lease costs and liabilities - The Company leases its retail store locations, distribution centers, and certain office space and equipment, typically for **five-year terms** with extension options[49](index=49&type=chunk) Total Lease Cost (Thirteen Weeks Ended) | Lease Cost Type | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $15,219 | $14,400 | | Variable lease cost | $3,205 | $3,541 | | Short term lease cost | $422 | $381 | | **Total lease cost** | **$18,846** | **$18,322** | - Total present value of lease liabilities as of August 2, 2025, was **$217,489 thousand**, with **$36,175 thousand** due in the remainder of 2025[52](index=52&type=chunk) [12. Segment Reporting](index=13&type=section&id=12.%20Segment%20Reporting) This note clarifies that the company operates as a single reportable segment, with the CEO managing resources and assessing performance on a consolidated basis - The Company operates as a single reportable segment, an off-price value retailer of fashion apparel, accessories, and home trends primarily for African American families[54](index=54&type=chunk) - The Chief Executive Officer, as the chief operating decision maker (CODM), manages and allocates resources on a consolidated basis and assesses performance based on consolidated net income (loss)[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, economic uncertainties, and strategic capital allocation. It details the financial performance for the thirteen and twenty-six weeks ended August 2, 2025, compared to the prior year, and discusses liquidity, capital resources, and critical accounting policies [Forward-Looking Statements](index=14&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future performance, subject to various risks and uncertainties that may cause actual results to differ - This section contains forward-looking statements regarding future revenues, expenditures, plans, and economic performance, which are subject to risks, uncertainties, and other factors[57](index=57&type=chunk) - Factors that may cause actual results to differ include general economic conditions, inflation, energy and fuel costs, unemployment, tariffs, natural disasters, and supply chain disruptions[58](index=58&type=chunk) [Executive Overview](index=15&type=section&id=Executive%20Overview) This overview describes Citi Trends as an off-price value retailer serving African American families, detailing its product mix and store operations - Citi Trends is an off-price value retailer known for trendy fashions, great brands, and competitive prices, primarily serving African American families in the United States[61](index=61&type=chunk) - The Company curates a three-tiered product mix including well-known brands, core products, and opening price goods, often featuring 'extreme value' deals[61](index=61&type=chunk) - As of August 2, 2025, the Company operated **590 stores** in urban, suburban, and rural markets across 33 states[62](index=62&type=chunk) [Uncertainties and Challenges](index=15&type=section&id=Uncertainties%20and%20Challenges) This section discusses economic conditions, including inflation and tariffs, and the seasonal nature of the business that may impact operations - Operations are expected to continue being influenced by general economic conditions, including ongoing inflationary pressures, new tariff programs, and changes in consumer sentiment[63](index=63&type=chunk) - The business is seasonal, with historically higher sales in the first and fourth quarters, and store traffic is influenced by weather patterns[64](index=64&type=chunk) [Basis of Presentation](index=15&type=section&id=Basis%20of%20Presentation) This section defines key financial statement components, including net sales, cost of sales, and selling, general, and administrative expenses - Net sales consist of store sales and layaway fees, net of customer returns[65](index=65&type=chunk) - Cost of sales includes the cost of products sold and associated freight costs, excluding depreciation[65](index=65&type=chunk) - Selling, general and administrative expenses comprise store costs (payroll, occupancy), corporate and distribution center costs, and advertising[65](index=65&type=chunk) [Results of Operations](index=15&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, cost of sales, and net income (loss), for the reported periods [Thirteen Weeks Ended August 2, 2025 and August 3, 2024](index=17&type=section&id=Thirteen%20Weeks%20Ended%20August%202,%202025%20and%20August%203,%202024) This subsection details the financial performance for the thirteen-week period, highlighting changes in net sales, cost of sales, and net income - Net sales increased by **$14.2 million**, or **8.0%**, to **$190.8 million**, driven by a **9.2% increase** in comparable store sales[72](index=72&type=chunk) - Cost of sales as a percentage of sales decreased by **890 basis points** to **60.0%**, primarily due to a **580 basis points decrease** in markdowns and a **190 basis points decrease** in shrink[73](index=73&type=chunk) - The Company reported a net income of **$3.8 million**, a significant improvement from a net loss of **$18.4 million** in the prior year, partly due to an **$11.0 million gain** on the sale of a corporate office building[77](index=77&type=chunk)[78](index=78&type=chunk) [Twenty-Six Weeks Ended August 2, 2025 and August 3, 2024](index=18&type=section&id=Twenty-Six%20Weeks%20Ended%20August%202,%202025%20and%20August%203,%202024) This subsection details the financial performance for the twenty-six-week period, highlighting changes in net sales, cost of sales, and net income - Net sales increased by **$29.6 million**, or **8.2%**, to **$392.5 million**, with comparable store sales increasing by **9.6%**[79](index=79&type=chunk) - Cost of sales as a percentage of sales decreased by **480 basis points** to **60.2%**, primarily driven by a **250 basis points decrease** in markdowns and a **130 basis points decrease** in shrink[80](index=80&type=chunk) - The Company achieved a net income of **$4.7 million**, a substantial improvement from a net loss of **$21.8 million** in the prior year, benefiting from an **$11.0 million gain** on the sale of a corporate office building[84](index=84&type=chunk)[85](index=85&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's capital allocation strategy, cash position, inventory, capital expenditures, and cash flow activities - The capital allocation strategy prioritizes investments in profitable business growth and current operations, followed by returning excess cash to stockholders through repurchase programs[86](index=86&type=chunk) - Quarter-end cash and cash equivalents were **$50.4 million**, down from **$59.3 million** at the end of the second quarter last year[86](index=86&type=chunk) - Inventory balance was **$117.6 million**, a **12.9% decrease** compared to **$135.0 million** at the end of the second quarter last year[88](index=88&type=chunk) - Capital expenditures in the first twenty-six weeks of 2025 were **$7.7 million**, an increase of **$2.1 million** year-over-year, with fiscal 2025 projected at **$22 million to $25 million** for new stores, remodels, and systems[89](index=89&type=chunk) - Net cash used in operating activities improved to **$7.1 million** in the first twenty-six weeks of 2025 from **$14.0 million** in the same period of 2024[92](index=92&type=chunk) - Cash provided by investing activities was **$3.5 million** in the first twenty-six weeks of 2025, a reversal from cash used of **$5.6 million** in the prior year, primarily due to the sale of a building[94](index=94&type=chunk) - Cash used in financing activities increased to **$7.1 million** in the first twenty-six weeks of 2025, mainly due to **$6.3 million** in share repurchases[95](index=95&type=chunk) [Critical Accounting Policies](index=19&type=section&id=Critical%20Accounting%20Policies) This section addresses the significant estimates and assumptions made in preparing the financial statements and confirms no material changes to prior policies - The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses[97](index=97&type=chunk) - There have been no material changes to the Critical Accounting Policies outlined in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025[98](index=98&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk during the twenty-six weeks ended August 2, 2025, compared to the disclosures in its previous Annual Report on Form 10-K - No material changes in market risk were reported for the twenty-six weeks ended August 2, 2025, compared to the disclosures in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[99](index=99&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of August 2, 2025, concluding they are effective. