Citi Trends(CTRN) - 2025 Q1 - Quarterly Results

First Quarter Fiscal 2024 Overview Citi Trends reported improved financial performance in Q1 Fiscal 2024, with positive sales growth and gross margin expansion, alongside a strong balance sheet with ample liquidity and no debt Key Performance Highlights Citi Trends reported improved financial performance in Q1 Fiscal 2024, with positive sales growth and gross margin expansion, alongside a strong balance sheet with ample liquidity and no debt. The company also continued its store optimization efforts Key Performance Highlights (Q1) | Metric | Q1 2024 | Q1 2023 | | :-------------------------------- | :------ | :------ | | Total Sales ($M) | $186.3 | $179.7 | | Comparable Sales Growth | 3.1% | N/A | | Gross Margin | 38.7% | 36.7% (reported) / 37.0% (adjusted) | | Operating Loss ($M) | ($7.0) | ($9.5) | | Adjusted Operating Loss ($M) | ($5.6) | ($7.9) | | Adjusted EBITDA Loss ($M) | ($0.8) | ($3.2) | | Net Loss Per Share | ($0.42) | ($0.81) | | Adjusted Net Loss Per Share | ($0.32) | ($0.66) | | Cash at Quarter-End ($M) | $58.2 | N/A | | Inventory Increase (YoY) | 4% | N/A | - Closed 3 stores and remodeled 20 stores in Q1 2024, ending the quarter with 599 locations. An additional 15 stores were remodeled in Q2 2024 to date, bringing 21% of the fleet to the CTx format[6] - The company maintains ample liquidity with $58.2 million in cash at quarter-end, no debt, and no borrowings under its $75 million credit facility[1][6] Interim Chief Executive Officer's Remarks Interim CEO Ken Seipel highlighted Q1 performance improvements, strategic initiatives for profitable growth, and financial discipline, while acknowledging the challenging economic environment and the departure of former CEO David Makuen - The company registered a 3.1% comparable sales increase and a 160 basis point gross margin expansion, aided by inventory rebuild in targeted product categories and improved in-store experiences[4] - Strategic focus areas include driving profitable sales, sharpening product assortment, streamlining costs, optimizing the supply chain, improving inventory returns, and leveraging recent technology investments[4] - The balance sheet has ample liquidity and no debt, providing flexibility to fund business opportunities, despite a challenging economic environment for lower-income consumers[4] - David Makuen stepped down as CEO on May 31, 2024, after four years of leadership, during which he shaped the company's culture through challenging consumer environments[4] About Citi Trends Citi Trends, Inc. is a prominent specialty value retailer catering primarily to African American and multicultural families in the United States, offering apparel, accessories, and home trends at competitive prices - Citi Trends is a leading specialty value retailer of apparel, accessories, and home trends[2][11] - The primary target demographic is African American and multicultural families in the United States[2][11] - The company operates 599 stores across 33 states[6][11] Financial Results - First Quarter Fiscal 2024 Citi Trends reported an increase in net sales year-over-year but continued to experience a net loss, albeit a reduced one compared to the prior year, with improved operating loss Condensed Consolidated Statements of Operations For the first quarter of 2024, Citi Trends reported an increase in net sales year-over-year but continued to experience a net loss, albeit a reduced one compared to the prior year. Operating loss also improved Condensed Consolidated Statements of Operations (Q1, in thousands) | Metric | Q1 2024 | Q1 2023 | Q1 2022 | | :--------------------------------------- | :------ | :------ | :------ | | Net sales | $186,289 | $179,688 | $208,215 | | Cost of sales | ($114,254) | ($113,659) | ($127,011) | | Selling, general and administrative expenses | ($74,211) | ($70,807) | ($71,026) | | Depreciation | ($4,793) | ($4,681) | ($5,445) | | (Loss) Income from operations | ($6,969) | ($9,460) | $39,653 | | Net (loss) income | ($3,426) | ($6,635) | $30,203 | | Basic net (loss) income per common share | ($0.42) | ($0.81) | $3.59 | | Diluted net (loss) income per common share | ($0.42) | ($0.81) | $3.59 | Condensed Consolidated Balance Sheets As of May 4, 2024, Citi Trends maintained a healthy balance sheet with no debt, a decrease in cash and cash equivalents, and a slight increase in inventory compared to the prior year Condensed Consolidated Balance Sheets (as of, in thousands) | Metric | May 4, 2024 | April 29, 2023 | | :-------------------------- | :---------- | :------------- | | Cash and cash equivalents | $58,169 | $88,707 | | Inventory | $119,014 | $114,322 | | Total assets | $484,102 | $534,430 | | Total liabilities | $329,269 | $374,468 | | Total stockholders' equity | $154,832 | $159,962 | - The company reported no debt at quarter-end[1][6] Capital Return Program Update Citi Trends did not repurchase any shares of its common stock during the first quarter of fiscal 2024, with a significant amount remaining available under its existing share repurchase program - No shares of common stock were repurchased in the first quarter of fiscal 2024[5] - $50.0 million remained available under the Company's share repurchase program at the end of Q1 2024[5] Fiscal 2024 Outlook Citi Trends has