Financial Data and Key Metrics Changes - Total sales for Q2 2023 were $173.6 million, a decrease of 6.2% compared to Q2 2022, but an 880 basis point acceleration from Q1 2023 [50][26] - Gross margin improved to 38.2%, which is above last year and 150 basis points better than Q1 2023 [17][93] - Operating loss was $7.9 million for the quarter, compared to an operating loss of $3.3 million in Q2 2022 [52] Business Line Data and Key Metrics Changes - Comp store sales decreased by 5.3% compared to last year, but showed significant improvement from Q1 [26] - Notable outperformers included footwear, ladies and men's apparel, and beauty merchandise, benefiting from inventory rebuild efforts [43] Market Data and Key Metrics Changes - The customer base primarily consists of families earning $50,000 or less annually, with many living on $25,000 per year, indicating ongoing inflationary pressures [7] - Improved traffic levels and strong conversion rates were observed, signaling positive customer response to product assortment [6][9] Company Strategy and Development Direction - The company is focused on driving comp store productivity and managing inventory to maximize margins [10][29] - Strategic initiatives include rebuilding inventory in key areas and offering a balanced assortment of price styles to appeal to value-based customers [6][8] - The upgraded ERP system is expected to enhance planning and allocation, driving long-term productivity [24][47] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of the year, anticipating modest improvement for customers despite ongoing economic pressures [40][68] - The company reiterated its guidance for the year, expecting total sales to be in the range of negative mid-single digits to negative low single digits compared to fiscal 2022 [29][53] Other Important Information - The company ended Q2 with liquidity of approximately $141 million, including $65 million in cash and no debt [8][25] - Five new stores were opened, including the first store in L.A. County, with early results being encouraging [51] Q&A Session Summary Question: How is the core customer feeling about managing inflationary pressures? - Management noted that while inflation remains a challenge, there are signs of gradual improvement in customer sentiment, particularly in apparel and footwear categories [34][60] Question: When can benefits from the ERP system be expected? - Management indicated that the ERP system will have a more significant impact in 2024, with some benefits potentially seen in Q4 2023 [36][64] Question: What is the outlook for the second half of the year given economic pressures? - Management acknowledged the impact of rising gas prices and rent but emphasized their focus on controlling internal factors to drive improvement [81] Question: How is the basket trending and what is the breakdown between AURs and units? - The basket has improved in Q2, primarily driven by an increase in units per transaction, indicating positive customer response to lower price points [82] Question: How are remodels performing compared to prior history? - The remodel program is performing well, with a mid- to high single-digit lift in sales observed post-remodel [88]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 29, 2023 OR Commission File Number 000-51315 Delaware 52-2150697 (State or other jurisdiction of (I.R.S. Employer incorpor ...

Citi Trends, Inc. (NASDAQ:CTRN) Q1 2023 Earnings Conference Call May 23, 2023 9:00 AM ET Company Participants David Makuen - Chief Executive Officer Heather Plutino - Chief Financial Officer Nitza McKee - Senior Associate, ICR IR Conference Call Participants Jeremy Hamblin - Craig-Hallum Capital Group Dana Telsey - Telsey Advisory Group John Lawrence - The Benchmark Company Operator Greetings, and welcome to the Citi Trends First Quarter 2023 Earnings Conference Call. During the presentation, all participan ...

| --- | --- | --- | --- | --- | |------------------------------------------------------------------------------|-------------------------|----------------------------|------------|---------------| | Cash paid for operating leases | 2022 \n$ 56,053 $ | Fiscal 2021 \n 56,932 | Year \n $ | 2020 \n47,075 | | Right of use assets obtained in exchange for new operating lease liabilities | $ 101,241 $ | 75,359 | $ | 60,144 | | | | | | | | Weighted average remaining lease term (years) - operating leases | 7.83 | 5.3 ...

