Citi Trends Clocks 6.2% Dip In Q2 Revenues On Macro Woes

Citi Trends, Inc.'s CTRN second-quarter FY23 sales decreased 6.2% year-on-year to $173.55 million, beating the analyst consensus estimate of $165.57 million.

The adjusted EPS loss of 60 cents beat the analyst consensus estimate of a 97-cent loss. 

Gross margin of 38.2% expanded by 10 basis points Y/Y. Comparable store sales decreased 5.3% compared to the second quarter of 2022 due to a challenging macro backdrop.

The second-quarter operating loss of $7.9 million was wider compared than the operating loss of $3.3 million in the second quarter of 2022.

Quarter-end total dollar inventory decreased 5.4% compared to the second quarter of 2022.

Citi Trends held $65.82 million in cash and equivalents as of July 29.

"We experienced improved traffic levels and strong conversion throughout the quarter, signaling that our product assortment, strengthened by our strategic inventory rebuild in key areas of the business, is resonating with our loyal customers," said CEO David Makuen.

"We are excited about our back-to-school and early Fall assortments showcased in our unique in-store experience that positions Citi Trends as a one-stop solution for trends for the entire family in their local neighborhoods," Makuen adds.

Outlook: The company reiterated its FY23 sales guidance.

Full-year total sales are expected to be in the range of negative mid-single-digits to negative low single-digits compared to fiscal 2022.

Full-year EBITDA expected to be in the range of $5 million to $20 million

The company plans to open five new stores, remodel 10 to 20 stores, and close 10 to 15 underperforming stores in the year

The year-end cash balance is expected to be in the range of $85 million to $105 million

CTRN Price Action: Citi Trends shares were up 7.67% at $23.73 Tuesday morning. 

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