Third quarter total sales increased 8.8% to
$199 million and comparable sales increased 6.3%
Gross margin increased 440 bps to 41.8%
driven by full-priced sales
Operating margin expanded to 4.7% compared
to (0.9%) in the prior year period
Earnings per share of $0.67 compared to
($0.09) in the third quarter of 2019
Strong liquidity with $96.8 million of cash
and no debt at the end of the quarter
Citi Trends, Inc. (NASDAQ:
CTRN), the leading value retailer of apparel, accessories and home
trends for way less spend primarily for African American families
in the United States, today reported results for the third quarter
ended October 31, 2020.
Financial Highlights – 13-week third
quarter ended October 31, 2020
- Total sales increased 8.8% to $199.1 million compared to $183.1
million in the third quarter of 2019
- Comparable store sales increased 6.3%; the fifth consecutive
quarter of positive open-only comparable store sales
- Gross margin increased 440 bps to 41.8% compared to 37.4% in
the third quarter of 2019, reflecting strong full-price selling and
fewer markdowns, continuing on the momentum from the second quarter
expansion of 390 bps
- Selling, general and administrative expenses increased 5.6%
year-over-year due to higher bonus and equity compensation
accruals; as a percent of sales, SG&A decreased 100 bps to
34.8% as compared to last year
- Operating income was $9.3 million compared to operating loss of
$1.6 million in the third quarter of 2019, for an operating margin
of 4.7% compared to (0.9%)
- Net income was $7.0 million compared to ($1.1) million in the
third quarter of 2019
- Earnings per share was $0.67 compared to ($0.09) in the third
quarter of 2019
- Cash of $96.8 million and no borrowings on the Company’s line
of credit at the end of the third quarter, compared to cash and
investments of $72.3 million at the end of the third quarter last
year
- Quarter-end inventory decreased 15.5% compared to the end of
the third quarter of 2019
- Successfully opened eight new Citi Trends stores and closed two
stores, bringing the current fleet total to 585
- Repurchased 375,803 shares of common stock at an aggregate cost
of $9.9 million during the quarter with an additional $5.1 million
repurchased through November 20th; the repurchase of the shares was
funded from cash on hand
Chief Executive Officer
Comments
David Makuen, Chief Executive
Officer, said, “I could not be more pleased with our third quarter
performance as we exceeded our expectations by delivering total
company sales growth of nearly 9% and a comparable store sales
increase of 6.3%, which we achieved despite reduced operating hours
and a challenging operating environment. We achieved this robust
growth on 33% less inventory in our comparable stores, validating
that we are successfully transforming and adapting our operating
model. In fact, our third quarter in-store inventory turned 55%
faster than the prior year, driven by meaningfully higher full
price selling and resulting in gross margin expansion of more than
440 basis points building on the second quarter gross margin
expansion of 390 basis points. These strong results once again
demonstrate the strength of our brand, our on-trend assortment and
our loyal and expanding customer base.”
Makuen continued, “Our
associates in our stores and distribution centers, as well as our
home office teams, continue to do an incredible job to safely serve
our customers and provide fresh and relevant trends at amazing
values. I would like to thank them for their commitment and hard
work. Central to our success has been our data-driven approach to
effectively respond to today’s largely at-home lifestyle. We
entered the holiday selling season well positioned to fill our
stores with ‘Fab Festive Finds’ anchored in a broad range of
giftable apparel, toys, tech, beauty, jewelry and more. Our 4,500
store team members cannot wait to create a happy holiday across our
entire fleet.”
Guidance
The Company continues to plan
the remainder of the year conservatively given marketplace
conditions as a result of the pandemic. As such, the Company is
estimating its fiscal 2020 fourth quarter comparable store sales to
be approximately flat, which is consistent with November’s trend.
This estimate is subject to potential consumer and marketplace
volatility due to the COVID-19 pandemic and changes to the consumer
landscape and therefore may change as the quarter
progresses.
Due to the uncertainty
surrounding the impact of the COVID-19 pandemic on the business
environment, consumer behavior and the Company’s business
operations, the Company is not providing any further guidance at
this time.
