Citi Trends(US:CTRN)2022-03-15 18:22Financial Data and Key Metrics Changes - For fiscal 2021, total sales reached $991.6 million, a 26.8% increase compared to fiscal 2019, with comparable sales up 22% [27] - Gross margin improved to 41.1%, an increase of 310 basis points over fiscal 2019 [27] - Operating income was $79.5 million, compared to $18.5 million in 2019, with operating margin expanding to 8% from 2.4% [27] - Earnings per diluted share increased by 390% to $6.91 compared to $1.41 in 2019 [27] - In Q4 2021, total sales were $241 million, growing by 14.2% compared to Q4 2019 [24] Business Line Data and Key Metrics Changes - The company opened 27 new stores and remodeled 25 during the year, launching the new CTx store format [7] - Comparable store sales increased by 14.8% during the holiday season compared to 2019 [24] - Average basket size increased due to higher unit retail selling prices and more units per transaction [25] Market Data and Key Metrics Changes - The company experienced a decline in traffic in January due to the Omicron variant but saw recovery in February and early March [10] - The company noted that 70% of its stores serve as primary neighborhood destinations for apparel and home needs [13] Company Strategy and Development Direction - The company aims to grow from 600 to 1,000 stores, with at least 150 remodels planned over the next three years [14] - Focus areas include expanding the customer base, optimizing product mix, reinvesting in infrastructure, and making a difference in communities [11] - The company plans to monetize its owned distribution centers to improve liquidity and support share repurchases [16][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from inflation and uncertainties regarding consumer demand, particularly in Q1 2022 [20][32] - The company expects a total sales decrease of 25% to 30% in Q1 2022 compared to the previous year, with a projected EPS of $0.15 to $0.40 [33] - Management remains confident in the underlying health of the business and the effectiveness of transformation initiatives [34] Other Important Information - The company repurchased approximately 95,000 shares at a cost of $8.1 million in Q4, totaling close to 1.4 million shares for the year at a cost of $115 million [29] - Pam Edwards, the CFO, announced her retirement effective April 1, 2022 [36] Q&A Session Summary Question: Can you clarify the Q1 guidance regarding same-store sales and share count? - Management indicated a total sales decrease of 25% to 30% for Q1, equating to a 28% to 33% range for comparable store sales [40] Question: How do you expect gross margins to trend in Q1? - Management expects gross margins in the high-30s for Q1, with improvements anticipated in subsequent quarters [48] Question: How are you managing inventories in light of inflation? - Management expressed confidence in inventory management, aiming to maintain lower markdowns compared to previous years [44][45] Question: What is the expected cadence for store openings this year? - The company plans to open approximately 35 new stores, with a focus on remodeling existing locations [50] Question: How do you view the impact of stimulus on sales moving forward? - Management noted that the impact of stimulus will decrease significantly in Q2 through Q4, with new initiatives expected to drive sales [56] Question: What are the expectations for EBITDA recovery? - Management anticipates returning to double-digit EBITDA by 2024 as underlying conditions improve [70] Question: How will proceeds from the sale-leaseback transactions be utilized? - The board is actively considering share repurchases as part of the capital allocation strategy [71]