Year-to-date, earnings per diluted share up
63%, or 38% on an adjusted basis*
Third quarter comparable store sales
increased 0.6%
Maintaining fourth quarter guidance
Declares quarterly dividend
Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the
third quarter of fiscal 2018.
Financial Highlights – Third quarter
ended November 3, 2018
Total sales in the third quarter ended November 3, 2018
decreased 0.9% to $175.4 million, compared with $176.9 million in
the third quarter ended October 28, 2017. As discussed previously,
the year-over-year comparison of total quarterly sales was
adversely impacted by approximately $5.0 million due to a shift in
the weeks that were included in the third quarter this year, as a
result of fiscal 2017 being a 53-week year. Comparable store sales
increased 0.6%, comparing the 13 weeks ended November 3, 2018 with
the 13 weeks ended November 4, 2017.
The Company had a net loss of $(0.5) million, or $(0.04) per
diluted share, in the third quarter of 2018, compared with net
income in last year’s third quarter of $0.6 million, or $0.05 per
diluted share. The decline in third quarter earnings from last year
was heavily impacted by the loss of sales resulting from the
calendar shift.
During the third quarter, the Company opened four new stores,
expanded one store and closed one store.
Financial Highlights – First three
quarters ended November 3, 2018
Total sales in the first three quarters of fiscal 2018 increased
4.7% to $568.4 million, compared with $543.1 million in the first
three quarters of fiscal 2017. Comparable store sales increased
2.0% in the first three quarters of this year, comparing the 39
weeks ended November 3, 2018 with the 39 weeks ended November 4,
2017.
Net income was $14.0 million in the first three quarters of
2018, compared with net income in the same period of last year of
$9.3 million on a GAAP basis, or $11.1 million when adjusted for
proxy contest-related expenses*. Earnings per diluted share in the
first three quarters of 2018 were $1.06, compared with earnings per
diluted share in the first three quarters of 2017 of $0.65 on a
GAAP basis, or $0.77 when adjusted for proxy contest-related
expenses*.
Bruce Smith, President and Chief Executive Officer, commented,
“Comparable store sales increased 0.6% in this year’s third quarter
on top of a strong 7.4% increase in the third quarter of 2017.
While sales in the non-apparel lines of business continued to
increase, we experienced a fashion miss in our Ladies’ apparel
category. We have taken corrective action in the Ladies’ area and
remain focused on our continuing efforts to maximize sales across
all of our merchandise categories anchored on delivering
fashion-right, value-priced products that resonate with our
customers.”
Smith further noted, “With the impact on earnings from the
calendar shift now largely behind us, we are pleased with our
year-to-date results for the first nine months of 2018, which
reflect a 63% increase in earnings per diluted share, or 38% when
adjusted for proxy contest-related expenses*.”
Guidance
The Company provided the following guidance for the fourth
quarter of fiscal 2018:
- The Company is maintaining its fourth
quarter earnings per diluted share guidance in a range of $0.60 to
$0.65, which would result in full year fiscal 2018 guidance in a
range of $1.66 to $1.71. This compares with last year’s earnings
per diluted share of $1.03 for the full year.
- Comparable store sales are expected to
increase in a range of 1% to 2% in the fourth quarter, consistent
with the November month-to-date trend.
- Total sales are expected to decrease in
a range of 3% to 4% 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.
The Company is also reiterating its longer term goals, under
which the Company expects to increase comparable store sales at a
rate of approximately 3% each year and increase store square
footage 2% to 3% each year through new store growth, with the
expectation that earnings would increase approximately 12% to 15%
annually.
Capital Return Program
During the third quarter, the Company completed the $25 million
stock repurchase program that had been authorized by the Company’s
Board of Directors on March 16, 2018. As the next step in the
Company’s expanded capital return program announced in April 2017,
the Company’s Board of Directors today announced the authorization
of another $25 million share repurchase program, which the Company
expects to fund from cash on hand.
Also, the Company announced that its Board of Directors has
declared a quarterly cash dividend of $0.08 per common share,
payable on December 26, 2018, to stockholders of record as of the
close of business on December 11, 2018.
Mr. Smith commented, “Once again, our Board has demonstrated its
confidence in the business and its commitment to returning excess
capital to stockholders while maintaining the financial flexibility
required to invest in and grow our business. These actions taken by
our Board are a continuation of the capital return program started
in 2015. Since that time, we have returned approximately $78
million to our stockholders through a combination of dividends and
share repurchases.”
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) 223-4398. A replay of the conference call will be
available until December 7, 2018, by dialing (402) 977-9140
and entering the passcode, 21899138.
