Citi Trends, Inc. reported total sales for the fiscal first quarter increased 3.7 percent year-over-year to $186.3 million, compared to total sales in Q1 2023. Comparable store sales, calculated on a shifted 13-week to 13-week basis, increased 3.1 percent compared to Q1 2023.
Gross margin of 38.7 percent of net sales in Q1 improved 200 basis points compared to 36.7 percent as reported and 170 bass points from 37.0 percent as adjusted in Q1 2023.
Operating loss was $7.0 million, or $5.6 million as adjusted, in the first quarter, compared to an operating loss of $9.5 million, or $7.9 million as adjusted in Q1 2023.
Adjusted EBITDA loss of $0.8 million in Q1 compared to an adjusted loss of $3.2 million in Q1 2023.
Net loss per share was 42 cents, or a loss of 32 cents per share as adjusted, compared to a loss of 81 cents, or 66 cents as adjusted in Q1 2023.
The company closed three stores and remodeled 20 stores to end the quarter with 599 locations; remodeled an additional 15 stores Q2 2024 to-date, resulting in 21 percent of the fleet in CTx format
Citi Trends had cash of $58.2 million at quarter-end, with no debt and no borrowings under a $75 million credit facility.
The company exited Q1 2024 with an inventory increase of 4 percent compared to Q1 2023 quarter-end.
Ken Seipel, the new interim CEO appointed this past weekend, commented, “The board is encouraged with our first quarter performance in which we registered an improvement in topline trend, delivering a comparable sales increase of 3.1 percent. The quarter was further highlighted by gross margin expansion of 160 basis points compared to last year. The improvements in topline and gross margin were helped by our rebuild of inventories in targeted product categories. We also benefitted from our store teams’ delivering in-store experiences and bringing to life our Citi Trends’ value proposition for the entire family.”
Seipel continued, “Our balance sheet has ample liquidity and no debt because of our financial disciplines, which in turn allows us the flexibility to fund business opportunities with acceptable rates of returns. We are mindful of the challenging economic environment for the lower income consumer, however, we will execute the business initiatives within our control that will position us to achieve our EBITDA target for the year. We are focused on driving profitable sales, sharpening our product assortment decisions, streamlining costs, optimizing our supply chain, improving inventory returns and leveraging benefits from recent technology investments. I would like to thank our entire organization for their dedication to executing our initiatives and serving our customers every day.”
Seipel concluded, “As announced on May 31, 2024, David Makuen has stepped down from his role as CEO. On behalf of the Board of Directors and the entire Citi Trends Team, I would like to thank David for his hard work and leadership these past four years. David shaped and built our strong purpose driven Citi Trends culture while leading the company through some of the most challenging consumer environments in recent history. Our best wishes to David!”
Capital Return Program Update
In the first quarter of fiscal 2024, the company did not repurchase any shares of its common stock. At the end of Q1 2024, $50.0 million remained available under the company’s share repurchase program.
Fiscal 2024 Outlook
The company’s updated fiscal 2024 outlook is as follows:
- Expecting full year comparable store sales growth of low to mid single digits, a range slightly below the company’s previous outlook.
- Full year gross margin to expand by approximately 75 basis points to 100 basis points, consistent with previous outlook.
- SG&A dollars expected to increase by approximately 1.5 percent to 2.5 percent, slightly better than previous outlook from streamlined costs in a variety of areas.
- Full year EBITDA planned to be in the range of $4 million to $10 million, unchanged from previous outlook.
- The company continues to plan to open up to five new stores, remodel approximately 40 stores and close 10 to 15 underperforming stores as part of its ongoing fleet optimization; expecting to end fiscal 2024 with approximately 595 stores.
- Full year capital expenditures are still expected to be approximately $20 million.
Image courtesy Citi Trends
See below for more SGB Media coverage of the CEO shift at Citi Trends:
