Year-to-date, earnings per diluted share up
83%, or 52% on an adjusted basis*
Second quarter comparable store sales
increased 3.3%
Citi Trends, Inc. (NASDAQ:CTRN) today reported results for the
second quarter of fiscal 2018.
Financial Highlights – Second quarter
ended August 4, 2018
Total sales in the second quarter ended August 4, 2018 increased
9.5% to $182.0 million, compared with $166.2 million in the second
quarter ended July 29, 2017. The year-over-year comparison of total
quarterly sales included a benefit of approximately $6.7 million
due to a shift in the weeks that were included in the second fiscal
quarter this year in relation to last year. With a 53-week fiscal
year in 2017, each quarter of fiscal 2018 starts one week later
than in the prior year, resulting in the second quarter of fiscal
2018 adding a strong back-to-school week at the beginning of August
and losing a smaller sales week at the beginning of the quarter.
Comparable store sales increased 3.3%, comparing the 13 weeks ended
August 4, 2018 with the 13 weeks ended August 5, 2017.
The Company had net income of $3.2 million in the second quarter
of 2018, compared with a net loss in last year’s second quarter of
($0.2) million on a GAAP basis, or net income of $0.4 million when
adjusted for proxy contest-related expenses* incurred in the second
quarter of 2017. Earnings per diluted share in this year’s second
quarter were $0.24, compared with a loss per diluted share in the
second quarter of 2017 of $(0.01) on a GAAP basis, or earnings per
diluted share of $0.03 when adjusted for proxy contest-related
expenses*.
During the second quarter, the Company opened three new stores,
relocated or expanded four stores and closed two stores.
Financial Highlights – First half ended
August 4, 2018
Total sales in the first half of fiscal 2018 increased 7.3% to
$393.0 million, compared with $366.2 million in the first half of
fiscal 2017. Comparable store sales increased 2.7% in the first
half of this year, comparing the 26 weeks ended August 4, 2018 with
the 26 weeks ended August 5, 2017.
Net income was $14.5 million in the first half of 2018, compared
with net income in last year’s first half of $8.7 million on a GAAP
basis, or $10.4 million when adjusted for proxy contest-related
expenses*. Earnings per diluted share in the first half of 2018
were $1.08, compared with earnings per diluted share in the first
half of 2017 of $0.59 on a GAAP basis, or $0.71 when adjusted for
proxy contest-related expenses*.
Bruce Smith, President and Chief Executive Officer, commented,
“Our second quarter reflected a significant improvement in
earnings, highlighted by a 3.3% increase in comparable store sales
and a benefit to total sales from a shift in the fiscal calendar in
relation to 2017, together with healthy gross margin expansion and
expense leverage.”
Smith further noted, “Importantly, the comparable store sales
increase included positive contributions from all five of our major
merchandise categories, as well as higher transaction counts and
increases in the average unit sale and units per transaction. In
addition, the earnings improvement reflected a much lower income
tax rate due to the enactment of the Tax Cuts and Jobs Act. The
second quarter results, combined with a similarly strong first
quarter, led to an 83% increase in earnings per diluted share, or a
52% increase in earnings per diluted share on an adjusted basis*,
during the first half of 2018.”
Guidance
The Company provided the following guidance for the remainder of
fiscal 2018:
- The Company is raising its full year
fiscal 2018 earnings per diluted share expectations to a range of
$1.65 to $1.75, up from previous guidance of $1.55 to $1.70.
- Comparable store sales are expected to
increase in a range of 2% to 3% in both the third and fourth
quarters. Thus far, in the fiscal month of August, comparable store
sales have increased 9%; however, the Company believes a range of
2% to 3% is an appropriate expectation for the second half of the
year, similar to the actual results in the first half of the
year.
- Total sales are expected to increase in
a range of 2% to 3% in the third quarter. While the second quarter
included a benefit to total sales from the shift in the fiscal
calendar, the third quarter year-over-year comparison of total
sales is expected to be adversely impacted by approximately $5
million, due to a strong back-to-school week at the beginning of
August shifting from the third quarter last year to the second
quarter this year. The week at the beginning of November that will
shift into the third quarter this year is typically a lower sales
week than the week at the beginning of August.
- Total sales are expected to decrease in
a range of 2% to 3% in the fourth quarter due to having one fewer
week this year than in last year’s 14-week fourth quarter of a
53-week year.
- Earnings (loss) per diluted share are
expected to be in a range of ($0.03) to $0.02 in the third quarter,
compared to $0.05 in last year’s third quarter, and a range of
$0.60 to $0.65 in the fourth quarter, compared to $0.38 in the
fourth quarter of 2017.
Capital Return Program
The Company announced that its Board of Directors has declared a
quarterly cash dividend of $0.08 per common share, payable on
September 18, 2018, to shareholders of record as of the close of
business on September 4, 2018.
During the first half of 2018, the Company repurchased 731,000
shares of its common stock at an aggregate cost of $21.0 million.
On August 4, 2018, $4.0 million remained available under the
existing stock repurchase authorization.
Investor Conference Call and
Webcast
Citi Trends will host a conference call today at 9:00 a.m. ET.
The number to call for the live interactive teleconference is
(303) 223-4366. A replay of the conference call will be
available until August 30, 2018, by dialing (402) 977-9140 and
entering the passcode, 21893704.
The live broadcast of Citi Trends' conference call will be
available online at the Company's website, www.cititrends.com,
under the Investor Relations section, beginning today at 9:00 a.m.
ET. The online replay will follow shortly after the call and will
be available for replay for one year.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and trends
that have occurred after quarter-end. The Company’s responses to
questions, as well as other matters discussed during the conference
call, may contain or constitute information that has not been
disclosed previously.
About Citi Trends
Citi Trends, Inc. is a value-priced retailer of urban fashion
apparel and accessories for the entire family. The Company operates
554 stores located in 31 states. Citi Trends’ website address is
www.cititrends.com. CTRN-G
*Non-GAAP Financial
Measure
The non-GAAP financial measures discussed herein are reconciled
to their corresponding GAAP measures at the end of this press
release.
Forward-Looking
Statements
All statements other than historical facts contained in this
news release, including statements regarding the Company’s future
financial results and position, business policy and plans,
objectives of management for future operations and our intentions
and ability to pay dividends and complete any share repurchase
authorizations, are forward-looking statements that are subject to
material risks and uncertainties. The words "believe," "may,"
"could," "plans," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions, as they relate to the Company,
are intended to identify forward-looking statements, although not
all forward-looking statements contain such language. Statements
with respect to earnings guidance are forward-looking statements.
Investors are cautioned that any such forward-looking statements
are subject to the finalization of the Company’s quarter-end
financial and accounting procedures, are not guarantees of future
performance or results and are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified.
Actual results or developments may differ materially from those
included in the forward-looking statements as a result of various
factors which are discussed in the Company’s filings with the
Securities and Exchange Commission, including those set forth under
the heading “Item 1A. Risk Factors” in the Company’s Form 10-K for
the fiscal year ended February 3, 2018. These risks and
uncertainties include, but are not limited to, uncertainties
relating to economic conditions, growth risks, consumer spending
patterns, competition within the industry, competition in our
markets and the ability to anticipate and respond to fashion
trends. Any forward-looking statements by the Company, with respect
to earnings guidance, the Company’s intention to declare and pay
dividends, the repurchase of shares pursuant to a share repurchase
program, or otherwise, are intended to speak only as of the date
such statements are made. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the Securities and Exchange Commission, the
Company does not undertake to publicly update any forward-looking
statements in this news release or with respect to matters
described herein, whether as a result of any new information,
future events or otherwise.
