Citi Trends(US:CTRN)2021-11-30 16:47Financial Data and Key Metrics Changes - Total sales for Q3 2021 reached $228 million, an increase of 14.5% compared to Q3 2020 and 24.5% compared to Q3 2019 [8][19] - Comparable store sales grew by 13.1% versus Q3 2020, building on a positive 6.3% from the previous year [8][19] - Gross margin improved to 40.3%, up 290 basis points from 37.4% in Q3 2019, driven by strong full-price selling and fewer markdowns [19][20] - Operating income increased to $11.6 million, a rise of $2.2 million compared to Q3 2020 and $13.2 million compared to Q3 2019 [20] - Net income was $9 million, compared to $7 million in Q3 2020 and an operating loss of $1.1 million in Q3 2019 [20] Business Line Data and Key Metrics Changes - Strong double-digit growth was observed across five of the six categories, including women's, men's, kids, beauty and accessories, and home and lifestyle [10] - Footwear was noted as lagging slightly due to supply chain disruptions, but momentum is improving as issues abate [32] Market Data and Key Metrics Changes - The company opened 11 new stores during the quarter, bringing the total store count to 600, with plans to end the year with approximately 611 stores [9] - Inventory at the end of the quarter increased by 10.9% compared to Q3 2020 but decreased by 6.3% compared to Q3 2019, reflecting improved inventory management [21] Company Strategy and Development Direction - The company is focused on four strategic priorities: growing the store fleet, optimizing product mix, reinvesting in the business, and making a difference in communities served [25][26] - Plans to open approximately 40 new stores and remodel 40 existing stores in fiscal 2022, reflecting the elevated CTX store upgrade [26] - The company aims for total sales growth of low to mid-single digits and at least low double-digit EPS growth in fiscal 2022 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges and highlighted strong inventory positioning for the holiday season [17][18] - The company raised its full-year 2021 sales outlook to a range of $1 billion to $1.15 billion and EPS guidance to $6.95 to $7.10, reflecting nearly 400% growth at the EPS midpoint compared to fiscal 2019 [23] Other Important Information - The company repurchased approximately 521,000 shares at a cost of $42.8 million in Q3, with a total of 1,273,000 shares repurchased for $107.2 million in the first nine months of the year [22] - Two new independent directors were appointed to the Board, enhancing the company's commitment to diversity, equity, and inclusion [27] Q&A Session Summary Question: Insights on Q4 performance and category performance - Management indicated strong performance across most categories, with footwear lagging due to supply chain issues but showing improvement [32] Question: Staffing trends and wage increases - The company is addressing staffing challenges on a store-by-store basis, including wage adjustments where necessary, but reported little to no issues with labor during recent weekends [34] Question: Confidence in FY'22 growth - Management expressed confidence in achieving low to mid-single digit sales growth and low double-digit EPS growth in FY'22, driven by strong underlying business performance and the impact of CTX store upgrades [36][60] Question: CTX store performance and CapEx implications - CTX stores are showing improved conversion rates, and while CapEx for new and remodeled stores is slightly higher, the sales increases associated with these changes are expected to offset costs [41][42] Question: Customer health and regional performance - Management noted resilience in customer spending despite changes in unemployment benefits, with a positive outlook for consumer liquidity into 2022 [52] Question: Consistency in November sales performance - November sales were consistent, supported by improved inventory levels and early holiday product placements [55]