Financial Data and Key Metrics Changes - For Q4 2022, total sales were $209.5 million, a decrease of 13.1% compared to Q4 2021 and a decrease of 0.7% compared to Q4 2019 [11] - Full-year sales for fiscal 2022 were $795 million, a decrease of 19.8% compared to the prior year but an increase of 1.7% compared to 2019 [12] - Gross margin for Q4 2022 was 39.5%, down from 40.4% in Q4 2021 and 39.7% in Q4 2019 [36] - Earnings per diluted share for Q4 2022 was $0.81, down from $1.16 in Q4 2021 [12] - The company ended the fiscal year with $104 million in cash and zero debt, indicating a strong balance sheet [5][8] Business Line Data and Key Metrics Changes - Comp sales for Q4 2022 decreased by 14.4% compared to Q4 2021, showing a sequential improvement from a 18.3% decline in Q3 [11] - Inventory at year-end decreased by 14.6% compared to 2021, with the company maintaining a disciplined approach to inventory management [13] Market Data and Key Metrics Changes - The company serves low-income African American families, with an average household income of $38,000, who are currently facing economic pressures due to inflation and reduced tax refunds [32] - The first quarter of fiscal 2023 is expected to be softer, with total sales anticipated to decline by low double digits to mid-teens compared to Q1 2022 [38] Company Strategy and Development Direction - The company plans to focus on driving comp store productivity, managing inventory, and enhancing the in-store customer experience [4][9] - Strategic priorities for 2023 include improving product assortments, controlling SG&A expenses, and executing technology enhancements [33] - The company aims to open 5 to 10 new stores and remodel 25 to 30 locations while closing underperforming stores [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2023, expecting relief for low-income customers as economic conditions improve [9][38] - The company anticipates a gradual recovery in consumer behavior, particularly in discretionary spending, as inflation eases [56] Other Important Information - The company repurchased approximately 331,000 shares at an aggregate cost of $10 million during the year, with $50 million remaining on the buyback program [13] - A ransomware incident temporarily disrupted operations but was resolved, allowing the company to restore critical systems [33] Q&A Session Summary Question: What markers are being looked at for improvement in the second half of the year? - Management indicated that driving comp store productivity and refining product assortments are key focuses, with expectations for improved trends in the second half [44] Question: Any updates on inventory levels and the CTx remodels? - Inventory levels are expected to improve, and CTx remodels are showing mid to high single-digit sales lifts compared to the base [46] Question: What is the expected contribution from the 53rd week in sales? - The growth contribution from the 53rd week is estimated to be about 150 basis points over the prior year, with negligible impact on profitability [47] Question: How has the reduction in SNAP benefits affected sales trends? - The reduction in SNAP benefits has led to lower discretionary spending among core customers, impacting sales more than the timing of tax refunds [48] Question: What is the profile of stores being closed? - Stores being closed typically do not meet sufficient sales volumes to ensure stable profitability, regardless of their location or structure [62]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 29, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 000-51315 CITI TRENDS, INC. (Exact name of registrant as specified in its charter) Delaware 52-2150697 (State or other jurisdiction of (I.R.S. Emp ...

Citi Trends, Inc. (NASDAQ:CTRN) Q3 2022 Results Conference Call November 28, 2022 9:00 AM ET Company Participants Nitza McKee - Senior Associate-ICR, LLC David Makuen - Chief Executive Officer Heather Plutino - Chief Financial Officer Conference Call Participants Jeremy Hamblin - Craig-Hallum Capital Group Chuck Grom - Gordon Haskett Dana Telsey - Telsey Advisory Group John Lawrence - Benchmark Operator Greetings and welcome to the Citi Trends 3Q 2022 Earnings Conference Call. During the presentation, all p ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 000-51315 CITI TRENDS, INC. (Exact name of registrant as specified in its charter) Delaware 52-2150697 (State or other jurisdiction of (I.R.S. Employ ...

Citi Trends, Inc. (NASDAQ:CTRN) Q2 2022 Earnings Conference Call August 24, 2022 9:00 AM ET Company Participants Nitza McKee - Senior Associate-ICR, LLC David Makuen - Chief Executive Officer Heather Plutino - Chief Financial Officer Conference Call Participants Jeremy Hamblin - Craig-Hallum Capital Group Dana Telsey - Telsey Advisory Group Chuck Grom - Gordon Haskett John Lawrence - Benchmark Operator Greetings, and welcome to the Citi Trends Second Quarter 2022 Earnings Conference Call. During the present ...

