Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the
second quarter of fiscal 2009.
Financial Highlights – Second
quarter ended August 1, 2009
Total sales in the second quarter ended August 1, 2009 decreased
3.5% to $111.6 million compared with $115.7 million in the second
quarter ended August 2, 2008. Comparable store sales decreased
12.4% in the second quarter. A net loss of $69,000 was recognized
in this year’s second quarter compared with net income of $2.8
million in the second quarter of 2008. Loss per diluted share was
$(0.00) in the second quarter of 2009 compared with earnings per
diluted share of $0.20 in the second quarter of 2008.
Sales and earnings in this year’s second quarter were adversely
affected by a difficult comparison to the second quarter of 2008
when our customers’ spending increased due to the government
stimulus checks. As is typical when comparable store sales are
negative, gross margin was lower in this year’s second quarter due
to higher merchandise markdowns; however, the overall decline in
gross margin was limited to 60 basis points due to continued
improvement in inventory shrinkage results. Selling, general and
administrative expenses were managed tightly, increasing only 5.7%,
even with a 13% increase in store selling square footage since last
year’s second quarter.
Store activity in the second quarter of 2009 included eight new
openings, one expansion and three closings, resulting in a total
store count of 370 at the end of the quarter.
Financial Highlights – First
half ended August 1, 2009
Total sales in the first half of fiscal 2009 increased 7.6% to
$254.7 million compared with $236.7 million in the first half of
fiscal 2008. Comparable store sales decreased 2.2% in the first
half of this year. Net income was $7.9 million compared with $8.0
million in last year’s first half. Earnings per diluted share were
$0.54 in the first half of 2009 compared with $0.56 in 2008’s first
half.
Fiscal 2009
Outlook
The Company estimates that 2009 earnings will be in a range of
$1.28 to $1.33 per diluted share which includes an anticipated 2009
comparable store sales increase of approximately 1%. For the year,
the Company expects to increase selling square footage by at least
15%. The effective tax rate for 2009 is estimated to be in a range
of 34% to 35%. An unrealized pretax loss on investments of $728,000
recorded in the first quarter of 2009 was almost entirely reversed
in the second quarter through an unrealized pretax gain of $671,000
due to an improvement in the credit spreads and liquidity in the
auction rate securities market. Accordingly, the outlook for the
full year includes only an insignificant unrealized loss.
The Company reminds investors of the complexity of accurately
assessing future results given the difficulty in predicting fashion
trends, consumer preferences and general economic conditions and
the impact of other business variables. See “Forward-Looking
Statements” below for more information regarding these
uncertainties.
Investor Conference Call and
Webcast
Citi Trends will host a conference call today at 5:00 p.m. ET.
The number to call for the live interactive teleconference is
(212) 231-2903. A replay of the conference call will be
available until August 26, 2009, by dialing (402) 977-9140 and
entering the passcode, 21431697. The live broadcast of Citi Trends’
quarterly conference call will be available online at the Company’s
website, www.cititrends.com, as well as
http://ir.cititrends.com/events.cfm, beginning today at 5:00 p.m.
ET. The online replay will follow shortly after the call and
continue through August 26, 2009.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and
trends. The Company’s responses to questions, as well as other
matters discussed during the conference call, may contain or
constitute information that has not been disclosed previously.
About Citi
Trends
Citi Trends, Inc. is a value-priced retailer of urban fashion
apparel and accessories for the entire family. After opening 7
stores thus far in August 2009, the Company currently operates 377
stores located in 24 states in the Southeast, Mid-Atlantic and
Midwest regions and the states of Texas and California. Citi
Trends’ website address is www.cititrends.com. CTRN-E
Forward-Looking Statements
All statements other than historical facts contained in this
news release, including statements regarding our future financial
results and position, business policy and plans and objectives of
management for future operations, are forward-looking statements
that are subject to material risks and uncertainties. The words
“believe,” “may,” “could,” “plans,” “estimate,” “continue,”
“anticipate,” “intend,” “expect” and similar expressions, as they
relate to Citi Trends, are intended to identify forward-looking
statements. Statements with respect to earnings guidance are
forward-looking statements. Investors are cautioned that any such
forward-looking statements are subject to the finalization of the
Company’s quarterly financial and accounting procedures, are not
guarantees of future performance or results and are inherently
subject to risks and uncertainties, some of which cannot be
predicted or quantified. Actual results or developments may differ
materially from those included in the forward-looking statements,
as a result of various factors which are discussed in Citi Trends,
Inc. filings with the Securities and Exchange Commission. These
risks and uncertainties include, but are not limited to,
uncertainties relating to economic conditions, growth risks,
consumer spending patterns, competition within the industry,
competition in our markets and the ability to anticipate and
respond to fashion trends. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the Securities and Exchange Commission, Citi
Trends does not undertake to publicly update any forward-looking
statements in this news release or with respect to matters
described herein, whether as a result of any new information,
future events or otherwise.
