• Total Sales: Approximately $211 million for the fourth quarter.
• Comparable Store Sales Growth: 6.4% increase in the fourth quarter.
• Gross Margin: 39.7%, a 60 basis point expansion compared to Q4 2024.
• Inventory: Down 6% compared to the prior year.
• Cash Position: $61 million in cash with no debt.
• Store Count: 591 stores at the end of the quarter.
• Adjusted EBITDA: $7.1 million for the fourth quarter.
• Full-Year Sales: $753.1 million for fiscal 2024.
• Full-Year Comparable Store Sales: 3.4% increase on a 52-week to 52-week basis.
• Full-Year Adjusted EBITDA: Loss of $14.2 million.
• Share Repurchase: $10 million spent on repurchasing 395,793 shares at an average price of $25.23.
• 2025 Outlook - Comp Sales Growth: Low to mid-single digits expected.
• 2025 Outlook - Gross Margin Expansion: Minimum of 220 basis points expected.
• 2025 Outlook - EBITDA: Expected to be in the range of $5 million to $9 million.
• 2025 Outlook - Store Openings/Closures: Plan to open up to five new stores and close up to five stores.

• Warning! GuruFocus has detected 4 Warning Sign with CTRN.

Release Date: March 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Citi Trends Inc (NASDAQ:CTRN) reported a 6.4% increase in comparable store sales for the fourth quarter, showing strong customer traffic and transaction growth.
• The company achieved a gross margin rate of 39.7%, a 60 basis point expansion compared to the previous year.
• Citi Trends Inc (NASDAQ:CTRN) ended the period with inventories down 6% compared to the prior year, indicating improved inventory management.
• The company has a strong financial position with $61 million in cash, no debt, and no drawings on its $75 million revolver.
• Citi Trends Inc (NASDAQ:CTRN) is implementing an AI-based product allocation system to enhance inventory efficiency and reduce markdowns.

Negative Points

• The company experienced a significant miss in plus size apparel due to execution issues, although these have been addressed.
• Adjusted EBITDA for the fourth quarter was $7.1 million, down from $10 million in the same quarter of the previous year.
• Citi Trends Inc (NASDAQ:CTRN) recorded a noncash valuation allowance of approximately $15.5 million related to deferred tax assets.
• The company closed two stores during the quarter as part of its fleet optimization efforts.
• Weather disruptions in January had a 250 basis point negative impact on comparable store sales for the month.

Q & A Highlights

Q: What is Citi Trends doing differently from the industry to sustain momentum into 2025 despite other retailers reporting softening results? A: Kenneth Seipel, CEO, highlighted that Citi Trends has sharpened its price value equation and added an off-price model, which has resonated well with customers. The strategic positioning of their 591 stores in neighborhoods has also made them a first alternative for customers, contributing to market share gains.

Q: How has the off-price portion of the business evolved, and what are the future expectations? A: Kenneth Seipel explained that the off-price segment, currently contributing 1-2% of the business, is expected to grow to about 10%. This segment focuses on in-season aggressive deals and extreme value items, which are additive to the business rather than replacements.

Q: Can you provide more details on the brand name deals Citi Trends is pursuing? A: Kenneth Seipel mentioned that while specific brand names cannot be disclosed due to ongoing relationships, the focus is on top-selling, high-awareness brands across categories like footwear and apparel. These deals are often at extreme pricing, providing unique market opportunities.

Q: What are the building blocks for the projected EBITDA increase of $19 million to $23 million? A: Kenneth Seipel and Heather Plutino, CFO, noted that the increase will be driven by sales growth, margin expansion, and leveraging SG&A. The company has set a low base for sales and expenses, with a plan to achieve a 25% flow-through from sales growth.

Q: What sales level is needed to achieve the longer-term adjusted EBITDA target of $40 million to $50 million? A: Kenneth Seipel indicated that the goal is to achieve an EBITDA margin of 5% to 7%, which would align with industry standards. The focus is on restoring EBITDA to the $40 million to $50 million range through improved sales and operational efficiencies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.