```markdown [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the Company [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. for the period ended April 30, 2022, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with accompanying notes detailing significant accounting policies, financial instruments, and other relevant disclosures [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | April 30, 2022 | January 29, 2022 | | :-------------------------------------- | :------------- | :--------------- | | **Assets** | | | | Cash and cash equivalents | $61,657 | $49,788 | | Inventory | 129,715 | 123,835 | | Total current assets | 207,726 | 192,607 | | Property and equipment, net | 68,213 | 75,282 | | Operating lease right of use assets | 241,686 | 201,827 | | Total assets | $523,228 | $474,025 | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | $87,857 | $98,879 | | Total current liabilities | 176,038 | 187,474 | | Noncurrent operating lease liabilities | 203,856 | 168,304 | | Total liabilities | 382,049 | 357,882 | | Total stockholders' equity | 141,179 | 116,143 | | Total liabilities and stockholders' equity | $523,228 | $474,025 | - Total assets increased by **$49.2 million** from January 29, 2022, to April 30, 2022, primarily driven by an increase in operating lease right-of-use assets and inventory[9](index=9&type=chunk) - Total stockholders' equity increased by **$25.0 million**, from **$116.1 million** to **$141.2 million**, reflecting net income and other equity changes[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the Company's financial performance over a period, showing revenues, expenses, and net income Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :----------------------------------- | :---------------------------------- | :------------------------------- | | Net sales | $208,215 | $285,381 | | Cost of sales (exclusive of depreciation) | (127,011) | (163,791) | | Selling, general and administrative expenses | (71,026) | (77,892) | | Depreciation | (5,445) | (4,697) | | Gain on sale-leaseback | 34,920 | — | | Income from operations | 39,653 | 39,001 | | Income before income taxes | 39,577 | 38,958 | | Income tax provision | (9,374) | (8,061) | | Net income | $30,203 | $30,897 | | Basic net income per common share | $3.59 | $3.27 | | Diluted net income per common share | $3.59 | $3.23 | - Net sales decreased by **27.0%** year-over-year, from **$285.4 million** in Q1 2021 to **$208.2 million** in Q1 2022[12](index=12&type=chunk) - Despite lower net sales, income from operations increased slightly from **$39.0 million** to **$39.7 million**, primarily due to a **$34.9 million** gain on a sale-leaseback transaction in Q1 2022[12](index=12&type=chunk) - Net income decreased marginally from **$30.9 million** in Q1 2021 to **$30.2 million** in Q1 2022[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities over a period Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :------------------------------------------ | :---------------------------------- | :------------------------------- | | Net cash (used in) provided by operating activities | $(18,879) | $61,739 | | Net cash provided by (used in) investing activities | $38,192 | $(5,745) | | Net cash used in financing activities | $(7,444) | $(47,895) | | Net increase in cash and cash equivalents | $11,869 | $8,099 | | Cash and cash equivalents, end of period | $61,657 | $131,276 | - Operating activities shifted from providing **$61.7 million** in cash in Q1 2021 to using **$18.9 million** in Q1 2022, largely due to changes in working capital and the absence of prior year's stimulus-driven demand[16](index=16&type=chunk) - Investing activities provided **$38.2 million** in Q1 2022, a significant increase from cash used in Q1 2021, primarily due to **$45.5 million** in proceeds from a sale-leaseback transaction[16](index=16&type=chunk) - Cash used in financing activities decreased substantially from **$47.9 million** in Q1 2021 to **$7.4 million** in Q1 2022, mainly due to lower common stock repurchases[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the Company's equity, including net income, stock repurchases, and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) | Metric | Balances — January 29, 2022 | Balances — April 30, 2022 | | :----------------------------------- | :-------------------------- | :------------------------ | | Common Shares | 16,090,365 | 16,159,393 | | Common Stock Amount | $159 | $159 | | Paid in Capital | $101,037 | $101,187 | | Retained Earnings | $272,158 | $302,361 | | Treasury Shares | 7,473,155 | 7,643,591 | | Treasury Stock Amount | $(257,211) | $(262,528) | | Total Stockholders' Equity | $116,143 | $141,179 | - Total stockholders' equity increased by **$25.0 million** from January 29, 2022, to April 30, 2022, primarily driven by net income of **$30.2 million**, partially offset by common stock repurchases[19](index=19&type=chunk) - The company repurchased **170,436 shares** of common stock for **$5.3 million** during the period[19](index=19&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Significant Accounting Policies](index=8&type=section&id=1.%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and methods used in preparing the financial statements - Citi Trends, Inc. is a specialty value retailer of apparel, accessories, and home trends, operating **614 stores** in **33 states** as of April 30, 2022[21](index=21&type=chunk) - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP for interim reporting, reflecting all normal and recurring adjustments[22](index=22&type=chunk) - Operating results for the first quarter are not necessarily indicative of the full fiscal year due to business seasonality, economic uncertainty, and potential COVID-19 impacts[22](index=22&type=chunk) [2. COVID-19 Pandemic](index=8&type=section&id=2.