Citi Trends, Inc. reported total net sales increased 51.8% to $69.9 million for the quarter ended October 29, 2005, compared with $46.0 million for the year-ago period. Same-store sales increased 25.0% on top of a 3.0% increase in the prior-year quarter. Relocated and expanded stores are included in the comparable store sales results. Net income increased to $2.6 million compared with $165,000 for the prior-year quarter. Earnings per diluted share increased to 18 cents compared with 2 cents in the prior-year quarter.
The Company's results were net positively impacted by Hurricanes Katrina, Rita and Wilma. Sales and earnings results for September and October for stores in the impacted areas were substantially higher than the remainder of the stores. Four stores remain closed as a result of the hurricanes. Sales in the non- affected comparable stores increased approximately 17% to 19% for the third fiscal quarter, compared to the overall comparable store sales increase of 25%.
Financial Highlights – 39 weeks ended October 29, 2005
Total net sales increased 40.7% to $193.0 million compared with $137.1 million for the 39-week period ended October 30, 2004. Comparable store sales increased 14.1% compared with a 2.1% increase in the prior-year period. Net income increased 166% to $6.3 million compared with $2.4 million for the prior-year period. Earnings per diluted share increased 123% to 49 cents compared with 22 cents in the prior-year period. Included in these net income results is a one-time termination fee paid in connection with the company's initial public offering, incurred in the second quarter of fiscal 2005, of $1.2 million, or 6 cents per diluted share.
For the year-to-date period, the company opened 26 stores, reaching a total store count of 226 (including the four stores currently closed due to the hurricanes). In the fourth quarter, the company plans to open an additional 11 stores bringing the store count to 237. The company expects to re-open by year end from none to two of the four stores currently closed, bringing the stores in operation at year end to 233 to 235.
Fiscal 2005 Outlook
Based upon results in the third fiscal quarter and the current expectations for the fourth fiscal quarter, the company now expects to report earnings (excluding the one-time termination fee paid in connection with the company's initial public offering of $1.2 million, or 6 cents per diluted share) for fiscal 2005 of between $1.00 to $1.03 per diluted share. This estimate is based upon fiscal 2005 comparable store sales of between 10% and 13%, 13.3 million diluted shares outstanding and the opening of 37 new stores during the year.
Fiscal 2006 Outlook
The Company estimates fiscal 2006 earnings of between $1.12 and $1.17 per diluted share. This estimate is based upon a fiscal 2006 comparable store sales increase of between 2% and 3%, 14.5 million diluted shares outstanding, and the opening of 42 to 45 new stores with 2 projected closings. The new store openings in fiscal 2006 are expected to increase selling square footage by approximately 20%. Total sales and net income are expected to increase 20- 23% for the year. Due to the exceptional sales and earnings results in the second and third quarters of fiscal 2005, comparisons in 2006 against these results will be difficult. The above estimates for 2006 do not include stock option compensation expense which will be required under FAS 123R. The company's current estimate for 2006 stock option compensation expense is approximately $1.0 million to $1.5 million, or approximately 4 cents to 7 cents per diluted share.
CITI TRENDS INC. CONDENSED STATEMENT OF INCOME (unaudited) (in $000's, except share and per share data) Thirteen Weeks Ended ------------------------------- Oct. 29, 2005 Oct. 30, 2004 ------------- ------------- (unaudited) (unaudited) Net sales $69,895 $46,049 Gross profit 27,022 16,890 Selling, general and administrative expenses 23,252 16,413 Income from operations 3,770 477 Net income $2,632 $165 Net income per share, basic $0.21 $0.02 Net income per share, diluted $0.18 $0.02