Citi Trends raised its guidance for the year after reporting improved earnings on a 9.9 percent same-store gain in the first quarter.

Ken Seipel, chief executive officer, said, “I am pleased to report progress on our continued strategic transformation journey, as evidenced by our strong first quarter results on both the top and bottom line as well as stronger-than-expected adjusted EBITDA flowthrough. The tide is rising on all fronts at Citi Trends, with all retail metrics trending positively and growth in both apparel and non-apparel in all climate zones and in all store volumes. Our sales momentum has continued with Q2 ’25 quarter-to-date comparable store sales growth trending in the mid to upper-single digits.”

Seipel continued, “There is no doubt that there is a great deal of macro-economic uncertainty, particularly as it relates to tariffs. Our approach is to be aggressive to drive growth and remain flexible to react and adjust as needed. For the foreseeable future, our teams have successfully held net product costs flat in aggregate, finding alternative goods when needed and taking advantage of off-price opportunities created by the disrupted environment. As a result, we have mitigated near-term margin pressure, and we remain optimistic about our ability to control our business results.

“In 2025, our go-forward focus is to finalize the improvement of key processes, consistently execute our business model and develop new capabilities for future growth. Our refined approach to serving African American customers through curated assortments, improved in-store experiences and compelling off-price value is resonating, as evidenced by increased transaction counts. The foundational improvements we’ve made across merchandising, supply chain and allocation have enabled faster delivery of fresher inventory while improving margins. Though we’re in early transformation stages, the positive trends we’re producing reinforce my confidence and belief that Citi Trends is a highly differentiated business model serving a very loyal customer, giving us a clear path to growing EBITDA to $40 million and beyond.

“The transformation of Citi Trends begins with our people. We are making Citi Trends a great place to work through performance-based compensation programs, improved retention and enhanced leadership training programs. For our customers, we’re making Citi Trends a great place to shop by delivering exceptional store experiences that are neat, clean and organized as we fully embrace our identity as an off-price retailer. And above all, we are improving our ability to edit style and trends while delivering extreme value branded offerings and buzz-worthy products, all aimed at enhancing our value equation for our shoppers. I want to thank the entire Citi Trends organization for their unwavering support throughout our transformation journey.

“I’m confident that our refined operating model, dedicated people and strong customer focus position Citi Trends to deliver continued strong results, market share gains and shareholder value creation.”

Financial Highlights, First Quarter 2025

  • Total sales of $201.7 million increased $15.4 million, or 8.3 percent, versus Q1 2024; comparable store sales increased 9.9 percent compared to Q1 2024, fueled by increases in traffic, basket and conversion, reflecting the continued impact of improved product style and value, addition of off-price extreme value and better product allocation methods.
  • Gross margin of 39.6 percent versus 38.7 percent in Q1 2024, an increase of 90 basis points due to higher initial markup, lower shrink and lower freight expense, partially offset by planned in-season markdowns.
  • SG&A expense dollars leveraged 270 bps versus Q1 2024, 220 bps as adjusted, reflecting the impact of increased sales and disciplined cost controls.
  • Net income of $0.9 million, or adjusted net income of $1.4 million, versus a net loss of $3.4 million, or adjusted net loss of $2.7 million, in Q1 2024.
  • Adjusted EBITDA of $5.4 million compared to an adjusted EBITDA loss of $0.8 million in Q1 2024.
  • Adjusted EBITDA Flowthrough of 40 percent, above company expectations, from total sales increase of $15.4 million versus last year and adjusted EBITDA increase of $6.2 million.
  • Diluted earnings per share of $0.11, or $0.17 as adjusted versus earnings per share of $(0.42), or $(0.32) as adjusted, in Q1 2024.
  • Remodeled 19 stores in the quarter and ended the period with 591 locations.

Inventory

  • Merchandise inventory was $109.9 million at the end of the first quarter versus $119.0 million at the end of Q1 2024, a 7.6 percent decrease. Average in-store inventory decreased 4.9 percent compared to the same period last year while supporting 9.9 percent comparable store sales growth.
  • Inventory is significantly fresher than in Q1 2024, with a 45 percent decrease in aged products, a result of the Q2 2024 markdown of slow-selling and aged inventory, as well as the renewed focus on in-season markdowns.

Cash and Liquidity

  • The company ended the first quarter with $41.6 million of cash, no borrowings, under a $75 million credit facility, and no debt.
  • Total liquidity of approximately $117.0 million at the end of the first quarter

Capital Return Program Update
In the first quarter of fiscal 2025, the company repurchased 250,555 shares of its common stock for a total spend of $6.3 million. At the end of Q1 2025, $40.0 million remained available under the company’s share repurchase program.

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

  • Expecting full-year comparable store sales growth of mid-single-digit, at the high end of the previous outlook of low to mid-single-digit growth.
  • Full-year gross margin rate is expected to increase approximately 200 basis points versus fiscal 2024, slightly below the previous outlook due to an extended timeline for the repair phase of the supply chain transformation.
  • SG&A is now expected to leverage in the range of 60 basis points to 80 basis points versus fiscal 2024, above the previous outlook on higher expected sales, inclusive of increased incentive compensation accruals related to business performance.
  • Full-year EBITDA is now expected to be in the range of $6 million to $10 million, above the previous outlook, a $20 million to $24 million improvement versus 2024.
  • Expects fiscal 2025 effective tax rate of approximately 0 percent, consistent with the previous outlook.
  • The company continues to plan to open 5 new stores, remodel approximately 50 and close up to 5 locations.
  • Expects full-year capital expenditures to remain in the range of $18 million to $22 million.

Image courtesy Citi Trends