Value-priced retailer of urban fashion apparel and
Citi Trends Inc.
) reported better-than-expected fourth quarter and fiscal 2012
results. The company posted loss per share of 5 cents, narrowing
substantially from a loss per share of 36 cents reported in the
year-ago quarter. Moreover, the company's quarterly loss compared
favorably with the Zacks Consensus Estimate of a loss of 7 cents
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For fiscal 2012, Citi Trends' loss per share of 15 cents narrowed
compared with a loss of 69 cents reported in fiscal 2011, while
it also bettered the Zacks Consensus Estimate of a loss of 17
cents per share.
Turning to Numbers
We note that Citi Trends' fourth-quarter and full-year sales
results include one additional week as compared with the
For the fourth quarter (14 weeks ended Feb 2, 2013), Citi Trends
reported preliminary sales of $175.7 million, down 1.5% from
$178.4 million in the prior-year quarter (13 weeks ended Jan 28,
2012). The additional week made for nearly $8.8 million of net
sales in fourth-quarter 2012. The fourth-quarter sales missed the
Zacks Consensus Estimate of $186 million.
The decline in sales results for the quarter were mainly
attributed to the loss of tax refund driven sales in the last two
weeks of January this year, as the Internal Revenue Service
pushed back the 2012 tax refund date to Jan 30 instead of the
usual refunds date of Jan 13. This delay in refunds impacted the
company's fourth-quarter comparable store sales by 7.5%. As a
result, the company's comparable store sales for the fourth
quarter (14 weeks ended Feb 2, 2013) plummeted 11.8% compared
with the year-ago 14 weeks period ended Feb 4, 2012.
By month, the company's comparable store sales inched up 1% in
November, while it declined 10% in December and 28% in January.
Barring the sales decline in the last two weeks of January,
comparable sales in the first three weeks of January rose 10%.
However, for fiscal 2012 (53 weeks ended Feb 2, 2013), the
company's net sales rose 2.2% to $654.7 million from $640.8
million reported in fiscal 2011 (52 weeks ended Jan 28, 2012).
The fiscal 2012 sales missed the Zacks Consensus Estimate of $665
million. Comparable store sales for the 53 weeks ended Feb 2,
2013 were down 5.6% compared with the 53 weeks ended Feb 4, 2012.
Citi Trends' gross profit for the quarter augmented 6.8% to $57.5
million from $53.8 million in the year-ago quarter, whereas gross
margin expanded 250 basis points to 32.7%. The growth in gross
margin was attributed to a substantial decline in clearance
markdowns versus last year.
Selling, general and administrative expenses in the quarter
increased 0.9% year over year to $52.7 million, while
depreciation and amortization expenses waned 11.8% to $5.8
million. The company's loss from operations came in at $1.5
million, significantly below the year-ago period loss from
operations of $9.2 million.
Citi Trends had no debt on its balance sheet at the end of fiscal
2012. Cash and cash equivalents were $37.3 million compared with
$42.0 million at the end of fiscal 2011. Shareholders' equity
totaled $196.0 million compared with $196.4 million in the
During fiscal 2012, Citi Trends slightly paced up its stores with
the opening of 4 new stores and relocation or expansion of 4
stores. Simultaneously, the company shuttered 2 stores. This
brought the company's total store count to 513 at the end of
fiscal 2012. The company operates across 29 states in the
Southeast, Mid-Atlantic and Midwest regions as well as in the
states of Texas and Calif.
Looking into fiscal 2013, the company remains stringently focused
on improving its sales via enhancing the variety of its ladies
business. Though the significance of the company's Urban Brands
continues to decline and non-branded business is not poised to
make loss from the branded business, the company expects to gain
from better focus on its ladies business in 2013.
Though the company has made significant progress on resolving
pricing issues and remains on track to resolve fashion issues in
2013, the company expects its first and fourth quarter of fiscal
2013 to be impacted by the shift of one week of fiscal 2013 in
fiscal 2012, due to the additional week that was accounted for in
fiscal 2012. Nevertheless, the company is expected to benefit
from the movement of the tax refund related sales into fiscal
A Look at Zacks Rank
Citi Trends currently holds a Zacks Rank #5 (Strong Sell). Stocks
that are performing well among apparel-shoe retailers include
New York & Company Inc.
), which has a Zacks Rank #2 (Buy),
Abercrombie & Fitch Inc. Inc.
) , both of which carry a Zacks Rank #3 (Hold).