Citi Trends Inc.
) has come up with disappointing preliminary sales results for
the fourth quarter, which guided the company to project net loss
for the upcoming quarter. Additionally, the company took a peek
into fiscal 2013, providing an update on the expected trends in
fiscal 2013. This Zacks Rank #1 (Strong Buy) stock is expected to
report detailed results on Mar 15, 2013.
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We note that the company's fourth quarter and full year sales
results include one additional week as compared to the prior-year
periods. 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 the fourth quarter of 2012. The fourth
quarter sales also missed the Zacks Consensus Estimate of $191
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
January, 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 $670
Driven by the lower sales results in the fourth quarter, the
company now expects to report a net loss per share of nearly 7
cents for the quarter, which is way below the Zacks Consensus
Estimate of a gain of 31 cents per share. The company estimates
the loss of sales in the last two weeks of January to impact net
loss per share by about 35 cents.
Though the shift in the tax refunds date impacted sales in
January, the company started witnessing tax refund driven sales
improvements since the beginning of first quarter fiscal 2013.
The company expects this improvement in sales to prove beneficial
for its first quarter results.
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
Besides Citi Trends, other stocks in the retail-apparel/shoe
sector that are currently performing well include
), which has a Zacks Rank #1 (Strong Buy), and
American Eagle Outfitters Inc.
Foot Locker Inc.
), both of which carry a Zacks Ranks #2 (Buy).