CitiCARESSM Council
Update
The Company formed the CitiCARES Council with the mission to
find ways to directly support the communities the Company’s stores
call home. The Company is determined to be present, involved, and
engaged in issues where it can make a difference. The Company
announced today that the CitiCARES Council will be conducting its
first fundraising event to benefit the Boys and Girls Clubs in
select communities. From November 20 thru December 20, select
stores will accept donations that will directly benefit the clubs
in those communities. Mr. Makuen noted, “the CitiCARES Council
worked directly with the staff at these clubs to discuss their
needs, programs and the shortfalls created as a result of the
current pandemic. The Company and the CitiCARES Council are proud
to partner with the Boys and Girls Club of America
organization.”
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) 223-4361. A replay of the
conference call will be available until December 8, 2020, by
dialing (402) 977-9140 and entering the passcode,
21971725.
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 fashion apparel, accessories and home
goods for the entire family. The Company operates 585 stores
located in 33 states. Citi Trends’ website address is
www.cititrends.com. CTRN-G
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,"
“upcoming,” “trend” 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, sales or new store 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 1, 2020, as
amended. These risks and uncertainties include, but are not limited
to, uncertainties relating to economic conditions, the impact of
potential global health emergencies such as COVID-19 (coronavirus),
including potential negative impacts on the global economy and
foreign sourcing, the duration of the COVID-19 outbreak (including
the resurgence of COVID-19 cases), actions that may be taken by
governmental authorities to contain the COVID-19 outbreak or to
treat its impact, the impacts of COVID-19 on the Company's
financial condition, business operation and liquidity, including
the re-closure of any of the Company’s retail stores and
distribution centers, 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
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 October 31, 2020 November 2,
2019 (unaudited) (unaudited) Net sales
$
199,100
$
183,050
Cost of sales (exclusive of depreciation shown separately
below)
(115,827
)
(114,579
)
Selling, general and administrative expenses
(69,230
)
(65,539
)
Depreciation
(4,703
)
(4,520
)
Income from operations
9,340
(1,588
)
Interest income
4
421
Interest expense
(193
)
(39
)
Income (loss) before income taxes
9,151
(1,206
)
Income tax (expense) benefit
(2,186
)
122
Net income (loss)
$
6,965
$
(1,084
)
Basic net income (loss) per common share
$
0.67
$
(0.09
)
Diluted net income (loss) per common share
$
0.67
$
(0.09
)
Weighted average number of shares outstanding Basic
10,365
11,636
Diluted
10,401
11,636
Thirty-Nine Weeks Ended Thirty-Nine Weeks
Ended October 31, 2020 November 2, 2019
(unaudited) (unaudited) Net sales
$
531,375
$
570,912
Cost of sales (exclusive of depreciation shown separately
below)
(327,344
)
(357,429
)
Selling, general and administrative expenses
(180,929
)
(191,975
)
Depreciation
(14,582
)
(13,741
)
Asset impairment
(286
)
(472
)
Income from operations
8,234
7,295
Interest income
235
1,214
Interest expense
(733
)
(117
)
Income before income taxes
7,736
8,392
Income tax expense
(1,796
)
(1,311
)
Net income loss
$
5,940
$
7,081
Basic net income per common share
$
0.57
$
0.60
Diluted net income per common share
$
0.57
$
0.60
Weighted average number of shares outstanding Basic
10,420
11,831
Diluted
10,444
11,842
CITI TRENDS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) (in thousands) October 31,
2020 November 2, 2019 (unaudited) (unaudited) Assets:
Cash and cash equivalents
$
96,762
$
23,731
Short-term investment securities
-
32,305
Inventory
114,405
135,395
Prepaid and other current assets
18,574
16,774
Property and equipment, net
63,564
55,704
Operating lease right of use assets
182,338
154,267
Long-term investment securities
-
16,272
Other noncurrent assets
6,278
7,802
Total assets
$
481,921
$
442,250
Liabilities and Stockholders' Equity: Accounts payable
$
87,757
$
71,699
Accrued liabilities
32,496
23,631
Current operating lease liabilities
47,976
41,659
Other current liabilities
1,737
2,208
Noncurrent operating lease liabilities
148,766
120,485
Other noncurrent liabilities
2,256
1,921
Total liabilities
320,988
261,603
Total stockholders' equity
160,933
180,647
Total liabilities and stockholders' equity
$
481,921
$
442,250
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201201005421/en/
Tom Filandro ICR, Inc. (646) 277-1235
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