Citi Trends, Inc. raised its outlook for the year after reporting that same-store sales in the third quarter climbed 10.8 percent on improved traffic. Back-to-school selling benefited from continued momentum in Children, Men’s and Basic apparel.

Company CEO Ken Seipel said, “I am pleased to report another quarter of strong results, reflecting disciplined execution and meaningful progress with our strategic transformation. Our third-quarter comparable store sales growth of 10.8 percent, 16.5 percent on a two-year stack basis, represents our fifth consecutive quarter of positive comp performance, bringing our year-to-date comp to 10.0 percent and 12.3 percent on a two-year stack basis. We’re experiencing broad-based momentum at Citi Trends, with sales growth spanning all store volume groups, geographies and product categories, highlighting the comprehensive nature of our business improvement. Importantly, increased traffic is driving the majority of our sales growth.

“We delivered a strong back-to-school season fueled by continued momentum in our Children’s, Men’s and Basic apparel divisions. We continue to sharpen our product and value for our core customer, and in the quarter, we saw a strong response to elevated brands and fashion for the Fall, as well as a strong response to early holiday assortments late in the quarter. As a result, our sales momentum has continued in the fourth quarter to date. I’m also excited to announce that this holiday season, we are launching the rebranded Citi Trends “Joy Looks Good on You” campaign and updated social media presence under the “@wearecititrends” tagline.

“Moving ahead, we remain committed to enhancing our operational processes and strengthening our capabilities as we work to capture the substantial growth opportunities before us. We have established a clear line of sight to achieve approximately $45 million in EBITDA in fiscal 2027, representing a $60 million improvement from 2024 levels. While we’re in the early stages of what I believe will be a compelling transformation, we have built a definitive, actionable and internally controllable plan to accelerate shareholder value creation over the next few years.”

Financial Highlights
Third Quarter 2025

  • Total sales of $197.1 million increased $18.0 million, or 10.1 percent vs. Q3 2024. Comparable store sales increased 10.8 percent compared to Q3 2024, driven by increases in traffic, basket and conversion, reflecting the impact of the company’s three-tiered merchandise assortment, including trendier product, off-price deals and more branded extreme value product.
  • Gross margin of 38.9 percent, consistent with the company’s internal operating plan, declined 90 basis points compared to Q3 2024. Q3 2025 included product margins consistent with first-half 2025 performance and the pull-forward of freight expense from Q4 to balance holiday workload in the distribution centers. Prior-year period results were positively impacted by low markdowns and shrink following last year’s Q2 strategic inventory reset, which ultimately jump-started the company’s top-line turnaround.
  • SG&A expense of $79.3 million, or $79.5 million as adjusted, vs. Q3 2024 SG&A expense of $74.7 million, or $74.6 million as adjusted, reflecting the costs to process higher sales and $3.2 million of incremental incentive compensation from improved financial performance. On a rate basis, adjusted SG&A expenses levered 130 basis points compared to Q3 2024.
  • Net loss of $6.9 million, or adjusted net loss of $7.1 million, vs. net loss of $7.2 million, or adjusted net loss of $6.5 million in Q3 2024.
  • Adjusted EBITDA loss of $2.9 million vs. adjusted EBITDA loss of $3.3 million in Q3 2024.
  • Remodeled 24 stores and opened three stores in the quarter, ending the period with 593 locations.
  • Cash of $51.1 million at quarter-end, with no debt and no borrowings under a $75 million credit facility.
  • Merchandise inventory was $123.5 million at the end of the quarter, a decrease of 3.1 percent vs. Q3 2024, with average store inventory up 4.5 percent vs. last year, reflecting revised timing of pre-holiday product deliveries.

Financial Highlights
39 weeks ended November 1, 2025

  • Total sales increased $47.7 million, or 8.8 percent, to $589.6 million vs. 2024. Comparable store sales increased 10.0 percent to 2024 and 12.3 percent on a two-year basis.
  • Net loss of $2.2 million, including the $11.0 million gain on the sale of the company’s Savannah, GA office building in Q2 2025, or adjusted net loss of $12.5 million, vs. a net loss of $29.0 million, or adjusted net loss of $25.2 million in 2024.
  • Adjusted EBITDA loss of $0.1 million compared to adjusted EBITDA loss of $21.3 million in 2024. Adjusted EBITDA improved by $21.2 million from last year, driven by higher sales, a 290-basis point increase in gross margin rate and 100 basis points of adjusted SG&A leverage, including the impact of higher incentive compensation accruals.

Fiscal 2025 Outlook
The company is updating its fiscal 2025 outlook as follows:

  • Expects full year comparable store sales to be up high-single-digits, on the high end of its previous outlook.
  • Full year gross margin to expand roughly 230 basis points vs. 2024, on the high end of its previous outlook.
  • SG&A is expected to leverage approximately 90 basis points vs. 2024, on the high end of the previous outlook.
  • Full year EBITDA to be in the range of $10 million to $12 million, above its previous outlook, and a $24 million to $26 million improvement vs. 2024.
  • Expects a 2025 effective tax rate of approximately 0 percent, consistent with its previous outlook.
  • For the year, the company will open 3 new stores and remodel 62 stores, consistent with its previous outlook. The company will close 4 locations, above the previous outlook of 3 closures.
  • Full-year capital expenditures to be roughly $23 million, on the lower end of its previous outlook.

While the company does not provide quarterly guidance, given where it is in its fiscal year, it offered the following comments about the fourth quarter of fiscal 2025:

  • Q4 comparable-store sales to be up in the high single digits.
  • Q4 gross margin to be in the range of 40 percent to 41 percent.
  • SG&A to be approximately $82 million.
  • Q4 EBITDA to be in the range of $10 million to $12 million.

Image courtesy Citi Trends