Citi Trends, Inc. sharply reduced its net loss on an adjusted basis in the second quarter ended August 3 as same-store sales grew 9.6 percent and gross margins expanded 890 basis points. The off-pricer raised its guidance for the year.

Ken Seipel, chief executive officer, said, “I’m pleased to report another quarter of strong, consistent performance as our strategic transformation continues to build momentum. Our second quarter results underscore our recent success executing our key initiatives, which drove comparable store sales up 9.2 percent — our fourth consecutive quarter and 12 straight months of consistent comparable sales gains. Year-to-date, comps are up 9.6 percent, with a two-year stack of 10.3 percent, reflecting the sustained, broad-based performance improvement across the company. I am also pleased that year-to-date sales momentum has continued into the important August back-to-school period.

“The majority of our sales growth over the past four quarters has been driven by increased customer traffic and transactions. By staying laser-focused on our core African American customer base, improving execution of our three-tiered product assortments, offering more compelling extreme-value deals, and introducing more trend-leading merchandise, we have encouraged our customers to shop more often and purchase more items. This consistent behavior gives us confidence in our overall strategy.

“While we are proud of our results and the meaningful progress to date, we recognize there is still significant opportunity ahead — processes to refine, capabilities to strengthen, and areas to optimize. We remain committed to the continued transformation of our business, delivering shareholder value, and delighting customers in the neighborhoods we serve. Our three-phase strategic framework — Repair, Execute, and Optimize — continues to position Citi Trends for sustainable, profitable growth, and I am confident in our ability to deliver strong results and capture additional market share in the future.”

Financial Highlights – Second Quarter 2025

  • Total sales of $190.8 million increased $14.2 million, or 8.0 percent vs. Q2 2024; comparable store sales increased 9.2 percent compared to Q2 2024, driven by increases in traffic, basket and conversion, reflecting the impact of the three-tiered merchandise assortment, including trendier product, off-price deals and more branded extreme value product.
  • Gross margin of 40.0 percent, the highest second quarter rate since fiscal 2021, increased 890 basis points vs. Q2 2024, driven by reduced markdowns, improved shrink results, increased full price selling and lower cost of freight.
  • SG&A expense of $78.9 million vs. Q2 2024 SG&A expense of $73.8 million, or $72.1 million as adjusted, reflecting the costs to process higher sales and $3.9 million of incremental incentive compensation from improved financial performance.
  • Net income of $3.8 million, including the $11.0 million gain on the sale of the Savannah office building, or adjusted net loss of $6.8 million, vs. net loss of $18.4 million, or adjusted net loss of $16.2 million, in Q2 2024.
  • Adjusted EBITDA loss of $2.6 million, an increase of $14.6 million compared to adjusted EBITDA loss of $17.2 million in Q2 2024.
  • Remodeled 19 stores and closed 1 store in the quarter, ending the period with 590 locations.
  • Cash of $50.4 million at quarter-end, with no debt and no borrowings under a $75 million credit facility.
  • Merchandise inventory totaled $117.6 million at the end of the quarter, representing a 12.9 percent decrease compared to Q2 2024. The average store inventory was down 5.7 percent compared to the same period last year, benefiting from improved buying discipline and a faster supply chain.

 Financial Highlights | 26 weeks ended August 2, 2025

  • Total sales increased to $392.5 million, a $29.6 million, or 8.2 percent, increase compared to 2024; comparable store sales rose 9.6 percent to 2024, and 10.3 percent on a two-year basis.
  • Net income of $4.7 million, including the $11.0 million gain on the sale of the Savannah office building, or adjusted net loss of $5.4 million, vs. net loss of $21.8 million, or adjusted net loss of $18.9 million in 2024.
  • Adjusted EBITDA of $2.8 million compared to adjusted EBITDA loss of $18.0 million in 2024. Adjusted EBITDA improvement to last year driven by higher sales, 480 basis point increase in gross margin rate and 90 basis points of SG&A leverage, including the impact of higher incentive compensation accruals.

Fiscal 2025 Outlook

The company is updating its fiscal 2025 outlook as follows:

  • Expecting full-year comparable store sales growth of mid- to high-single-digits, above the previous outlook of mid-single-digit growth.
  • Full year gross margin expected to expand approximately 210 to 230 basis points vs. 2024, slightly above previous outlook, reflecting inventory efficiency improvements and initial progress against planned supply chain improvements.
  • SG&A is expected to increase by 60 to 90 basis points compared to 2024, slightly better than the previous outlook and inclusive of increased incentive compensation accruals related to business performance.
  • Full-year EBITDA is now expected to be in the range of $7 million to $11 million, above the previous outlook, representing a $21 million to $25 million improvement compared to 2024.
  • Expecting a 2025 effective tax rate of approximately 0 percent, consistent with the previous outlook.
  • The company now expects to open three new stores, remodel approximately 60 stores, and close three locations.
  • Full-year capital expenditures are now expected to be in the range of $22 million to $25 million, slightly higher than the previous outlook.

Image courtesy Citi Trends