CITI TRENDS, INC. CONDENSED
STATEMENTS OF OPERATIONS (unaudited) (in thousands, except
per share data) Thirteen Weeks Ended
Thirteen Weeks Ended August 1, 2009 August 2,
2008 (unaudited) (unaudited) Net sales $ 111,605 $ 115,655 Cost
of sales 69,011 70,731 Gross profit
42,594 44,924 Selling, general and administrative expenses 38,994
36,877 Depreciation and amortization 4,455
4,078 Income (loss) from operations (855 ) 3,969 Interest
income 105 557 Interest expense (28 ) (75 ) Unrealized gain on
investment securities 671 - Income
(loss) before income tax expense (benefit) (107 ) 4,451 Income tax
expense (benefit) (38 ) 1,605 Net income
(loss) $ (69 ) $ 2,846 Basic net income (loss) per
common share $ (0.00 ) $ 0.20 Diluted net income (loss) per
common share $ (0.00 ) $ 0.20
Net income (loss) attributable to
common shares(1):
Basic $ (69 ) $ 2,807 Diluted $ (69 ) $ 2,808
Weighted average shares used to compute basic net income (loss) per
share 14,365 14,095 Weighted average
shares used to compute diluted net income (loss) per share
14,365 14,279
CITI TRENDS, INC. CONDENSED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share
data) Twenty-Six Weeks Ended Twenty-Six
Weeks Ended August 1, 2009 August 2, 2008
(unaudited) (unaudited) Net sales $ 254,702 $ 236,651 Cost of sales
154,920 144,964 Gross profit 99,782
91,687 Selling, general and administrative expenses 79,127 73,118
Depreciation and amortization 8,828 7,781
Income from operations 11,827 10,788 Interest income 244
1,425 Interest expense (69 ) (162 ) Unrealized loss on investment
securities (57 ) - Income before income tax
expense 11,945 12,051 Income tax expense 4,085
4,037 Net income $ 7,860 $ 8,014 Basic
net income per common share $ 0.54 $ 0.56 Diluted net
income per common share $ 0.54 $ 0.56
Net income attributable to common
shares(1):
Basic $ 7,700 $ 7,927 Diluted $ 7,700 $ 7,928
Weighted average shares used to compute basic net
income per share 14,342 14,071 Weighted
average shares used to compute diluted net income per share
14,370 14,248 (1) Net of income
allocated to nonvested restricted stockholders
CITI TRENDS, INC. CONDENSED BALANCE
SHEETS (unaudited) (in thousands)
August 1, 2009 August 2, 2008 (unaudited) (unaudited)
Assets: Cash and cash equivalents $ 36,361 $ 7,191 Short-term
investment securities 42,468 - Inventory 88,829 85,330 Other
current assets 13,199 11,374 Property and equipment, net 59,741
57,165 Long-term investment securities - 50,936 Other noncurrent
assets 4,744 6,679 Total assets $
245,342 $ 218,675 Liabilities and
Stockholders' Equity: Accounts payable $ 46,129 $ 43,521 Accrued
liabilities 20,336 17,461 Other current liabilities 2,370 4,043
Noncurrent liabilities 8,836 7,483
Total liabilities 77,671 72,508 Total stockholders' equity
167,671 146,167 Total liabilities and
stockholders' equity $ 245,342 $ 218,675
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