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of August 2, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[100](index=100&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended August 2, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[102](index=102&type=chunk) [PART II - OTHER INFORMATION](index=22&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The Company is periodically involved in legal proceedings incidental to its business but is not aware of any pending or threatened matters expected to have a material adverse effect on its financial condition, results of operations, or liquidity - The Company is from time to time involved in various legal proceedings incidental to the conduct of its business[103](index=103&type=chunk) - Management is not aware of any legal proceedings pending or threatened that are expected to have a material adverse effect on the Company's financial condition, results of operations, or liquidity[103](index=103&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the Risk Factors previously described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025 - There have been no material changes to the Risk Factors described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025[104](index=104&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any shares in the second quarter of 2025, but $40.0 million remained available under its stock repurchase authorization as of August 2, 2025 - The Company did not repurchase any shares in the second quarter of 2025[105](index=105&type=chunk) - As of August 2, 2025, **$40.0 million** remained available under the Company's stock repurchase authorization[105](index=105&type=chunk) [Item 3. Defaults Upon Senior Securities](index=22&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable, indicating no defaults upon senior securities - This item is marked as 'Not applicable'[106](index=106&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable, indicating no mine safety disclosures are required - This item is marked as 'Not applicable'[107](index=107&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) This item is marked as not applicable, indicating no other information to report - This item is marked as 'Not applicable'[108](index=108&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, incentive plans, award agreements, and certifications from executive officers - Exhibits include corporate organizational documents (Certificate of Incorporation, Bylaws), incentive plans (2021 Incentive Plan), and related award agreements[112](index=112&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial Officer, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included[112](index=112&type=chunk) - Inline XBRL Document Sets for the condensed consolidated financial statements and the cover page are also filed[112](index=112&type=chunk) [SIGNATURES](index=24&type=section&id=SIGNATURES) This section contains the official signature of the registrant, Citi Trends, Inc., by its Chief Financial Officer, Heather Plutino, certifying the filing of the report - The report was signed on September 10, 2025, by Heather Plutino, Chief Financial Officer of Citi Trends, Inc[116](index=116&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, the company reported sales of $190.8 million, an 8% increase compared to Q2 2024, with comparable store sales growth of 9.2%, marking the fourth consecutive quarter of mid to high single-digit comp sales growth [19][20][28] - The gross margin rate for Q2 was 40%, the highest since fiscal 2021, with an 890 basis point expansion year-over-year [20][21] - Adjusted EBITDA for the quarter was a loss of $2.6 million, but an increase of $14.6 million compared to Q2 2024 [22][23] - Total inventory dollars decreased by 12.9% year-over-year, with average in-store inventory down 5.7% [25] Business Line Data and Key Metrics Changes - The product performance in Q2 was broad-based across categories, with strong responses in women's plus and big men's apparel, as well as children's categories [9][10][12] - Transaction growth accounted for the majority of sales gains, with improvements in units per transaction while maintaining stable average unit retails [8][19] - The company is focusing on enhancing its product assortments, including a three-tiered strategy of good, better, and best products, with early success in women's plus and big men's sizes [10][11] Market Data and Key Metrics Changes - The company experienced consistent results across climate zones, regions, and store volume deciles, indicating broad-based improvement [8][19] - The focus on neighborhood-based locations continues to drive traffic, with a strong emphasis on cultural relevance in product assortments [8][9] Company Strategy and Development Direction - The company is undergoing a transformation guided by a three-phase framework: Repair, Execute, and Optimize, aimed at delivering sustainable profitable growth [5][6] - Future plans include remodeling approximately 50 stores per year and expanding square footage in the mid-single-digit range, with a goal of achieving $40 million or more in EBITDA by 2027 [30][31] - The company is implementing AI-based allocation systems to improve inventory management and sales accuracy [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, noting that the macroeconomic environment remains uncertain but the company is well-positioned for continued growth [26][27] - The outlook for full-year comparable store sales growth has been updated to mid to high single digits, with expected gross margin expansion of approximately 210 to 230 basis points [27][28] Other Important Information - The company sold a 72,000 square foot building in Savannah, Georgia, realizing a gain of approximately $11 million [23] - The company plans to remodel approximately 60 locations in the year and expects to open three new stores while closing three [28] Q&A Session Summary Question: Discussion on expenses and incentive compensation - The average SG&A expense is expected to be around $78 million per quarter, with a slight increase in Q4 due to holiday sales [35][36] Question: Incremental margin flow through on sales - The goal is a 20% to 25% EBITDA flow through on incremental sales, with expectations of around 25% in the back half of 2025 [37] Question: Insights from the new trend director - The trend director is focused on interpreting consumer voice and translating it into tangible styles and trends, which is expected to enhance product curation [38][39] Question: Sustained momentum in Q3 - Sustained momentum is driven by refined preseason planning, better execution, and improved product assortment, including branded deals [45][46] Question: Store remodels and new store economics - Remodel expenses average between $85,000 and $130,000 per location, with expected sales lifts varying by market [59][60] Question: Supply chain initiatives - The company has made progress in optimizing the supply chain, with expectations for further improvements as new systems are implemented [64][66]

