Citi Trends(US:CTRN)2021-05-25 16:00Financial Data and Key Metrics Changes - Total sales increased by 146% compared to Q1 2020 and by 39% compared to Q1 2019, reaching $285 million [8][33] - Comparable store sales rose by 142% versus 2020 and by 35% compared to 2019, marking the seventh consecutive quarter of positive growth [8] - Earnings per share (EPS) was $3.23, a significant increase from a loss of $2 per share in Q1 2020 and from $0.65 in Q1 2019, representing a 397% increase [36] - Gross margin improved to 42.6%, up 1,530 basis points from 27.3% in Q1 2020 and 510 basis points from 2019 [34] Business Line Data and Key Metrics Changes - Strong performance was noted across all six categories: women's, men's, kids, accessories, home and lifestyle, and footwear, with particular strength in women's and men's apparel [9][19] - The home and lifestyle category experienced outsized growth, contributing to overall sales increases [19] Market Data and Key Metrics Changes - The federal government stimulus payments contributed to sales momentum, particularly in March and April [8] - Sales were strongest in March and April, benefiting from earlier Easter and gradual tax refund distributions [33] Company Strategy and Development Direction - The company plans to open at least 30 new stores and remodel approximately 20 stores this year, with a long-term goal of reaching 1,000 locations [13][42] - Strategic initiatives include optimizing product mix, reinvesting in infrastructure, and enhancing community engagement [12][27] - The launch of lab stores aims to test and enhance the customer experience, with plans to roll out the new Citi Trends Experience (CTX) in 2022 [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving full-year sales in the range of $970 million to $990 million, raising EPS guidance to $4.55 to $4.75 [39] - The company is confident in its growth strategies and expects to exceed $1 billion in sales sooner than originally anticipated [42] - Management acknowledged challenges such as freight and labor costs but remains focused on maintaining strong margins and operational efficiency [50][25] Other Important Information - The company repurchased approximately 537,500 shares at a cost of about $45.5 million during the quarter [37] - Nearly 80% of employees are African-American or Latinx, and 83% are female, highlighting the company's commitment to diversity and inclusion [28] Q&A Session Summary Question: Thoughts on share repurchase program and store growth acceleration - Management indicated a broader definition of capital allocation, focusing on accelerating store growth and infrastructure investments [46][48] Question: Impact of freight and labor shortages on margins - Freight was not significantly impactful in Q1, but expected to deleverage margins by 170 to 190 basis points for the rest of the year [50] Question: Reasons for business acceleration compared to 2019 - Factors included improved product assortment, increased brand awareness, and returning customers [60] Question: Expectations for sales cadence throughout the year - Q2 is expected to moderate from Q1, with Q3 having more upside potential compared to Q4 [62] Question: Current distribution center capacity and growth plans - Current capacity is sufficient for 2-3 years, with plans for infrastructure improvements to support accelerated growth [65] Question: Impact of stimulus on Q1 performance and regional performance - Stimulus had a meaningful impact, but improved product assortment and customer capture are seen as more critical for future growth [71] Question: Inventory management and back-to-school planning - The company aims to maintain reasonable inventory levels while ensuring fresh trends to meet customer demand [77]