On January 9, we upgraded value-priced retailer of urban
fashion apparel and accessories,
Citi Trends, Inc.
) to 'Outperform' based on its improved results in the third
quarter of fiscal 2012.We are impressed with Citi Trends'
turnaround efforts, where the company registered growth in its
top line and narrowed its loss despite reporting weaker
Why the Upgrade?
Citi Trends marked an improvement in its third quarter 2012
results by reporting a loss per share of 25 cents, which fared
better than both the prior-year quarter's loss of 38 cents as
well as the Zacks Consensus Estimate of a loss of 41 cents per
share. During the quarter, Citi Trends' net sales improved 4.1%
to $149 million, and surpassed the Zacks Consensus Estimate of
Following the release of Citi Trends' third-quarter results,
the Zacks Consensus Estimate of earnings for 2012 has shot up
83.3% to 22 cents per share. Apart from the better-than-expected
third-quarter results, the company's store-growth initiatives,
efficient inventory management and healthy financial position
underline its strength. We believe that these factors are also
the reasons behind the rise in earnings estimate.
In our point of view, Citi Trends' extensive focus on
store-expansion strategy may drive its top-line growth. Further,
the company has taken prudent steps towards inventory management,
such as enhanced supervision and installation of sophisticated
surveillance systems in high-shrinkage stores. We expect these
initiatives to help the company improve its operational
Other Stocks to Consider
Besides Citi Trends, other stocks in the retail-apparel/shoe
sector that are currently performing well include
Foot Locker Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
CITI TRENDS INC (CTRN): Free Stock Analysis
DSW INC CL-A (DSW): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
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