First quarter total sales increased 145.8%
vs Q1 2020 and 39.2% vs Q1 2019
First quarter gross margin increased 1,530
bps to 42.6%
First quarter operating margin of 13.7%
compared to (23.7%) in Q1 2020
Earnings per diluted share of $3.23 compared
to ($2.00) in Q1 2020
Raising full year 2021 guidance following
record first quarter
Citi Trends, Inc. (NASDAQ:
CTRN), a growing specialty value retailer of apparel, accessories
and home trends for way less spend primarily for African American
and Latinx families in the United States, today reported results
for the first quarter ended May 1, 2021.
Financial Highlights
– 13-week first quarter ended May 1,
2021
- Total sales increased 145.8% to $285.4 million compared to
$116.1 million in Q1 2020; total sales increased 39.2% compared to
Q1 2019
- Comparable store sales increased 142.0%, representing the
seventh consecutive quarter of positive open-only comparable store
sales; comparable store sales increased 35.0% compared to Q1
2019
- Gross margin increased 1,530 bps to 42.6% compared to Q1 2020
gross margin of 27.3% and 510 bps compared to Q1 2019 gross margin
of 37.5% primarily due to strong full-price selling and fewer
markdowns
- As a percent of sales, selling, general and administrative
expenses improved 1,930 bps compared to Q1 2020 and 365 bps
compared to Q1 2019 due to sales leverage and disciplined expense
control
- Operating income was $39.0 million compared to ($27.6) million
in Q1 2020 and $8.7 million in Q1 2019
- Operating margin was 13.7% compared to (23.7%) in Q1 2020 and
4.3% in Q1 2019
- Net income was $30.9 million compared to ($20.9) million in Q1
2020 and $7.8 million in Q1 2019
- Earnings per diluted share was $3.23 compared to ($2.00) in Q1
2020 and $0.65 in Q1 2019
- Cash of $131.3 million with no debt at the end of the quarter,
compared to cash of $108.1 million with $43.7 million drawn on the
credit facility at the end of Q1 2020
- Quarter-end inventory decreased 16.5% compared to the end of Q1
2020
Chief Executive Officer
Comments
David Makuen, Chief Executive
Officer, commented, “We had a very strong start to our fiscal year,
with record first quarter results for total sales, gross margin and
operating margin, building on our momentum from last year despite
the backdrop of the continued pandemic. Our robust, broad-based
topline performance is attributed to our differentiated business
model that continues to meet the needs of our customers through our
highly curated merchandise across our six “CITIs,” combined with a
unique and compelling shopping experience that we look to amplify
even further. The combination of these efforts resulted in another
quarter in which we drove an increase in full-price selling,
reduced markdown levels and improved inventory turns, all while
maintaining disciplined expense management, resulting in bottom
line results that exceeded our expectations. I want to thank our
team for their unwavering dedication and resiliency as we continue
to prioritize health and safety in the communities in which we
operate.”
Makuen continued, “Looking
ahead, we feel very good about our overall positioning for the rest
of fiscal 2021 and beyond. As we continue to enhance the Citi
Trends experience for our customers and execute against our
strategic priorities, we are well ahead of our previously shared
long-term plan and expect to achieve our growth target of $1
billion in sales sooner than originally planned. As such, our board
of directors and leadership team are exploring new capital
allocation strategies designed to accelerate our new store growth.
We are confident that our growth strategies and the advantages of
our business model will continue to fuel market share gains and
drive long-term sustainable growth."
Capital Return Program
Update
In the first quarter, the
Company repurchased approximately 537,500 shares of its common
stock at an aggregate cost of approximately $45.5 million. As
previously announced, this includes 250,000 shares bought back in a
block repurchase.
Guidance
The Company is encouraged by
its second quarter to-date sales performance, which is above its
internal expectations. On the heels of a record first quarter, for
the full year 2021, the Company is raising its guidance and expects
to generate total sales of $970 to $990 million, an increase of
approximately 24% to 27% as compared to fiscal years 2020 and 2019.
This would result in expected earnings per diluted share in a range
of $4.55 to $4.75, an increase of 96% to 105% compared to 2020 and
an increase of 223% to 237% compared to 2019.
