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]

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

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

Financial Data and Key Metrics Changes - The company reported a fourth quarter comparable store sales growth of 6.4%, showing sequential improvement from the third quarter and strong acceleration on a two-year basis [3][4] - Gross margin expanded compared to the previous year, indicating positive momentum in sales and profitability [4] Business Line Data and Key Metrics Changes - The strategic focus on off-price value retailing has been a key driver of the company's performance, particularly in appealing to the African American customer base [3][5] - The company is enhancing its product value proposition and expanding brand assortment, which has contributed to the positive sales momentum [5] Market Data and Key Metrics Changes - The company has seen approximately 2,000 basis points of improvement in two-year stack trends, distinguishing itself from other retailers facing softening results [7][8] Company Strategy and Development Direction - The company is focused on a refined strategy that emphasizes trendy fashions, great brands, and competitive pricing, creating a defensible market position [3][4] - Long-term EBITDA targets are set between $40 million to $50 million, with plans to improve EBITDA margins to the 5% to 7% range [5][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic initiatives and healthy balance sheet, positioning it for continued improvement into fiscal year 2025 [4] - The management highlighted the importance of operational excellence and improved allocation practices in driving the company's turnaround [5] Other Important Information - The company is developing relationships with larger brands to enhance its product offerings, particularly in footwear and apparel [10] - The operating budget is set at a low base to ensure foundational operations, with a sales plan aimed at generating approximately 25% flow-through once sales targets are met [15][16] Q&A Session Summary Question: Sales trends and industry differentiation - The analyst inquired about the company's sales trends and what differentiates it from the industry, noting a significant improvement in two-year stack trends [7] Response: Off-price strategy - Management attributed the success to the addition of off-price strategies and a sharpened price-value equation across core products [8] Question: Off-price inventory expectations - The analyst asked about the current and future state of off-price inventory [9] Response: In-season aggressive deals - Management clarified that off-price now includes more in-season aggressive deals, not just end-of-season closeouts [9] Question: Long-term EBITDA targets - The analyst sought clarity on the sales levels needed to achieve the EBITDA target of $40 million [11] Response: EBITDA margin improvement - Management indicated that improving EBITDA margins to above 5% would be essential to reach the target [11] Question: Building blocks of EBITDA increase - An analyst requested details on the components contributing to the projected EBITDA increase [15] Response: Sales growth and margin expansion - Management discussed the importance of sales growth and margin expansion, with a focus on maintaining a low base of expenses [16] Question: Clarification on comp guidance - The analyst asked if the low base of sales and SG&A was the baseline for comp guidance [17] Response: Guidance encompasses low sales base - Management confirmed that the guidance includes a low sales base to ensure expenses remain controlled [17]

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

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