Financial Data and Key Metrics Changes - In Q2 2025, Citi Trends reported sales of $190.8 million, an 8% increase compared to Q2 2024, with comparable store sales growth of 9.2%, marking the fourth consecutive quarter of mid to high single-digit comp sales growth [19][25] - The gross margin rate for Q2 was 40%, the highest since fiscal 2021, with an 890 basis point expansion year-over-year [20] - Adjusted EBITDA for the quarter was a loss of $2.6 million, but an increase of $14.6 million compared to Q2 2024 [22] Business Line Data and Key Metrics Changes - The product performance was broad-based across categories, with strong sales in women's plus and big men's apparel, as well as children's categories [10][11] - Transaction growth accounted for the majority of sales gains, with improvements in units per transaction while maintaining stable average unit retails [8][10] Market Data and Key Metrics Changes - The company experienced consistent results across climate zones, regions, and store volume deciles, indicating broad-based improvement [8][19] - Year-to-date comparable store sales growth was reported at 9.6%, with a two-year comp stack of 10.3% [23] Company Strategy and Development Direction - Citi Trends is focused on a three-phase transformation strategy: Repair, Execute, and Optimize, aimed at delivering sustainable profitable growth [5] - The company plans to remodel approximately 50 stores per year and expand square footage in the mid-single-digit range, with a goal of achieving $40 million or more in EBITDA by 2027 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, noting that the macroeconomic environment remains uncertain but sales momentum has continued into Q3 [25][31] - The company is navigating the changing tariff landscape successfully and is focused on maintaining flexibility and liquidity [17] Other Important Information - Total inventory dollars at quarter-end decreased by 12.9% compared to last year, with average in-store inventory down 5.7% [24] - The company has no debt and maintains a strong balance sheet with $50 million in cash [25] Q&A Session Summary Question: Discussion on expenses and incentive compensation - Management confirmed that SG&A expenses are expected to average around $78 million per quarter in the back half of the year, with a slight increase in Q4 due to holiday sales [34][35] Question: Incremental margin flow-through on sales - The goal is to achieve a 20% to 25% EBITDA flow-through on incremental sales, with expectations of around 25% in the back half of 2025 [36] Question: Insights from the new trend director - The trend director has focused on interpreting consumer voice and translating it into tangible styles and trends, leading to better product curation [37][38] Question: Sustained momentum in Q3 - Management indicated that sustained momentum is driven by refined preseason planning, thoughtful category reviews, and improved execution in stores [42][45] Question: Store remodels and new store economics - The average remodel cost is between $85,000 and $130,000, with expected sales lifts varying by market [56][59]

Financial Data and Key Metrics Changes - In Q2 2025, Citi Trends reported sales of $190.8 million, an 8% increase compared to Q2 2024, with comparable store sales growth of 9.2%, marking the fourth consecutive quarter of mid to high single-digit comp sales growth [19][25] - The gross margin rate for Q2 was 40%, the highest since fiscal 2021, with an 890 basis point expansion year-over-year [20] - Adjusted EBITDA for the quarter was a loss of $2.6 million, but an increase of $14.6 million compared to Q2 2024 [22] Business Line Data and Key Metrics Changes - The product performance was broad-based across categories, with strong sales in women's plus and big men's apparel, as well as children's categories [10][11] - Transaction growth accounted for the majority of sales gains, with improvements in units per transaction while maintaining stable average unit retails [8][10] Market Data and Key Metrics Changes - The company experienced consistent results across climate zones, regions, and store volume deciles, indicating broad-based improvement [8][19] - Year-to-date comparable store sales growth was reported at 9.6%, with a two-year comp stack of 10.3% [23] Company Strategy and Development Direction - Citi Trends is focused on a three-phase transformation strategy: Repair, Execute, and Optimize, aimed at delivering sustainable profitable growth [5] - The company plans to remodel approximately 50 stores per year and expand square footage in the mid-single-digit range, with a goal of achieving $40 million or more in EBITDA by 2027 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, noting that the macroeconomic environment remains uncertain but sales momentum has continued into Q3 [25][31] - The company expects full-year comparable store sales growth to be in the mid to high single digits, an increase from previous guidance [26] Other Important Information - The company sold a 72,000 square foot building in Savannah, Georgia, realizing a gain of approximately $11 million [22] - Total inventory dollars at quarter-end decreased by 12.9% compared to last year, reflecting improved inventory efficiency [24] Q&A Session Summary Question: Discussion on expenses and incentive compensation - Management confirmed that SG&A expenses are expected to average around $78 million per quarter in the back half of the year, with a slight increase in Q4 due to holiday sales [34][35] Question: Incremental margin flow-through on sales - The goal is to achieve a 20% to 25% EBITDA flow-through on incremental sales, with expectations of around 25% in the back half of 2025 [36] Question: Insights from the new trend director - The trend director has focused on interpreting consumer preferences and translating them into tangible styles, leading to improved product curation [38][39] Question: Sustained momentum in Q3 - Management indicated that sustained momentum is driven by refined preseason planning, better execution, and a more curated product assortment [42][45] Question: Store remodels and new store economics - The average remodel cost is between $85,000 and $130,000, with expected sales lifts varying by market [56][59]

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) Citi Trends reported strong Q2 FY2025 results with increased sales and gross margin, driven by strategic initiatives focused on its core customer base and product assortments [Second Quarter Fiscal 2025 Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Highlights) Citi Trends reported strong second-quarter fiscal 2025 results, with total sales increasing 8.0% to $190.8 million and comparable store sales growing 9.2% Second Quarter Fiscal 2025 Key Financial Highlights | Metric | Q2 2025 | Change vs. Q2 2024 | | :-------------------------- | :---------- | :------------------- | | Total sales | $190.8 million | +8.0% | | Comparable store sales growth | 9.2% | N/A | | Gross Margin rate | 40.0% | +890 basis points | | Net income | $3.8 million | Improved from $(18.4) million loss | | Adjusted net loss* | $(6.8) million | Improved from $(16.2) million loss | | Adjusted EBITDA* loss | $(2.6) million | Improved from $(17.2) million loss | | Stores remodeled | 19 | N/A | | Stores closed | 1 | N/A | | Total store locations | 590 | N/A | | Cash at quarter-end | $50.4 million | N/A | | Merchandise inventory | $117.6 million | -12.9% | | Average store inventory | N/A | -5.7% | [CEO Comments & Strategic Initiatives](index=1&type=section&id=CEO%20Comments%20%26%20Strategic%20Initiatives) CEO Ken Seipel highlighted the fourth consecutive quarter of strong comparable sales growth, driven by increased customer traffic and transactions and a strategic focus on core customers and product assortments - Achieved fourth consecutive quarter and 12 straight months of consistent comparable sales gains, with **Q2 comps up 9.2%** and **year-to-date comps up 9.6%**[3](index=3&type=chunk) - Sales growth primarily driven by increased customer traffic and transactions, resulting from a focus on the core African American customer base, improved three-tiered product assortments, compelling extreme-value deals, and trend-leading merchandise[4](index=4&type=chunk) - Strategic framework, 'Repair, Execute, and Optimize,' continues to position Citi Trends for sustainable, profitable growth and market share capture[5](index=5&type=chunk) [About Citi Trends](index=3&type=section&id=About%20Citi%20Trends) Citi Trends, Inc. is an off-price value retailer