CITI TRENDS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in
thousands, except per share data) Thirteen
Weeks Ended Thirteen Weeks Ended August 4, 2018
July 29, 2017 (unaudited) (unaudited) Net sales $ 181,999 $
166,200 Cost of sales (exclusive of depreciation shown
separately below) (110,398) (102,175) Selling, general and
administrative expenses (62,285) (59,834) Depreciation (4,676)
(4,589) Asset impairment (942) (77) Income (loss)
from operations 3,698 (475) Interest income 363 215 Interest
expense (38) (37) Income (loss) before income taxes
4,023 (297) Income tax (expense) benefit (788) 87 Net
income (loss) $ 3,235 $ (210) Basic net income (loss) per
common share $ 0.24 $ (0.01) Diluted net income (loss) per common
share $ 0.24 $ (0.01) Weighted average number of shares
outstanding Basic 13,314 14,382 Diluted 13,351
14,382
Twenty-Six
Weeks Ended Twenty-Six Weeks Ended August 4, 2018
July 29, 2017 (unaudited) (unaudited) Net sales $ 393,031 $
366,155 Cost of sales (exclusive of depreciation shown
separately below) (239,811) (224,565) Selling, general and
administrative expenses (125,290) (120,321) Depreciation (9,650)
(8,887) Asset impairment (942) (77) Income from
operations 17,338 12,305 Interest income 658 401 Interest expense
(75) (74) Income before income taxes 17,921 12,632
Income tax expense (3,389) (3,952) Net income $
14,532 $ 8,680 Basic net income per common share $ 1.08 $
0.60 Diluted net income per common share $ 1.08 $ 0.59
Weighted average number of shares outstanding Basic 13,446
14,550 Diluted 13,491 14,598
CITI TRENDS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
August 4, 2018 July 29, 2017 (unaudited)
(unaudited) Assets: Cash and cash equivalents $ 40,992 $ 30,195
Short-term investment securities 36,009 32,669 Inventory 138,801
131,989 Prepaid and other current assets 17,701 16,783 Property and
equipment, net 57,154 63,795 Long-term investment securities 13,020
26,748 Other noncurrent assets 7,105 7,485 Total assets $ 310,782 $
309,664 Liabilities and Stockholders' Equity: Accounts
payable $ 72,096 $ 67,256 Accrued liabilities 27,358 26,788 Other
current liabilities 2,005 1,803 Noncurrent liabilities 8,338 8,705
Total liabilities 109,797 104,552 Total stockholders' equity
200,985 205,112 Total liabilities and stockholders' equity $
310,782 $ 309,664
CITI
TRENDS, INC. RECONCILIATION OF GAAP BASIS OPERATING
RESULTS TO ADJUSTED NON-GAAP OPERATING RESULTS
(unaudited) (in thousands, except per share data)
The Company makes reference in this
release to net income adjusted for proxy contest expenses and
earnings per diluted share adjustedfor proxy contest expenses for
the thirteen and twenty-six week periods ended July 29, 2017. The
Company believes that excludingproxy contest expenses and their
related tax effects from its financial results reflects operating
results that are more indicative of theCompany's ongoing operating
performance while improving comparability to prior and future
periods, and as such, may provide investorswith an enhanced
understanding of the Company's past financial performance and
prospects for the future. This information is notintended to be
considered in isolation or as a substitute for net income or
earnings per diluted share prepared in accordance with
generallyaccepted accounting principles (GAAP).
Thirteen Weeks Ended July 29, 2017 As Reported
Adjustment (1) As Adjusted (unaudited)
(unaudited) (unaudited) Net sales $ 166,200 $ - $ 166,200
Cost of sales (exclusive of depreciation shown separately
below) (102,175) - (102,175) Selling, general and administrative
expenses (59,834) 926 (58,908) Depreciation (4,589) - (4,589) Asset
impairment (77) - (77) (Loss)
income from operations (475) 926 451 Interest income 215 - 215
Interest expense (37) - (37)
(Loss) income before income taxes (297) 926 629 Income tax benefit
(expense) 87 (271) (184) Net
(loss) income $ (210) $ 655 $ 445 Basic net
(loss) income per common share $ (0.01) $ 0.03 Diluted net (loss)
income per common share $ (0.01) $ 0.03 Weighted average
number of shares outstanding Basic 14,382 14,382
Diluted 14,382 14,417
Twenty-Six
Weeks Ended July 29, 2017 As Reported
Adjustment (1) As Adjusted (unaudited)
(unaudited) (unaudited) Net sales $ 366,155 $ - $ 366,155
Cost of sales (exclusive of depreciation shown separately
below) (224,565) - (224,565) Selling, general and administrative
expenses (120,321) 2,516 (117,805) Depreciation (8,887) - (8,887)
Asset impairment (77) - (77)
Income from operations 12,305 2,516 14,821 Interest income 401 -
401 Interest expense (74) - (74)
Income before income taxes 12,632 2,516 15,148 Income tax expense
(3,952) (787) (4,739) Net income
$ 8,680 $ 1,729 $ 10,409 Basic net income per
common share $ 0.60 $ 0.72 Diluted net income per common share $
0.59 $ 0.71 Weighted average number of shares outstanding
Basic 14,550 14,550 Diluted 14,598
14,598 (1) Proxy contest expenses and related tax effects
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180823005123/en/
Citi Trends, Inc.Bruce Smith, 912-443-2075President and Chief
Executive Officer
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