CEO Action for Diversity &
Inclusion™
The Company also announced
that David Makuen, Chief Executive Officer, has pledged on behalf
of Citi Trends to the CEO Action for Diversity &
Inclusion™, the
largest CEO-driven coalition to advance diversity and inclusion
within the workplace. By signing the pledge, Citi Trends, among
other companies, is committing to take action to cultivate a
workplace where diverse perspectives and experiences are welcomed
and respected and where employees feel encouraged to discuss
diversity and inclusion. With businesses anchored in almost every
community across America joining the pledge, the coalition has the
opportunity to play a meaningful role in such an important societal
issue.
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 (212) 231-2901. A replay of the
conference call will be available until June 1, 2021, by dialing
(402) 977-9140 and entering the passcode, 21993903.
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 growing
specialty value retailer of apparel, accessories and home trends
for way less spend primarily for African American and Latinx
families in the United States. The Company operates 584 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 and expectations of
management for future operations and capital allocation
expectations, 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 our Annual Reports and Quarterly Reports on Forms 10-K
and 10-Q, respectively, and any amendments thereto, filed with the
Securities and Exchange Commission. These risks and uncertainties
include, but are not limited to, uncertainties relating to general
economic conditions, including any deterioration whether caused by
acts of war, terrorism, political or social unrest (including any
resulting store closures, damage or loss of inventory); the ongoing
COVID-19 (coronavirus) pandemic and associated containment and
remediation efforts, the potential negative impacts of COVID-19 on
the global economy and foreign sourcing; the impacts of COVID-19 on
the Company's financial condition, business operation and
liquidity, including the re-closure of any or all of the Company’s
retail stores and distribution centers; transportation and
distribution delays or interruptions; changes in freight rates; the
Company’s ability to negotiate effectively the cost and purchase of
merchandise inventory risks due to shifts in market demand; the
Company’s ability to gauge fashion trends and changing consumer
preferences; changes in consumer spending patterns; the duration
and extent of economic stimulus; changes in product mix;
interruptions in suppliers’ businesses; temporary changes in demand
due to weather patterns; seasonality of the Company’s business;
delays associated with building, opening and operating new stores;
and delays associated with building, and opening or expanding new
or existing distribution centers. Any forward-looking statements by
the Company, with respect to guidance, 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 May 1, 2021 May 2,
2020 (unaudited) (unaudited) Net sales
$
285,381
$
116,124
Cost of sales (exclusive of depreciation shown
separately below)
(163,791
)
(84,370
)
Selling, general and administrative expenses
(77,892
)
(54,076
)
Depreciation
(4,697
)
(4,946
)
Asset impairment
-
(286
)
Income from operations
39,001
(27,554
)
Interest income
4
217
Interest expense
(47
)
(163
)
Income (loss) before income taxes
38,958
(27,500
)
Income tax (expense) benefit
(8,061
)
6,608
Net income (loss)
$
30,897
$
(20,892
)
Basic net income (loss) per common share
$
3.27
$
(2.00
)
Diluted net income (loss) per common share
$
3.23
$
(2.00
)
Weighted average number of shares outstanding
Basic
9,450
10,443
Diluted
9,571
10,443
CITI TRENDS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
May 1, 2021 May 2, 2020
(unaudited) (unaudited) Assets: Cash and cash equivalents
$
131,276
$
108,130
Short-term investment securities
-
5
Inventory
101,803
121,885
Prepaid and other current assets
19,290
10,138
Property and equipment, net
65,532
64,847
Operating lease right of use assets
184,694
166,749
Deferred tax assets
5,141
14,334
Other noncurrent assets
1,441
755
Total assets
$
509,177
$
486,843
Liabilities and Stockholders' Equity: Accounts
payable
$
109,723
$
94,249
Accrued liabilities
39,314
19,056
Current operating lease liabilities
48,908
50,834
Other current liabilities
12,410
1,050
Revolving credit facility
-
43,700
Noncurrent operating lease liabilities
148,596
133,167
Other noncurrent liabilities
2,233
1,729
Total liabilities
361,184
343,785
Total stockholders' equity
147,993
143,058
Total liabilities and stockholders' equity
$
509,177
$
486,843
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210525005277/en/
Tom Filandro
ICR, Inc. (646) 277-1235
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