specializing in apparel, accessories, and home trends, primarily serving African American families across 590 stores in 33 states - Citi Trends is a leading off-price value retailer of apparel, accessories, and home trends[14](index=14&type=chunk) - Primarily serves African American families in the United States[14](index=14&type=chunk) - Operates **590 stores** across **33 states**[14](index=14&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) The company demonstrated a significant financial turnaround in Q2 and year-to-date fiscal 2025, achieving net income and improved EBITDA driven by sales growth and gross margin expansion [Second Quarter Fiscal 2025 Financial Results](index=4&type=section&id=Second%20Quarter%20Fiscal%202025%20Financial%20Results) The second quarter of fiscal 2025 saw a significant turnaround in profitability, with net sales increasing to $190.8 million and the company reporting a net income of $3.8 million, a substantial improvement from a net loss in Q2 2024 [Condensed Consolidated Statements of Operations (Q2)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Q2%29) The condensed consolidated statements of operations show net sales of $190.8 million, a gross margin of 40.0%, and a net income of $3.8 million for Q2 2025, with basic EPS significantly improving to $0.48 Second Quarter Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Q2 2023 | | :----------------------------------- | :------ | :------ | :------ | | Net sales | $190,750 | $176,552 | $173,554 | | Cost of sales | $(114,477) | $(121,624) | $(107,226) | | Selling, general and administrative expenses | $(78,905) | $(73,780) | $(69,543) | | Depreciation | $(4,548) | $(4,782) | $(4,708) | | Asset impairment | $(263) | $(1,261) | — | | Gain on sale of building | $10,960 | — | — | | Income (loss) from operations | $3,517 | $(24,895) | $(7,923) | | Interest income | $389 | $611 | $887 | | Interest expense | $(88) | $(80) | $(77) | | Income (loss) before income taxes | $3,818 | $(24,364) | $(7,113) | | Income tax expense | — | $5,951 | $2,081 | | Net income (loss) | $3,818 | $(18,413) | $(5,032) | | Basic net income (loss) per common share | $0.48 | $(2.21) | $(0.61) | | Diluted net income (loss) per common share | $0.46 | $(2.21) | $(0.61) | | Basic weighted average shares outstanding | 8,033 | 8,337 | 8,225 | | Diluted weighted average shares outstanding | 8,314 | 8,337 | 8,225 | [Condensed Consolidated Balance Sheets (Q2 End)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Q2%20End%29) As of August 2, 2025, Citi Trends reported total assets of $457.4 million and total liabilities of $344.2 million, with cash at $50.4 million and inventory decreasing by 12.9% year-over-year Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Cash and cash equivalents | $50,397 | $59,302 | | Inventory | $117,566 | $134,996 | | Prepaid and other current assets | $21,241 | $20,818 | | Property and equipment, net | $50,522 | $51,702 | | Operating lease right of use assets | $216,420 | $225,278 | | Deferred tax assets | — | $13,715 | | Other noncurrent assets | $1,262 | $920 | | **Total assets** | **$457,408** | **$506,731** | | Accounts payable | $96,245 | $110,540 | | Current operating lease liabilities | $43,344 | $49,071 | | Accrued liabilities | $26,457 | $24,780 | | Other current liabilities | $1,330 | $1,092 | | Noncurrent operating lease liabilities | $174,145 | $182,869 | | Other noncurrent liabilities | $2,647 | $1,789 | | **Total liabilities** | **$344,168** | **$370,141** | | **Total stockholders' equity** | **$113,240** | **$136,590** | | **Total liabilities and stockholders' equity** | **$457,408** | **$506,731** | [Year-to-Date (26 Weeks) Fiscal 2025 Financial Results](index=2&type=section&id=Year-to-Date%20%2826%20Weeks%29%20Fiscal%202025%20Financial%20Results) For the 26 weeks ended August 2, 2025, total sales increased by 8.2% to $392.5 million, with comparable store sales up 9.6%, resulting in a net income of $4.7 million and positive adjusted EBITDA [Key Financial Metrics (YTD)](index=2&type=section&id=Key%20Financial%20Metrics%20%28YTD%29) Year-to-date, Citi Trends achieved total sales of $392.5 million and comparable store sales growth of 9.6%, with net income of $4.7 million and adjusted EBITDA improving significantly to $2.8 million Year-to-Date (26 Weeks) Key Financial Metrics | Metric | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Total sales | $392.5 million | $362.9 million | +8.2% | | Comparable store sales | +9.6% | N/A | N/A | | Comparable store sales (two-year basis) | +10.3% | N/A | N/A | | Net income | $4.7 million | $(21.8) million | Improved | | Adjusted net loss* | $(5.4) million | $(18.9) million | Improved | | Adjusted EBITDA* | $2.8 million | $(18.0) million | Improved | - Adjusted EBITDA* improvement to last year driven by higher sales, **480 basis point increase in gross margin rate** and **90 basis points of SG&A leverage**, including the impact of higher incentive compensation accruals[13](index=13&type=chunk) [Fiscal 2025 Outlook](index=2&type=section&id=Fiscal%202025%20Outlook) Citi Trends has raised its fiscal 2025 guidance, now expecting mid to high-single digit comparable store sales growth, gross margin expansion, and full-year EBITDA between $7 million and $11 million Fiscal 2025 Outlook (Updated Guidance) | Metric | Updated Outlook | Previous Outlook | Change | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----- | | Comparable store sales growth | Mid to high-single digits | Mid-single digit | Raised | | Full year gross margin expansion | Approx. 210 to 230 basis points vs. 2024 | Slightly above previous | Raised | | SG&A leverage | 60 to 90 basis points vs. 2024 | Slightly better than previous | Raised | | Full year EBITDA* | $7 million to $11 million | Above previous outlook | Raised | | Effective tax rate | Approx. 0% | Consistent | Consistent | | New store openings | 3 | N/A | N/A | | Store remodels | Approx. 60 | N/A | N/A | | Store closures | 3 | N/A | N/A | | Full year capital expenditures | $22 million to $25 million | Slightly higher than previous | Raised | [Non-GAAP Financial Measures Reconciliation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides reconciliations of GAAP to non-GAAP financial measures for Q2 and year-to-date, detailing adjustments for various non-recurring items to present adjusted performance metrics [Non-GAAP Measures Disclaimer](index=2&type=section&id=Non-GAAP%20Measures%20Disclaimer) The company uses non-GAAP financial measures to evaluate operating performance and for period-to-period comparisons, providing useful information to investors, though a full reconciliation for forward-looking guidance is not provided due to prediction uncertainties - Non-GAAP financial measures are used to understand and evaluate current operating performance and to allow for period-to-period comparisons, providing useful information to investors[21](index=21&type=chunk) - A full reconciliation of forward-looking non-GAAP financial measures for 2025 guidance is not possible without unreasonable effort due to the inability to predict certain adjustment items with reasonable certainty[12](index=12&type=chunk) [Second Quarter Non-GAAP Reconciliation](index=5&type=section&id=Second%20Quarter%20Non-GAAP%20Reconciliation) This section provides the reconciliation of GAAP to non-GAAP financial measures for the second quarter of fiscal 2025 and 2024, detailing adjustments for items such as gain on sale of building, asset impairment, severance, and CEO transition expenses Second Quarter Reconciliation of Adjusted SG&A (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | SG&A | $(78,905) | $(73,780) | | Severance | $69 | — | | CEO transition expenses | — | $1,358 | | Cyber incident expenses | — | $36 | | Shareholder matters | $(30) | $271 | | **Adjusted SG&A** | **$(78,866)** | **$(72,115)** | Second Quarter Reconciliation of Adjusted Net Income (Loss) (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Net income (loss) | $3,818 | $(18,413) | | Gain on sale of building | $(10,960) | — | | Asset impairment | $263 | $1,261 | | Severance | $69 | — | | CEO transition expenses | — | $1,358 | | Cyber incident expenses | — | $36 | | Shareholder matters | $(30) | $271 | | Tax effect | — | $(715) | | **Adjusted net loss** | **$(6,840)** | **$(16,202)** | Second Quarter Reconciliation of Adjusted EBITDA (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Net income (loss) | $3,818 | $(18,413) | | Interest income | $(389) | $(611) | | Interest expense | $88 | $80 | | Income tax benefit | — | $(5,951) | | Depreciation | $4,548 | $4,782 | | Gain on sale of building | $(10,960) | — | | Asset impairment | $263 | $1,261 | | Severance | $69 | — | | CEO transition expenses | — | $1,358 | | Cyber incident expenses | — | $36 | | Shareholder matters | $(30) | $271 | | **Adjusted EBITDA** | **$(2,593)** | **$(17,187)** | [Year-to-Date Non-GAAP Reconciliation](index=6&type=section&id=Year-to-Date%20Non-GAAP%20Reconciliation) This section provides the reconciliation of GAAP to non-GAAP financial measures for the twenty-six weeks ended August 2, 2025, and August 3, 2024, detailing adjustments for items such as lease termination fees, severance, and shareholder matters Year-to-Date (26 Weeks) Reconciliation of Adjusted SG&A (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | SG&A | $(153,792) | $(147,991) | | Lease termination fee | $390 | — | | Severance | $388 | — | | Shareholder matters | $146 | $1,651 | | Cyber incident expenses | $(402) | $36 | | CEO transition expenses | — | $1,358 | | **Adjusted SG&A** | **$(153,270)** | **$(144,946)** | Year-to-Date (26 Weeks) Reconciliation of Adjusted Net Income (Loss) (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Net income (loss) | $4,689 | $(21,840) | | Gain on sale of building | $(10,960) | — | | Asset impairment | $327 | $1,261 | | Lease termination fee | $390 | — | | Severance | $388 | — | | Shareholder matters | $146 | $1,651 | | Cyber incident expenses | $(402) | $36 | | CEO transition expenses | — | $1,358 | | Tax effect | — | $(1,229) | | **Adjusted net loss** | **$(5,422)** | **$(18,763)** | Year-to-Date (26 Weeks) Reconciliation of Adjusted EBITDA (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Net income (loss) | $4,689 | $(21,840) | | Interest income | $(847) | $(1,460) | | Interest expense | $164 | $158 | | Income tax (benefit) expense | — | $(8,724) | | Depreciation | $8,918 | $9,576 | | Gain on sale of building | $(10,960) | — | | Asset impairment | $327 | $1,261 | | Lease termination fee | $390 | — | | Severance | $388 | — | | Shareholder matters | $146 | $1,651 | | Cyber incident expenses | $(402) | $36 | | CEO transition expenses | — | $1,358 | | **Adjusted EBITDA** | **$2,814** | **$(17,983)** | - Adjustments include severance and related costs from CEO transition and organizational changes[23](index=23&type=chunk), costs associated with hiring a new CEO[24](index=24&type=chunk), costs from the cyber disruption in January 2023[25](index=25&type=chunk), costs related to significant shareholder requests[26](index=26&type=chunk), and a lease termination fee for a store closure[27](index=27&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) This section provides details on the investor conference call, a disclaimer regarding forward-looking statements, and contact information for investor relations [Investor Conference Call and Webcast](index=2&type=section&id=Investor%20Conference%20Call%20and%20Webcast) Citi Trends hosted a conference call and webcast on August 26, 2025, to discuss its results, with replays available online and via phone, noting that previously undisclosed information might be discussed - A live broadcast of the conference call was available online at cititrends.com under the Investor Relations section, starting August 26, 2025, at 9:00 a.m. ET[9](index=9&type=chunk) - The live conference call could also be accessed by dialing (877) 407-0779, with a replay available until September 2, 2025, by dialing (844) 512-2921 and entering passcode 13754572[10](index=10&type=chunk) - The company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end, which may contain or constitute previously undisclosed information[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains a standard disclaimer that all non-historical statements are forward-looking and subject to material risks and uncertainties, including general economic conditions, market interest rates, and supply chain issues - All statements other than historical facts, including future financial results, business policy, plans, objectives, and capital allocation expectations, are forward-looking statements subject to material risks and uncertainties[15](index=15&type=chunk) - Risks and uncertainties include general economic conditions (inflation, energy/fuel costs, unemployment), changes in market interest rates and wages, new taxes/tariffs, trade restrictions, natural disasters, pandemics, transportation delays, ability to attract/retain workers, inventory management, fashion trends, consumer confidence, competition, and cybersecurity[15](index=15&type=chunk) [Contact Information](index=3&type=section&id=Contact%20Information) Investor relations contact information is provided for inquiries - Contact for investor relations: Tom Filandro, ICR, Inc., via email at CitiTrendsIR@icrinc.com[16](index=16&type=chunk)

PART I - FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and management's discussion for the first quarter of fiscal 2025 [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Citi Trends, Inc., including the balance sheets, statements of operations, cash flows, and stockholders' equity, along with detailed notes explaining significant accounting policies, financial instruments, and other relevant disclosures for the period ended May 3, 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the Company's financial position, including assets, liabilities, and equity, as of May 3, 2025, and February 1, 2025 Condensed Consolidated Balance Sheets (in thousands) | Metric | May 3, 2025 | February 1, 2025 | | :-------------------------------- | :---------- | :--------------- | | Cash and cash equivalents | $41,556 | $61,085 | | Inventory | $109,931 | $122,640 | | Total current assets | $168,603 | $197,060 | | Total assets | $437,408 | $462,769 | | Total current liabilities | $150,472 | $174,391 | | Total liabilities | $328,849 | $349,593 | | Total stockholders' equity | $108,559 | $113,176 | - Total assets decreased by **$25.36 million** from February 1, 2025, to May 3, 2025, primarily driven by decreases in cash and cash equivalents and inventory[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the Company's revenues, expenses, and net income or loss for the thirteen weeks ended May 3, 2025, and May 4, 2024 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $201,728 | $186,289 | | Cost of sales (exclusive of depreciation) | $(121,918) | $(114,254) | | Selling, general and administrative expenses | $(74,887) | $(74,211) | | Income (loss) from operations | $489 | $(6,969) | | Net income (loss) | $871 | $(3,426) | | Basic net income (loss) per common share | $0.11 | $(0.42) | | Diluted net income (loss) per common share | $0.11 | $(0.42) | - Net sales increased by **8.3% year-over-year**, from **$186.3 million** in Q1 2024 to **$201.7 million** in Q1 2025[10](index=10&type=chunk) - The company reported a net income of **$0.9 million** (**$0.11 EPS**) in Q1 2025, a significant improvement from a net loss of **$3.4 million** (**$(0.42) EPS**) in Q1 2024[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines the cash inflows and outflows from operating, investing, and financing activities for the thirteen weeks ended May 3, 2025, and May 4, 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(10,969) | $(19,614) |\n| Net cash used in investing activities | $(2,104) | $(1,590) |\n| Net cash used in financing activities | $(6,456) | $(333) |\n| Net decrease in cash and cash equivalents | $(19,529) | $(21,537) |\n| Cash and cash equivalents, end of period | $41,556 | $58,169 | - Net cash used in operating activities decreased from **$19.6 million** in Q1 2024 to **$11.0 million** in Q1 