%20COVID-19%20Pandemic) This section discusses the ongoing impact of the COVID-19 pandemic on the Company's operations and financial performance - The COVID-19 pandemic continues to cause significant volatility and disruptions, particularly in fiscal 2020 and 2021, and the extent of future impact remains unpredictable[24](index=24&type=chunk) [3. Cash and Cash Equivalents/Concentration of Credit Risk](index=8&type=section&id=3.%20Cash%20and%20Cash%20Equivalents/Concentration%20of%20Credit%20Risk) This section defines cash equivalents and addresses the Company's management of credit risk related to its cash holdings - Cash equivalents include highly liquid investments with maturities of three months or less at purchase date[25](index=25&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[25](index=25&type=chunk) [4. Earnings per Share](index=8&type=section&id=4.%20Earnings%20per%20Share) This section details the calculation of basic and diluted earnings per share, including factors affecting share count - Basic EPS is calculated using the weighted average number of common shares outstanding, while diluted EPS includes potentially dilutive securities like nonvested restricted stock[26](index=26&type=chunk) - For Q1 2022, **222,000 shares** of nonvested restricted stock were excluded from diluted EPS calculation due to antidilution, compared to **38,000 shares** in Q1 2021[27](index=27&type=chunk) Weighted Average Shares Outstanding for EPS Calculation | Metric | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :-------------------------------------------------- | :---------------------------------- | :------------------------------- | | Weighted average number of common shares outstanding | 8,407,284 | 9,449,792 | | Incremental shares from assumed vesting of nonvested restricted stock | — | 121,044 | | Weighted average number of common shares and common stock equivalents outstanding | 8,407,284 | 9,570,836 | [5. Revolving Credit Facility](index=10&type=section&id=5.%20Revolving%20Credit%20Facility) This section describes the Company's revolving credit facility, its terms, and current utilization - The Company has a **$75 million** revolving credit facility, with a **$25 million** uncommitted 'accordion' feature, maturing on April 15, 2026[30](index=30&type=chunk) - As of April 30, 2022, there were no borrowings under the credit facility, and **$0.6 million** of letters of credit were outstanding[31](index=31&type=chunk) [6. Income Taxes](index=10&type=section&id=6.%20Income%20Taxes) This section explains the Company's income tax accounting policies and the effective tax rate for the period - Income taxes are accounted for using the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[32](index=32&type=chunk) - The effective income tax rate for Q1 2022 was **23.7%**, an increase from **20.7%** in Q1 2021, primarily due to a favorable tax impact from restricted stock vestings in the prior year[33](index=33&type=chunk) [7. Commitments and Contingencies](index=10&type=section&id=7.%20Commitments%20and%20Contingencies) This section discloses potential future obligations and legal matters that could impact the Company's financial position - 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[34](index=34&type=chunk) [8. Stock Repurchases](index=11&type=section&id=8.%20Stock%20Repurchases) This section details the Company's common stock repurchase activities and remaining authorization Common Stock Repurchases (in thousands, except per share data) | Metric | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :------------------------------------------ | :---------------------------------- | :------------------------------- | | Total number of shares purchased | 170 | 537 | | Average price paid per share | $31.20 | $84.60 | | Total investment | $5,317 | $45,470 | - On March 15, 2022, the board approved an additional **$30 million** stock repurchase program, leaving **$54.7 million** available under authorization as of April 30, 2022[36](index=36&type=chunk) [9. Revenue](index=11&type=section&id=9.%20Revenue) This section describes the Company's revenue recognition policies and disaggregates revenue by merchandise category - Primary revenue source is from the sale of clothing and accessories, recognized when merchandise is paid for and control is transferred to the customer[37](index=37&type=chunk) - Revenue from gift cards is recognized upon redemption, and sales taxes are excluded from revenue[37](index=37&type=chunk) Disaggregation of Revenue by Merchandise Category (Percentage of Net Sales) | Category | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :------------------- | :---------------------------------- | :------------------------------- | | Ladies | 28 % | 29 % | | Kids | 21 % | 20 % | | Accessories & Beauty | 18 % | 17 % | | Mens | 16 % | 18 % | | Home & Lifestyle | 9 % | 8 % | | Footwear | 8 % | 8 % | [10. Leases](index=11&type=section&id=10.