Citi Trends(CTRN) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Presents unaudited condensed consolidated financial statements for Citi Trends, Inc., with notes on accounting policies and COVID-19 impact Condensed Consolidated Balance Sheets Summarizes the company's financial position, detailing assets, liabilities, and equity as of May 2, 2020, and February 1, 2020 Condensed Consolidated Balance Sheets (in thousands) | Assets/Liabilities & Equity | May 2, 2020 | Feb 1, 2020 | | :-------------------------- | :---------- | :---------- | | Assets | | | | Cash and cash equivalents | $108,130 | $19,923 | | Short-term investment securities | $5 | $27,562 | | Inventory | $121,885 | $138,258 | | Total current assets | $240,158 | $201,207 | | Total assets | $486,843 | $459,145 | | Liabilities | | | | Accounts payable | $94,249 | $79,596 | | Revolving credit facility | $43,700 | — | | Total liabilities | $343,785 | $288,101 | | Stockholders' Equity | | | | Total stockholders' equity | $143,058 | $171,044 | - Cash and cash equivalents significantly increased from $19.9 million to $108.1 million, while short-term investment securities decreased from $27.6 million to $5 thousand[10] - Total liabilities increased by $55.7 million, primarily due to a $43.7 million borrowing under the revolving credit facility[10] - Total stockholders' equity decreased by $27.9 million, from $171.0 million to $143.1 million[10] Condensed Consolidated Statements of Operations Details the company's financial performance, including net sales, expenses, and net income/loss for the thirteen weeks ended May 2, 2020, and May 4, 2019 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Thirteen Weeks Ended May 2, 2020 | Thirteen Weeks Ended May 4, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | | Net sales | $116,124 | $205,032 | | Cost of sales | $(84,370) | $(128,238) | | Selling, general and administrative expenses | $(54,076) | $(63,447) | | Depreciation | $(4,946) | $(4,614) | | Asset impairment | $(286) | — | | (Loss) Income from operations | $(27,554) | $8,733 | | Interest income | $217 | $379 | | Interest expense | $(163) | $(38) | | (Loss) Income before income taxes | $(27,500) | $9,074 | | Income tax benefit (provision) | $6,608 | $(1,286) | | Net (loss) income | $(20,892) | $7,788 | | Basic net (loss) income per common share | $(2.00) | $0.65 | | Diluted net (loss) income per common share | $(2.00) | $0.65 | - Net sales decreased by 43.4% to $116.1 million in Q1 2020 from $205.0 million in Q1 2019[13] - The company reported a net loss of $20.9 million in Q1 2020, a significant decline from a net income of $7.8 million in Q1 2019[13] - Basic and diluted EPS shifted from a positive $0.65 in Q1 2019 to a negative $2.00 in Q1 2020[13] Condensed Consolidated Statements of Cash Flows Outlines the cash inflows and outflows from operating, investing, and financing activities for the thirteen weeks ended May 2, 2020, and May 4, 2019 Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Thirteen Weeks Ended May 2, 2020 | Thirteen Weeks Ended May 4, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $12,820 | $8,897 | | Net cash provided by investing activities | $39,251 | $6,034 | | Net cash provided by (used in) financing activities | $36,136 | $(3,310) | | Net increase in cash and cash equivalents | $88,207 | $11,621 | | Cash and cash equivalents, end of period | $108,130 | $29,484 | - Net cash provided by operating activities increased to $12.8 million in Q1 2020 from $8.9 million in Q1 2019[17] - Investing activities provided $39.3 million in Q1 2020, significantly up from $6.0 million in Q1 2019, largely due to sales/redemptions of investment securities[17] - Financing activities shifted from using $3.3 million in Q1 2019 to providing $36.1 million in Q1 2020, driven by $43.7 million in borrowings under the revolving credit facility[17] Condensed Consolidated Statements of Stockholders' Equity Presents changes in stockholders' equity, including net income/loss, dividends, and stock repurchases for the thirteen weeks ended May 2, 2020, and May 4, 2019 Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) | Item | Thirteen Weeks Ended May 2, 2020 | Thirteen Weeks Ended May 4, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | | Balances — February 1, 2020 / February 2, 2019 | $171,044 | $187,425 | | Net (loss) income | $(20,892) | $7,788 | | Dividends paid to stockholders | $(831) | $(958) | | Repurchase of common stock | $(6,254) | $(1,640) | | Balances — May 2, 2020 / May 4, 2019 | $143,058 | $190,549 | - Total stockholders' equity decreased from $171.0 million at February 1, 2020, to $143.1 million at May 2, 2020, primarily due to a net loss of $20.9 million and $6.3 million in common stock repurchases[20] - The company repurchased 260,254 shares of common stock for $6.3 million during the thirteen weeks ended May 2, 2020[20] Notes to the Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the financial statements - Citi Trends, Inc. is a value-priced retailer of fashion apparel, accessories, and home goods, operating 574 stores in 33 states as of May 2, 2020[25] - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP for interim reporting, reflecting all normal and recurring adjustments[26] - The company adopted ASU 2016-13 (Financial Instruments – Credit Losses) on February 2, 2020, which did not have a material impact on its financial statements[28] 2. Impact of the COVID-19 Pandemic Discusses the adverse effects of the COVID-19 pandemic on the company's financial condition, operations, and liquidity, along with mitigation strategies - All retail stores and distribution centers were temporarily closed effective March 20, 2020, due to the COVID-19 pandemic, adversely impacting financial condition, results of operations, and liquidity[29] - Measures taken include borrowing $43.7 million from the revolving credit facility, furloughing staff, implementing salary reductions, extending vendor payment terms, abating rent, reducing operating expenses and capital expenditures, suspending share repurchases and dividends, and extending the credit facility term to August 2021[29] - The company began reopening stores on April 24, 2020, with 16 stores reopened by May 2, 20