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
559 stores located in 32 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 or sales 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 or sales 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 November 3, 2018 October 28, 2017
(unaudited) (unaudited) Net sales $ 175,364 $ 176,943 Cost
of sales (exclusive of depreciation shown separately below)
(110,420 ) (110,094 ) Selling, general and administrative expenses
(61,189 ) (61,118 ) Depreciation (4,600 ) (4,976 ) Asset impairment
(180 ) - (Loss) income from operations (1,025
) 755 Interest income 321 216 Interest expense (39 )
(38 ) (Loss) income before income taxes (743 ) 933 Income tax
benefit (expense) 237 (286 ) Net (loss) income
$ (506 ) $ 647 Basic net (loss) income per common
share $ (0.04 ) $ 0.05 Diluted net (loss) income per common
share $ (0.04 ) $ 0.05 Weighted average number of
shares outstanding Basic 12,780 13,563
Diluted 12,780 13,614
Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
November 3, 2018 October 28, 2017 (unaudited)
(unaudited) Net sales $ 568,395 $ 543,098 Cost of sales
(exclusive of depreciation shown separately below) (350,231 )
(334,659 ) Selling, general and administrative expenses (186,478 )
(181,439 ) Depreciation (14,250 ) (13,863 ) Asset impairment
(1,122 ) (77 ) Income from operations 16,314 13,060 Interest
income 979 617 Interest expense (114 ) (112 ) Income
before income taxes 17,179 13,565 Income tax expense (3,152
) (4,238 ) Net income $ 14,027 $ 9,327
Basic net income per common share $ 1.06 $ 0.66
Diluted net income per common share $ 1.06 $ 0.65
Weighted average number of shares outstanding Basic
13,224 14,221 Diluted 13,269
14,270
CITI TRENDS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
November 3, 2018 October 28, 2017 (unaudited)
(unaudited) Assets: Cash and cash equivalents $ 28,378 $ 34,866
Short-term investment securities 42,939 30,298 Inventory 139,699
133,245 Prepaid and other current assets 15,282 16,405 Property and
equipment, net 55,643 63,571 Long-term investment securities 10,320
26,117 Other noncurrent assets 7,947 8,171 Total
assets $ 300,208 $ 312,673 Liabilities and Stockholders'
Equity: Accounts payable $ 68,342 $ 68,047 Accrued liabilities
25,836 28,921 Other current liabilities 2,106 1,913 Noncurrent
liabilities 8,001 8,786 Total liabilities 104,285
107,667 Total stockholders' equity 195,923
205,006 Total liabilities and stockholders' equity $ 300,208 $
312,673
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
adjusted for proxy contest expenses. The Company believes that
excluding proxy contest expenses and their related tax effects from
its financial results reflects operating results that are more
indicative of the Company's ongoing operating performance while
improving comparability to prior and future periods, and as such,
may provide investors with an enhanced understanding of the
Company's past financial performance and prospects for the future.
This information is not intended to be considered in isolation or
as a substitute for net income or earnings per diluted share
prepared in accordance with generally accepted accounting
principles (GAAP).
Thirteen Weeks Ended October 28, 2017 As
Reported Adjustment (1) As Adjusted (unaudited)
(unaudited) (unaudited) Net sales $ 176,943 $ - $ 176,943
Cost of sales (exclusive of depreciation shown separately
below) (110,094 ) - (110,094 ) Selling, general and administrative
expenses (61,118 ) - (61,118 ) Depreciation (4,976 ) - (4,976 )
Asset impairment - - -
Income from operations 755 - 755 Interest income 216 - 216 Interest
expense (38 ) - (38 ) Income before
income taxes 933 - 933 Income tax expense (286 ) -
(286 ) Net income $ 647 $ - $ 647
Basic net income per common share $ 0.05 $
0.05 Diluted net income per common share $ 0.05 $
0.05 Weighted average number of shares outstanding
Basic 13,563 13,563 Diluted
13,614 13,614
Thirty-Nine
Weeks Ended October 28, 2017 As Reported Adjustment
(1) As Adjusted (unaudited) (unaudited) (unaudited)
Net sales $ 543,098 $ - $ 543,098 Cost of sales
(exclusive of depreciation shown separately below) (334,659 ) -
(334,659 ) Selling, general and administrative expenses (181,439 )
2,516 (178,923 ) Depreciation (13,863 ) - (13,863 ) Asset
impairment (77 ) - (77 ) Income from
operations 13,060 2,516 15,576 Interest income 617 - 617 Interest
expense (112 ) - (112 ) Income before
income taxes 13,565 2,516 16,081 Income tax expense (4,238 )
(786 ) (5,024 ) Net income $ 9,327 $ 1,730
$ 11,057 Basic net income per common share $
0.66 $ 0.78 Diluted net income per common share $
0.65 $ 0.77 Weighted average number of shares
outstanding Basic 14,221 14,221 Diluted
14,270 14,270 (1) Proxy contest
expenses and related tax effects
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181130005062/en/
Citi Trends, Inc.Bruce Smith, (912) 443-2075President and Chief
Executive Officer
Citi Trends (NASDAQ:CTRN)
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