2025, primarily due to improved net income and inventory management[13](index=13&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - Cash used in financing activities significantly increased to **$6.5 million** in Q1 2025, mainly due to **$6.3 million** in common stock repurchases, compared to **$0.3 million** in Q1 2024[13](index=13&type=chunk)[76](index=76&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Shows changes in the Company's equity, including stock repurchases and net income, for the thirteen weeks ended May 3, 2025, and May 4, 2024 Changes in Stockholders' Equity (in thousands, except share amounts) | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Balances — Beginning of Period | $113,176 | $157,706 |\n| Stock-based compensation expense | $968 | $884 |\n| Repurchase of common stock | $(6,315) | — |\n| Net income (loss) | $871 | $(3,426) |\n| Balances — End of Period | $108,559 | $154,832 | - Total stockholders' equity decreased from **$113.2 million** at February 1, 2025, to **$108.6 million** at May 3, 2025, primarily due to **$6.3 million** in common stock repurchases, partially offset by net income[14](index=14&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of significant accounting policies, financial instruments, and other disclosures supporting the financial statements [1. Significant Accounting Policies](index=8&type=section&id=1.%20Significant%20Accounting%20Policies) Outlines the Company's operational context and key accounting principles applied in preparing the financial statements - Citi Trends, Inc. operates **591 stores** across **33 states** as an off-price value retailer primarily for African American families[16](index=16&type=chunk)[51](index=51&type=chunk) - The financial statements are prepared in accordance with U.S. GAAP for interim reporting and are unaudited, with results for Q1 2025 not necessarily indicative of the full fiscal year due to seasonality and economic uncertainty[17](index=17&type=chunk) - As of May 3, 2025, the Company had **$0.2 million** of assets classified as held for sale[20](index=20&type=chunk) [2. Cash and Cash Equivalents/Concentration of Credit Risk](index=8&type=section&id=2.%20Cash%20and%20Cash%20Equivalents/Concentration%20of%20Credit%20Risk) Describes the Company's policies for managing cash, cash equivalents, and associated credit risk - Cash equivalents include highly liquid investments with maturities of three months or less at purchase date[21](index=21&type=chunk) - The Company places cash and cash equivalents in high credit quality banks and institutional money market funds, maintaining accounts that may exceed federally insured limits[21](index=21&type=chunk) [3. Earnings per Share](index=8&type=section&id=3.%20Earnings%20per%20Share) Details the calculation of basic and diluted earnings per common share for the reporting periods Weighted Average Shares Outstanding (Thirteen Weeks Ended) | Metric | May 3, 2025 | May 4, 2024 | | :---------------------------------------------------------------- | :---------- | :---------- | | Weighted average number of common shares outstanding (basic) | 8,033,623 | 8,252,556 |\n| Incremental shares from assumed vesting of nonvested restricted stock | 136,833 | — |\n| Weighted average number of common shares and common stock equivalents outstanding (diluted) | 8,170,456 | 8,252,556 | - For Q1 2024, **272,000 shares** of nonvested restricted stock were excluded from diluted EPS calculation due to antidilution[25](index=25&type=chunk) [4. Revolving Credit Facility](index=10&type=section&id=4.%20Revolving%20Credit%20Facility) Explains the terms and status of the Company's revolving credit facility, including its recent amendment - The credit facility was amended on April 10, 2025, extending its maturity date to April 10, 2030[26](index=26&type=chunk) - The amended facility provides a **$75 million** credit commitment and a **$25 million** uncommitted 'accordion' feature, potentially increasing the facility to **$100 million**[26](index=26&type=chunk) - As of May 3, 2025, the Company had no borrowings under the credit facility and **$2.2 million** of letters of credit outstanding[29](index=29&type=chunk) [5. Income Taxes](index=10&type=section&id=5.%20Income%20Taxes) Discusses the Company's accounting for income taxes, including deferred tax assets and valuation allowances - Income taxes are accounted for using the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[30](index=30&type=chunk) - Management maintains a valuation allowance against deferred tax assets due to sufficient negative evidence, intending to reverse it only when sufficient positive evidence exists[31](index=31&type=chunk) [6. Commitments and Contingencies](index=12&type=section&id=6.%20Commitments%20and%20Contingencies) Addresses the Company's legal proceedings and other potential future obligations - The Company is involved in various legal proceedings incidental to its business but is not aware of any expected to have a material adverse effect on its financial condition, results of operations, or liquidity[32](index=32&type=chunk)[84](index=84&type=chunk) [7. Stock Repurchases](index=12&type=section&id=7.%20Stock%20Repurchases) Provides details on the Company's common stock repurchase activities during the reporting period Stock Repurchases (Thirteen Weeks Ended) | Metric | May 3, 2025 | May 4, 2024 | | :-------------------------------- | :---------- | :---------- | | Total number of shares purchased | 251,000 | — |\n| Average price paid per share | $25.21 | — |\n| Total investment | $6,315,000 | — | - As of May 3, 2025, **$40.0 million** remained available under the Company's stock repurchase authorization[33](index=33&type=chunk) [8. Recent Accounting Pronouncements](index=12&type=section&id=8.%20Recent%20Accounting%20Pronouncements) Summarizes new accounting standards and their potential impact on the Company's financial statements - ASU 2023-09, 'Improvement to Income Tax Disclosures,' effective for annual periods after December 15, 2024, requires additional disclosures for income tax rate reconciliations and taxes paid[34](index=34&type=chunk) - ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years after December 15, 2026, requires public entities to disaggregate certain income statement expenses into specified categories[35](index=35&type=chunk) - The Company is currently evaluating the impact of both ASU 2023-09 and ASU 2024-03 on its financial statements and disclosures[34](index=34&type=chunk)[35](index=35&type=chunk) [9. Revenue](index=12&type=section&id=9.%20Revenue) Explains the Company's revenue recognition policies and provides a breakdown of net sales by product division - Revenue is primarily derived from the sale of clothing and accessories, with performance obligations satisfied immediately upon customer payment and merchandise receipt[36](index=36&type=chunk) - Revenue from layaway sales is recognized when merchandise is paid for and control is transferred, while gift card revenue is recognized upon redemption[36](index=36&type=chunk) Percentage of Net Sales by Division (Thirteen Weeks Ended) | Division | May 3, 2025 | May 4, 2024 | | :---------------- | :---------- | :---------- | | Womens | 28 % | 29 % |\n| Kids | 22 % | 22 % |\n| Accessories & Beauty | 17 % | 17 % |\n| Mens | 15 % | 15 % |\n| Home & Lifestyle | 11 % | 10 % |\n| Footwear | 7 % | 7 % | [10. Leases](index=13&type=section&id=10.%20Leases) Details the Company's lease arrangements, including lease costs and future minimum lease payments - The Company leases retail store locations, distribution centers, and office space, typically with five-year terms and extension options[40](index=40&type=chunk) Total Lease Cost (in thousands, Thirteen Weeks Ended) | Lease Type | May 3, 2025 | May 4, 2024 | | :---------------- | :---------- | :---------- | | Operating lease cost | $15,167 | $15,391 |\n| Variable lease cost | $2,610 | $2,622 |\n| Short term lease cost | $576 | $712 |\n| Total lease cost | $18,353 | $18,725 | Future Minimum Lease Payments as of May 3, 2025 (in thousands) | Fiscal Year | Lease Costs | | :---------- | :---------- | | 2025 | $50,428 |\n| 2026 | $53,975 |\n| 2027 | $42,461 |\n| 2028 | $33,635 |\n| 2029 | $24,936 |\n| Thereafter | $91,553 |\n| Total future minimum lease payments | $296,988 |\n| Less: imputed interest | $(76,599) |\n| Total present value of lease liabilities | $220,389 | [11. Segment Reporting](index=14&type=section&id=11.