Zacks Investment Research downgraded
Citi Trends Inc.
) to a Zacks Rank #5 (Strong Sell) on May 25.
CITI TRENDS INC (CTRN): Free Stock Analysis
GAP INC (GPS): Free Stock Analysis Report
LULULEMON ATHLT (LULU): Free Stock Analysis
NEW YORK & CO (NWY): Free Stock Analysis
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Why the Downgrade?
Citi Trends has witnessed sharp downward estimate revisions after
reporting disappointing first-quarter fiscal 2013 results. Shares
of this value-priced retailer of urban fashion apparel and
accessories have been range bound since reporting first-quarter
earnings on May 22.
Citi Trends reported first-quarter earnings per share of 42
cents, missing the Zacks Consensus Estimate of 57 cents by 26.3%
and the year-ago earnings of 69 cents by 39.1%.
Earnings were primarily affected by an 8% year-over-year decline
in sales and a 4.1% downside in comps. Net sales of $181.8
million also fell below the Zacks Consensus Estimate of $198
million. Weakened sales and comps were mainly driven by weak
sales at the company's stores in February and March, followed by
a recovery in April as the weather turned warmer post Easter.
We believe Citi Trends remains significantly impacted by the
macroeconomic issues, wherein its customers continue to feel the
pinch of increased payroll tax, higher fuel prices, high
unemployment rate and delayed tax refunds.
Given the first-quarter results and the limited near-term
catalysts, we expect the company's share performance to remain
strained in the near term.
Following the company's muted performance, the Zacks Consensus
Estimate for fiscal 2013 has moved down by 6 cents to a
break-even point over the last 30 days. For fiscal 2014, most of
the estimates were revised downward over the last 30 days,
pulling the Zacks Consensus Estimate down by 8.7% to 21 cents per
Other Stocks to Consider
Not all apparel/shoe retailers are performing as poorly as Citi
Trends. The apparel/shoe retailers with a favorable Zacks Rank
that are performing well and are worth considering include
New York & Co. Inc.
Lululemon Athletica Inc.
). Of these, New York & Co. has a Zacks Rank #1 (Strong Buy),
while Gap and Lululemon carry a Zacks Rank #2 (Buy).