Citi Trends(US:CTRN)2023-03-21 18:58Financial Data and Key Metrics Changes - For Q4 2022, total sales were $209.5 million, a decrease of 13.1% compared to Q4 2021 and a decrease of 0.7% compared to Q4 2019 [11] - Full-year sales for fiscal 2022 were $795 million, a decrease of 19.8% compared to the prior year but an increase of 1.7% compared to 2019 [12] - Gross margin for Q4 2022 was 39.5%, down from 40.4% in Q4 2021 and 39.7% in Q4 2019 [36] - Earnings per diluted share for Q4 2022 was $0.81, down from $1.16 in Q4 2021 [12] - The company ended the fiscal year with $104 million in cash and zero debt, indicating a strong balance sheet [5][8] Business Line Data and Key Metrics Changes - Comp sales for Q4 2022 decreased by 14.4% compared to Q4 2021, showing a sequential improvement from a 18.3% decline in Q3 [11] - Inventory at year-end decreased by 14.6% compared to 2021, with the company maintaining a disciplined approach to inventory management [13] Market Data and Key Metrics Changes - The company serves low-income African American families, with an average household income of $38,000, who are currently facing economic pressures due to inflation and reduced tax refunds [32] - The first quarter of fiscal 2023 is expected to be softer, with total sales anticipated to decline by low double digits to mid-teens compared to Q1 2022 [38] Company Strategy and Development Direction - The company plans to focus on driving comp store productivity, managing inventory, and enhancing the in-store customer experience [4][9] - Strategic priorities for 2023 include improving product assortments, controlling SG&A expenses, and executing technology enhancements [33] - The company aims to open 5 to 10 new stores and remodel 25 to 30 locations while closing underperforming stores [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2023, expecting relief for low-income customers as economic conditions improve [9][38] - The company anticipates a gradual recovery in consumer behavior, particularly in discretionary spending, as inflation eases [56] Other Important Information - The company repurchased approximately 331,000 shares at an aggregate cost of $10 million during the year, with $50 million remaining on the buyback program [13] - A ransomware incident temporarily disrupted operations but was resolved, allowing the company to restore critical systems [33] Q&A Session Summary Question: What markers are being looked at for improvement in the second half of the year? - Management indicated that driving comp store productivity and refining product assortments are key focuses, with expectations for improved trends in the second half [44] Question: Any updates on inventory levels and the CTx remodels? - Inventory levels are expected to improve, and CTx remodels are showing mid to high single-digit sales lifts compared to the base [46] Question: What is the expected contribution from the 53rd week in sales? - The growth contribution from the 53rd week is estimated to be about 150 basis points over the prior year, with negligible impact on profitability [47] Question: How has the reduction in SNAP benefits affected sales trends? - The reduction in SNAP benefits has led to lower discretionary spending among core customers, impacting sales more than the timing of tax refunds [48] Question: What is the profile of stores being closed? - Stores being closed typically do not meet sufficient sales volumes to ensure stable profitability, regardless of their location or structure [62]