%20Segment%20Reporting) Confirms the Company operates as a single retail segment and how its performance is managed - The Company operates as a single operating segment, an off-price value retailer of fashion apparel, accessories, and home trends[45](index=45&type=chunk) - The Chief Executive Officer, as the chief operating decision maker (CODM), manages and allocates resources on a consolidated basis, assessing performance based on consolidated net income (loss)[45](index=45&type=chunk) - All sales and assets are located within the United States[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, liquidity, and capital resources for the first quarter of fiscal 2025 compared to 2024. It highlights improved net sales and a return to net income, driven by increased comparable store sales and better cost management, while also discussing ongoing economic uncertainties and strategic capital allocation [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) Highlights the inherent uncertainties and risks associated with forward-looking information in the report - The report contains forward-looking statements regarding future revenues, expenditures, plans, and economic performance, subject to risks and uncertainties[47](index=47&type=chunk) - Factors that could cause actual results to differ include general economic conditions, inflation, tariffs, natural disasters, supply chain disruptions, and changes in consumer preferences[48](index=48&type=chunk) [Executive Overview](index=15&type=section&id=Executive%20Overview) Provides a high-level description of Citi Trends' business model, target market, and operational scope - Citi Trends is an off-price value retailer offering culturally relevant fashion, accessories, and home trends primarily for African American families[50](index=50&type=chunk) - The Company curates a three-tiered product mix: well-known brands, core trend-right products, and opening price goods, often with extreme value deals[50](index=50&type=chunk) - As of May 3, 2025, the Company operated **591 stores** across **33 states**[51](index=51&type=chunk) [Uncertainties and Challenges](index=17&type=section&id=Uncertainties%20and%20Challenges) Discusses external factors like economic conditions, inflation, and seasonality that may impact the Company's operations - Operations are expected to be influenced by general economic conditions, including ongoing inflationary pressures, new tariff programs, and changes in consumer sentiment[53](index=53&type=chunk) - The business is seasonal, with historically higher sales in the first and fourth quarters, and store traffic is influenced by weather patterns[54](index=54&type=chunk) [Basis of Presentation](index=17&type=section&id=Basis%20of%20Presentation) Defines how key financial statement line items such as net sales, cost of sales, and SG&A are presented - Net sales include store sales and layaway fees, net of returns[55](index=55&type=chunk) - Cost of sales comprises product costs and associated freight, excluding depreciation[55](index=55&type=chunk) - Selling, general and administrative expenses include store, corporate, distribution center, and advertising costs[55](index=55&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Analyzes the Company's financial performance for the first quarter, focusing on sales, costs, and profitability [Key Operating Statistics](index=17&type=section&id=Key%20Operating%20Statistics) Identifies the primary metrics used to evaluate the Company's operational performance and store productivity - Key performance measures include comparable store sales growth, average sales per store, cost of sales as a percentage of sales, and store operating expenses as a percentage of sales[58](index=58&type=chunk) - A comparable store is defined as one open for at least **14 full consecutive months** without significant closure[58](index=58&type=chunk) [Thirteen Weeks Ended May 3, 2025 and May 4, 2024](index=17&type=section&id=Thirteen%20Weeks%20Ended%20May%203,%202025%20and%20May%204,%202024) Compares the Company's financial results for the first quarter of fiscal 2025 against the same period in 2024 - Net sales increased by **$15.4 million**, or **8.3%**, to **$201.7 million** in Q1 2025, driven by a **9.9% increase** in comparable store sales[59](index=59&type=chunk) - Cost of sales as a percentage of sales decreased to **60.4%** in Q1 2025 from **61.3%** in Q1 2024, due to lower shrink and freight expenses and increased initial markup, partially offset by higher markdowns[60](index=60&type=chunk)[62](index=62&type=chunk) - Selling, general and administrative expenses decreased as a percentage of sales to **37.1%** in Q1 2025 from **39.8%** in Q1 2024, despite a **$0.7 million** increase in absolute terms[63](index=63&type=chunk) - The Company reported a net income of **$0.9 million** in Q1 2025, a significant improvement from a net loss of **$3.4 million** in Q1 2024[65](index=65&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Examines the Company's ability to generate and manage cash, including its capital allocation strategy and financing [Capital Allocation](index=19&type=section&id=Capital%20Allocation) Outlines the Company's strategy for deploying capital, prioritizing growth investments and shareholder returns - The capital allocation strategy prioritizes investments for profitable business growth and current operations, then returns excess cash to shareholders via share repurchases[66](index=66&type=chunk) - Quarter-end cash and cash equivalents were **$41.6 million**, down from **$58.2 million** at the end of Q1 2024[66](index=66&type=chunk) - Principal liquidity sources include cash on hand, short-term trade credit, cash from operations, and a **$75 million** revolving credit facility[67](index=67&type=chunk) [Inventory](index=19&type=section&id=Inventory) Discusses the Company's inventory levels and management strategies at the end of the reporting period - Quarter-end inventory was **$109.9 million**, a decrease from **$119.0 million** at the end of Q1 2024, primarily due to a strategic reduction in average in-store inventory and lower pack-and-hold inventory[68](index=68&type=chunk) [Capital Expenditures](index=19&type=section&id=Capital%20Expenditures) Details the Company's investments in property and equipment, including planned expenditures for the fiscal year - Capital expenditures in Q1 2025 were **$2.1 million**, an increase of **$0.5 million** from Q1 2024, reflecting investments in existing store remodels[69](index=69&type=chunk) - Anticipated capital expenditures for fiscal 2025 are approximately **$20 million**, mainly for opening up to **five new stores**, remodeling about **50 stores**, and technology investments[69](index=69&type=chunk) [Share Repurchases](index=19&type=section&id=Share%20Repurchases) Reports on the Company's activities in buying back its common stock during the quarter - The Company returned **$6.3 million** to shareholders through share repurchases in Q1 fiscal 2025[70](index=70&type=chunk) [Revolving Credit Facility](index=19&type=section&id=Revolving%20Credit%20Facility) Provides an update on the Company's credit facility, including its terms and current utilization - The revolving credit facility matures in April 2030, offering a **$75 million** credit commitment and a **$25 million** 'accordion' feature[71](index=71&type=chunk) - As of the end of Q1 2025, there were no borrowings under the facility, with **$2.2 million** in letters of credit outstanding[71](index=71&type=chunk) [Cash Flows](index=19&type=section&id=Cash%20Flows) Analyzes the sources and uses of cash from operating, investing, and financing activities for the quarter - Net cash used in operating activities decreased to **$11.0 million** in Q1 2025 from **$19.6 