Citi Trends(CTRN) - 2026 Q2 - Quarterly Results

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