updated its fiscal 2024 outlook, slightly adjusting comparable store sales growth expectations while maintaining previous guidance for gross margin expansion and EBITDA Full Year Guidance Citi Trends has updated its fiscal 2024 outlook, slightly adjusting comparable store sales growth expectations while maintaining previous guidance for gross margin expansion and EBITDA. The company continues its fleet optimization strategy and capital expenditure plans Fiscal 2024 Outlook | Metric | Outlook | Change from Previous Outlook | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Comparable Store Sales Growth | Low to mid-single digits | Slightly below previous outlook | | Gross Margin Expansion | Approximately 75 to 100 basis points | Consistent with previous outlook | | SG&A Dollars Increase | Approximately 1.5% to 2.5% | Slightly better than previous outlook | | Full Year EBITDA* ($M) | $4 million to $10 million | Unchanged from previous outlook | | New Stores | Up to 5 | Unchanged | | Remodeled Stores | Approximately 40 | Unchanged | | Underperforming Stores Closed | 10 to 15 | Unchanged | | Expected Stores at Fiscal Year-End | Approximately 595 | Unchanged | | Full Year Capital Expenditures ($M) | Approximately $20 million | Unchanged | Non-GAAP Financial Measures Citi Trends provides reconciliations for several non-GAAP financial measures, including adjusted operating income, adjusted diluted EPS, adjusted EBITDA, and adjusted gross margin Reconciliation of Non-GAAP Measures Citi Trends provides reconciliations for several non-GAAP financial measures, including adjusted operating income, adjusted diluted EPS, adjusted EBITDA, and adjusted gross margin. These adjustments aim to offer a clearer view of ongoing operating performance by excluding non-recurring items like cyber incident expenses and other non-recurring expenses - Non-GAAP measures are used to reflect operating results more indicative of ongoing performance and improve comparability, but are not a substitute for GAAP measures[10][19] Reconciliation of Adjusted Operating (Loss) Income (Q1, in thousands) | Metric | May 4, 2024 | April 29, 2023 | | :-------------------------- | :---------- | :------------- | | Operating loss | ($6,969) | ($9,460) | | Cyber incident expenses | — | $1,560 | | Other non-recurring expenses | $1,380 | — | | Adjusted operating loss | ($5,589) | ($7,900) | Reconciliation of Adjusted Diluted EPS (Q1) | Metric | May 4, 2024 | April 29, 2023 | | :-------------------------- | :---------- | :------------- | | Diluted loss per share | ($0.42) | ($0.81) | | Cyber incident expenses | — | $0.19 | | Other non-recurring expenses | $0.17 | — | | Tax effect | ($0.07) | ($0.04) | | Adjusted diluted loss per share | ($0.32) | ($0.66) | Reconciliation of Adjusted EBITDA (Q1, in thousands) | Metric | May 4, 2024 | April 29, 2023 | | :-------------------------- | :---------- | :------------- | | Net loss | ($3,426) | ($6,635) | | Interest income | ($849) | ($1,023) | | Interest expense | $79 | $75 | | Income tax benefit | ($2,773) | ($1,876) | | Depreciation | $4,793 | $4,681 | | Cyber incident expenses | — | $1,560 | | Other non-recurring expenses | $1,380 | — | | Adjusted EBITDA | ($796) | ($3,218) | Reconciliation of Adjusted Gross Margin (Q1, in thousands) | Metric | May 4, 2024 | April 29, 2023 | | :-------------------------- | :---------- | :------------- | | Gross profit | $72,035 | $66,029 | | Gross margin | 38.7% | 36.7% | | Cyber incident expenses | $0 | $513 | | Adjusted gross profit | $72,035 | $66,542 | | Adjusted gross margin | 38.7% | 37.0% | Additional Information This section provides details on the investor conference call, forward-looking statements, and contact information for investor relations Investor Conference Call Details Citi Trends hosted a conference call to discuss its first quarter fiscal 2024 results, providing both live access and replay options for investors - A live conference call was held on June 4, 2024, at 9:00 a.m. ET[7] - The live broadcast was available online at cititrends.com under the Investor Relations section[7] - A replay of the conference call was available until June 11, 2024, via dial-in, and an online replay will be available for one year[7][8] Forward-Looking Statements The report includes a standard disclaimer regarding forward-looking statements, emphasizing that such statements are subject to material risks and uncertainties that could cause actual results to differ significantly from projections - All statements regarding future financial results, business policy, plans, objectives, and expectations are forward-looking and subject to material risks and uncertainties[13] - Risks and uncertainties include general economic conditions (inflation, energy costs, unemployment), market interest rates, natural disasters, pandemics, transportation delays, changes in freight rates, ability to attract/retain workers, merchandise inventory risks, consumer confidence, competition, cyber disruptions, and seasonality[13] - The company does not undertake to publicly update any forward-looking statements unless required by applicable law[13] Contact Information Contact details are provided for investor relations inquiries - For investor inquiries, contact Tom Filandro at ICR, Inc. via CitiTrendsIR@icrinc.com[14]