million** in Q1 2024, driven by net income and a **$12.7 million** decrease in inventory[72](index=72&type=chunk)[73](index=73&type=chunk) - Significant uses of cash in Q1 2025 operating activities included a **$21.9 million** decrease in accounts payable and a **$19.4 million** decrease in accrued expenses and other long-term liabilities[74](index=74&type=chunk) - Cash used in investing activities increased to **$2.1 million** in Q1 2025 from **$1.6 million** in Q1 2024, primarily for purchases of property and equipment[75](index=75&type=chunk) - Cash used in financing activities increased significantly to **$6.4 million** in Q1 2025, mainly due to **$6.3 million** for share repurchases[76](index=76&type=chunk) [Cash Requirements and Commitments](index=21&type=section&id=Cash%20Requirements%20and%20Commitments) Identifies the Company's significant future cash obligations, including operating leases and operational needs - Principal cash requirements include inventory purchases, capital expenditures, and operational needs (salaries, occupancy, taxes)[77](index=77&type=chunk) - As of May 3, 2025, contractual commitments for operating leases totaled **$220.4 million**, with **$50.4 million** due within **12 months**[77](index=77&type=chunk) [Critical Accounting Policies](index=21&type=section&id=Critical%20Accounting%20Policies) Reiterates the significant accounting policies requiring management's judgment and estimates - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts[78](index=78&type=chunk) - There have been no material changes to the Critical Accounting Policies outlined in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[79](index=79&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk during the thirteen weeks ended May 3, 2025, compared to the disclosures in its previous Annual Report on Form 10-K - No material changes in market risk occurred during the thirteen weeks ended May 3, 2025, compared to the disclosures in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[80](index=80&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of May 3, 2025. There were no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of May 3, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[81](index=81&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended May 3, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[83](index=83&type=chunk) PART II - OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal proceedings but does not expect any pending or threatened matters to have a material adverse effect on its financial condition, results of operations, or liquidity - The Company is not aware of any legal proceedings pending or threatened against it that are expected to have a material adverse effect on its financial condition, results of operations, or liquidity[84](index=84&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - There have been no material changes to the Risk Factors described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025[85](index=85&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchases during the first quarter of 2025, including the number of shares bought back and the average price paid, under existing board-authorized programs Common Stock Repurchases (First Quarter 2025) | Period | Total number of shares purchased | Average price paid per share | | :---------------- | :------------------------------- | :--------------------------- | | February (2/2/25 - 3/1/25) | 159,980 | $26.12 |\n| March (3/2/25 - 4/5/25) | 90,575 | $22.49 |\n| April (4/6/25 - 5/3/25) | — | $— |\n| Total | 250,555 | | - As of May 3, 2025, **$40,026,598** remained available under the Company's publicly announced stock repurchase programs, which do not have expiration dates[86](index=86&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as 'Not applicable,' indicating no defaults upon senior securities during the reporting period - This item is not applicable for the reporting period[87](index=87&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'Not applicable,' as the Company's operations do not involve mine safety disclosures - This item is not applicable for the reporting period[88](index=88&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) This item is marked as 'Not applicable,' indicating no other information requiring disclosure under this section - This item is not applicable for the reporting period[89](index=89&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, credit agreements, certifications, and XBRL documents - Exhibits include the Third Amended and Restated Certificate of Incorporation, Fourth Amended and Restated Bylaws, Amended and Restated Cooperation Agreement, and Fourth Amendment to Credit Agreement[94](index=94&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350) are included[94](index=94&type=chunk) - Inline XBRL Document Set for financial statements and cover page are also part of the exhibits[94](index=94&type=chunk) SIGNATURES Certifies the submission of the Form 10-Q by the Company's authorized officer [SIGNATURES](index=27&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, certifying its submission on behalf of Citi Trends, Inc. by its Chief Financial Officer - The report was signed on June 11, 2025, by Heather Plutino, Chief Financial Officer of Citi Trends, Inc[98](index=98&type=chunk)

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 market conditions and a belief that only a small fraction of companies are suitable for buying at any given time [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]

Financial Data and Key Metrics Changes - Total sales grew by $15.4 million or 8.3% year-over-year, reaching $201.7 million [24] - Adjusted EBITDA increased by $6.2 million, with a sales to profit flow-through of 40% [4][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, representing 36.9% of revenue, a decrease from 39.1% in the prior year [25] Business Line Data and Key Metrics Changes - Comparable store sales increased by 9.9%, with a two-year stack of 13% [24] - Strong performance across all apparel and home categories, with many categories experiencing double-digit growth [9][10] - The plus-size business showed meaningful improvement, while the accessory business was slightly below plan [10][11] Market Data and Key Metrics Changes - Sales growth was consistent across climate zones and store volumes, indicating broad-based strength [24] - Average in-store inventories decreased by approximately 5%, reflecting disciplined inventory management [13] Company Strategy and Development Direction - The company is in a three-phase strategic transformation: repair, execute, and optimize [5][8] - 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 [11][56] - Plans to open up to five new stores and remodel approximately 50 locations in the year [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan and updated the full-year outlook for comparable store sales growth to mid-single digits [28] - The company is navigating challenges related to tariffs but sees opportunities in the current market environment [21][22] - Management emphasized the importance of maintaining a focus on core customers and delivering compelling product value [34] Other Important Information - The company ended the quarter with no debt and $42 million in cash, maintaining a strong financial position [27] - A new AI-based allocation system is being tested, with plans for a full rollout following the back-to-school season [16] Q&A Session Summary Question: Can you elaborate on the merchandising and closeout strategy? - The company is focusing on both end-of-season closeouts and in-season extreme value products, aiming for a long-term goal of 10% top-line growth from extreme value offerings [38][41][44] 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 in forecasting due to macroeconomic uncertainties [46][48] Question: Can you provide insights on specific category performance? - All categories performed well in Q1, with particular emphasis on plus sizes and big men's apparel for future growth [52][56]

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]