Citi Trends Disappoints, Shares Plunge

Citi Trends Inc. (CTRN) reported sluggish fiscal 2010 second-quarter results before the opening bell on Wednesday. The company’s net loss widened to $567,000 from a loss of $69,000 in the year-ago quarter. Loss per share came in at 4 cents, way behind the Zacks Consensus Estimate for a profit of 7 cents per share.

Citi Trends further disappointed investors by slashing its guidance for fiscal 2011 by a significant margin. The company now expects earnings of $1.60 to $1.70 per share on same-store sales growth of flat to 2% in the second half of 2010. Citi Trends earlier predicted earnings of $1.75 to $1.80 per share.

The revised guidance is well below the Zacks Consensus Estimate of $1.84 per share, which edged up a penny over the past 2 months. Consequently, shares of Citi Trends plunged more than 11% in morning trade on the Nasdaq.

During the quarter, Citi Trends recorded a 15.6% year-over-year growth in net sales to $129.0 million, still missing the Zacks Consensus Estimate of $137 million. The growth was primarily driven by the launch of 55 new stores in the last one-year period, partially offset by a 0.6% decline in same–store sales.

Citi Trends’ gross profit logged a growth of 13.3% year-over-year to $48.3 million mainly due to higher sales. Selling, general and administrative expenses increased 13.9% year-over-year primarily due to higher costs related to new stores. Accordingly, the company posted a wider operating loss of $915,000, compared to a loss of $855,000 in the year-ago period.

Citi Trends ended the quarter with a debt-free balance sheet, and cash and cash equivalents of $84.6 million, compared to $36.4 million in the year-ago quarter. Shareholders’ equity at the end of the quarter was $195.6 million, compared to $167.7 million in the year-ago period.

Citi Trends is a value-priced retailer of urban fashion apparel and accessories including nationally recognized brands, private-label products and a limited assortment of home décor items. The company currently operates 429 stores across 25 states in the Southeast, Mid-Atlantic and Midwest regions as well as in the states of Texas and California.

We currently have a long-term Neutral recommendation on Citi Trends.

CITI TRENDS INC (CTRN): Free Stock Analysis Report

About Zacks Investment Research 1766 Articles

Zacks Investment Research is one of the most highly regarded firms in the investment industry. In 1978 Zacks originated the concept of utilizing earnings estimates revisions to make profitable investment decisions. Zacks offers multiple investment products and services to help investors achieve superior returns.


Be the first to comment

Leave a Reply

Your email address will not be published.