Citi Trends Inc.
) posted fourth-quarter fiscal 2013 earnings per share of 10
cents, marking a turnaround from the loss of 5 cents per share
reported in the prior-year quarter. Moreover, the company's
earnings were in line the Zacks Consensus Estimate.
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We believe that the company's strategic initiatives such as
better utilization of floor area, improvising merchandise margins
and efficient inventory management have helped it make a
Quarter in Detail
Citi Trends reported sales of $157.2 million, marking a decline
of 10.5% from $175.7 million in the prior-year quarter, while it
remained almost in line with the Zacks Consensus Estimate of $157
million. The decline was mainly due to the inclusion of an
additional week in fourth-quarter fiscal 2012, which contributed
$12 million to sales.
Comparable-store sales (13 weeks comparable basis) in the quarter
declined 3.5% from the year-ago quarter, mainly driven by a 2%
fall in average unit sale coupled with a marginal decline
in the number of transactions and the average number of
items per transaction.
On the basis of merchandise category, comparable store sales of
the Home Division and Accessories increased 9% and 12%,
respectively. On the other hand, sales of the Children, Men's
divisions were down 6% each, while the Ladies division was down
Citi Trends' gross profit for the quarter increased by a marginal
0.2% to $57.6 million from $57.5 million in the year-ago quarter,
while gross margin expanded 390 basis points (bps) to 36.6%. The
improvement in gross margin came on the back of lesser markdowns
and strong inventory control that helped lower cost of sales.
Selling, general and administrative (SG&A) expenses in the
quarter increased approximately 4.7% year over year to $50.2
million, while depreciation expense waned 8.6% to $5.3 million.
As a percentage of sales, SG&A expenses increased 190 bps to
31.9% due to a decline in total sales.
Operating income on a reported basis was $1.9 million, improving
significantly from a loss of $1.5 million reported in the
comparable year-ago quarter.
For fiscal 2013, the company's earnings came in at 3 cents per
share, significantly improving from a loss per share of 15 cents
in fiscal 2012 and the Zacks Consensus Estimate of a loss of 3
cents. Sales for the year dipped 5.0% to $622.2 million, while it
was almost in sync with the Zacks Consensus Estimate of $622
Citi Trends had no debt on its balance sheet at the end of fiscal
2013. Cash and cash equivalents were $58.9 million compared with
$37.3 million at the end of fiscal 2012. Shareholders' equity
totaled $198.9 million, as against $196.0 million in the
Following a conservative store growth strategy in fiscal 2013,
Citi Trends opened only 1 store throughout the year, while it
relocated or expanded 6 stores. Moreover, the company shuttered 9
stores in the year, bringing the company's total store count to
505 at the close of fiscal 2013. At present, the company operates
across 29 states in the Southeast, Mid-Atlantic and Midwest
regions as well as in the states of Texas and California.
Looking at fiscal 2014, the company anticipates some sales
improvement as the company's strategies begin paying off.
However, from the perspective of growth the company envisions
another conservative year with plans to open only 5-10 new
stores, relocate or expand 5-10 stores and remodel 20-25 stores.
Other Stocks to Consider
Citi Trends currently holds a Zacks Rank #3 (Hold). Better-ranked
stocks in the retail space include
Foot Locker Inc.
American Apparel Inc.
Burlington Stores Inc.
). All of these stocks have a Zacks Rank #2 (Buy).