%20Leases) This section outlines the Company's lease arrangements, including lease costs and future payment obligations - The Company leases retail store locations, office space, and equipment, typically for five-year terms with extension options[41](index=41&type=chunk) - In April 2022, the Company completed a sale-leaseback of its distribution center for **$45.5 million**, resulting in a **$34.9 million** gain and recording a new operating lease right-of-use asset and liability[43](index=43&type=chunk) Total Lease Cost (in thousands) | Lease Cost Type | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :-------------------- | :---------------------------------- | :------------------------------- | | Operating lease cost | $13,861 | $12,953 | | Variable lease cost | 2,333 | 2,981 | | Short term lease cost | 346 | 316 | | Total lease cost | $16,540 | $16,250 | Future Minimum Lease Payments as of April 30, 2022 (in thousands) | Fiscal Year | Lease Costs | | :------------------------ | :---------- | | Remainder of 2022 | $41,190 | | 2023 | 56,306 | | 2024 | 48,025 | | 2025 | 37,547 | | 2026 | 27,194 | | Thereafter | 100,676 | | Total future minimum lease payments | 310,938 | | Less: imputed interest | (60,172) | | Total present value of lease liabilities | $250,766 | [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 performance and condition for the first quarter of 2022, highlighting key operational results, liquidity, capital resources, and the impact of external factors like inflation and supply chain disruptions. It also outlines the Company's strategic initiatives and capital allocation priorities [Forward-Looking Statements](index=14&type=section&id=Forward-Looking%20Statements) This section cautions readers about statements regarding future events, which are subject to risks and uncertainties - The report contains forward-looking statements regarding future revenues, expenditures, operational plans, and economic performance, which involve risks and uncertainties[47](index=47&type=chunk) - Factors that could cause actual results to differ include general economic conditions, the ongoing COVID-19 pandemic, inflation, supply chain disruptions, competition, and changes in consumer behavior[48](index=48&type=chunk) [Executive Overview](index=14&type=section&id=Executive%20Overview) This section provides a high-level summary of Citi Trends' business model, market position, and operational scope - Citi Trends is a growing specialty value retailer of apparel, accessories, and home trends, primarily serving African American and Latinx families[50](index=50&type=chunk) - As of April 30, 2022, the Company operated **614 stores** across **33 states**, offering high-quality, trend-right merchandise at everyday low prices[50](index=50&type=chunk) [Uncertainties and Challenges](index=14&type=section&id=Uncertainties%20and%20Challenges) This section discusses key external factors and operational challenges impacting the Company, including the pandemic, inflation, and supply chain issues - The COVID-19 pandemic continues to cause significant volatility and disruptions, with unpredictable future impacts, despite recent improvements[51](index=51&type=chunk) - Inflationary pressures, particularly on food, fuel, and energy, are impacting operations and core customers, with expectations for persistence in the near term[53](index=53&type=chunk) - Supply chain disruptions, including production delays and transportation issues, have led to increased costs, prompting actions like earlier merchandise ordering and expanded direct shipping[54](index=54&type=chunk) - The business is seasonal, with higher sales in the first and fourth quarters, and sales are influenced by weather patterns[55](index=55&type=chunk) [Basis of Presentation](index=16&type=section&id=Basis%20of%20Presentation) This section clarifies how key financial metrics like net sales, cost of sales, and SG&A expenses are defined and presented - Net sales include store sales and layaway fees, net of returns. Cost of sales covers product costs and freight, excluding depreciation[56](index=56&type=chunk) - Selling, general, and administrative expenses comprise store costs (payroll, occupancy), corporate, distribution center, and advertising costs[56](index=56&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance, focusing on sales, costs, and profitability drivers for the period - The Company measures performance using comparable store sales growth and average sales per store, focusing on overall store sales volume as a key profitability driver[59](index=59&type=chunk) - Net sales decreased by **$77.2 million** (**27.0%**) to **$208.2 million** in Q1 2022, driven by a **29.2%** decrease in comparable store sales due to outsized sales in Q1 2021 (government stimulus) and current inflationary pressures[61](index=61&type=chunk) - Cost of sales as a percentage of sales increased to **61.0%** in Q1 2022 from **57.4%** in Q1 2021, primarily due to increased markdowns and deleveraging effects of lower sales[62](index=62&type=chunk) - Selling, general and administrative expenses decreased by **$6.9 million** (**8.8%**) to **$71.0 million**, mainly due to a **$5.9 million** decrease in incentive-based compensation[63](index=63&type=chunk) - A **$34.9 million** gain on a sale-leaseback transaction for the distribution center significantly impacted income from operations in Q1 2022[64](index=64&type=chunk) - Net income was **$30.2 million** in Q1 2022, a slight decrease from **$30.9 million** in Q1 2021[66](index=66&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's ability to meet short-term obligations and fund operations, including cash position, inventory, and capital expenditures - The capital allocation strategy prioritizes investments in profitable business growth and current operations, followed by returning excess cash to shareholders via repurchase programs[67](index=67&type=chunk) - Quarter-end cash and cash equivalents were **$61.7 million**, down from **$131.3 million** in the prior year[67](index=67&type=chunk) - Inventory increased to **$129.7 million** from **$101.8 million** year-over-year, due to opportunistic purchases of packaway inventory and depleted levels in the prior year[69](index=69&type=chunk)[71](index=71&type=chunk) - Capital expenditures in Q1 2022 were **$8.0 million**, an increase of **$2.1 million**, supporting new store openings, remodels, and system/distribution center upgrades. Fiscal 2022 capital expenditures are projected at **$32 million**[72](index=72&type=chunk) - Cash used in operating activities was **$18.9 million** in Q1 2022, a significant shift from **$61.7 million** provided in Q1 2021, primarily due to changes in accrued compensation, accounts payable, and inventory[75](index=75&type=chunk)[76](index=76&type=chunk) - Cash provided by investing activities was **$38.2 million** in Q1 2022, largely from **$45.5 million** in proceeds from the sale-leaseback transaction[77](index=77&type=chunk) - Cash used in financing activities decreased to **$7.4 million** in Q1 2022 from **$47.9 million** in Q1 2021, mainly due to lower share repurchases[78](index=78&type=chunk) [Critical Accounting Policies](index=20&type=section&id=Critical%20Accounting%20Policies) This section highlights accounting policies requiring significant management judgment and estimates, which could materially affect financial results - The preparation of financial statements requires management to make estimates and assumptions that affect reported asset and liability amounts, and actual results may differ[80](index=80&type=chunk)[82](index=82&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 January 29, 2022[82](index=82&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&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 April 30, 2022, compared to previous disclosures - No material changes in market risk occurred during the thirteen weeks ended April 30, 2022, compared to disclosures in the Annual Report on Form 10-K[83](index=83&type=chunk) [Item 4. Controls and Procedures](index=22&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 April 30, 2022, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely. No material changes to internal control over financial reporting occurred during the quarter - Management concluded that disclosure controls and procedures were effective as of April 30, 2022, ensuring timely and accurate reporting of information[84](index=84&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended April 30, 2022[86](index=86&type=chunk) [PART II - OTHER INFORMATION](index=22&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The Company is periodically involved in various legal proceedings incidental to its business but is not aware of any pending or threatened legal actions that are expected to have a material adverse effect on its financial condition, results of operations, or liquidity - The Company is involved in various legal proceedings but expects no material adverse effect on its financial condition, results of operations, or liquidity from any pending or threatened actions[87](index=87&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 January 29, 2022 - No material changes to the Risk Factors described in the Annual Report on Form 10-K for the fiscal year ended January 29, 2022[88](index=88&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 repurchase activities during the first quarter of 2022, including the number of shares purchased, average price paid, and the remaining authorization under its stock repurchase programs Information on Share Repurchases (in thousands, except per share data) | Period | Total number of shares purchased | Average price paid per share | Total investment | | :-------------------------------- | :------------------------------- | :--------------------------- | :--------------- | | April (4/3/22 - 4/30/22) | 170,436 | $31.20 | $5,317 | - As of April 30, 2022, **$54.7 million** remained available under the Company's stock repurchase authorization, following an additional **$30 million** program approved on March 15, 2022[36](index=36&type=chunk)[91](index=91&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report - Not applicable; no defaults upon senior securities to report[93](index=93&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company's operations - Not applicable; no mine safety disclosures are relevant to the Company[95](index=95&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report - Not applicable; no other information to report[97](index=97&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including XBRL documents, corporate governance documents, and certifications - Exhibits include Inline XBRL Document Set for financial statements and cover page, Third Amended and Restated Certificate of Incorporation, Restricted Stock Unit Award Agreement, Agreement for Purchase and Sale of Real Property, and various certifications[100](index=100&type=chunk)[102](index=102&type=chunk) [SIGNATURES](index=25&type=section&id=SIGNATURES) This section contains the required signatures, certifying the accuracy and completeness of the financial report - The report was signed on June 9, 2022, by Jason B. Moschner, Vice President of Finance, on behalf of Citi Trends, Inc[104](index=104&type=chunk)[105](index=105&type=chunk) ```