Citi Trends Announces First Quarter 2022 Results
Total sales of
Comparable store sales decreased 29% vs. a 35% increase in Q1 2021 vs. Q1 2019
Gross margin of 39.0%
Diluted EPS of
Company completes sale-leaseback transaction for
The Company is reporting select operating results for the first quarter 2022 relative to the same period of 2019 due to the unique operating environment resulting from the COVID-19 pandemic and related government stimulus in 2020 and 2021.
Financial Highlights – First Quarter 2022
- Total sales decreased 27.0% vs. Q1 2021; increased 1.6% vs. Q1 2019
- Comparable store sales decreased 29.2% compared to Q1 2021 on top of a 35% increase in Q1 2021 vs. Q1 2019, representing a positive stack of 5.8% (computed as the sum of Q1 2022 comp vs. Q1 2021 plus Q1 2021 comp vs. Q1 2019)
- Gross margin of 39.0% vs. 42.6% in Q1 2021; increased 150 bps vs. Q1 2019 of 37.5%
-
Operating income of
$39.7 million , or$4.7 million as adjusted* for the gain on the sale of a distribution center, compared to$39.0 million in Q1 2021 and$8.7 million in Q1 2019, or$9.8 million as adjusted* -
Diluted earnings per share of
$3.59 , or adjusted diluted earnings per share* of$0.42 vs.$3.23 in Q1 2021 and$0.65 in Q1 2019, or$0.72 as adjusted* - Quarter-end total inventory compared to Q1 2019 decreased 1.2% (or a decrease of 13.9% excluding packaway inventory); average in-store inventory decreased 32.5% vs. Q1 2019
-
Cash of
$61.7 million at the end of the quarter, with no debt and a$75 million credit facility
Chief Executive Officer Comments
Makuen continued, “As we look to the remainder of 2022, we expect the macro factors will continue to impact our customer and the broader discretionary shopping landscape. Therefore, we believe it is prudent to revise our guidance for the rest of the year compared to the pre-pandemic 2019 baseline. Lastly, we’re making progress on our incremental product initiatives and upgrading our in-store experience via the rollout of our CTx store format.”
Capital Return Program Update
In the first quarter of 2022, the Company repurchased approximately 170,000 shares of its common stock at an aggregate cost of
Sale-Leaseback Update
As previously announced, the Company underwent a comprehensive evaluation of its owned real estate. As a result, the Company completed the sale-leaseback of its distribution center located in
Guidance
The Company is providing the following updated guidance:
-
Fiscal 2022 total sales of
$860 to$880 million , with a comparable store sales decrease of 14% to 16% on top of a 22% increase in fiscal 2021 vs. fiscal 2019; this guidance implies a stack of 6% to 8% for the periods noted -
Fiscal 2022 operating income of
$58.8 to$65.3 million , and adjusted operating income of$23.8 to$30.6 million (adjusted for the sale of the distribution center); at the midpoint of the adjusted range, this implies a 32% increase compared to fiscal 2019 -
Fiscal 2022 diluted earnings per share of
$5.59 to$6.09 , and adjusted diluted earnings per share of$2.25 to$2.75 (adjusted for the sale of the distribution center); at the midpoint of the adjusted range, this implies a 60% increase compared to fiscal 2019 -
Fiscal 2022 guidance includes
$2.3 million of incremental non-cash SG&A expense related to the conversion of certain cash settled awards to restricted stock, which negatively impacts diluted earnings per share by approximately$0.22 - The Company now expects to open approximately 20 new stores during fiscal 2022
Investor Conference Call and Webcast
The live broadcast of
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the call, may contain or constitute information that has not been disclosed previously.
About
*Non-GAAP Financial Measures
The historical non-GAAP financial measures discussed herein are reconciled to their corresponding GAAP measures at the end of this press release.
Forward-Looking Statements
All statements other than historical facts contained in this news release, including statements regarding the Company’s future financial results and position, business policy and plans, objectives and expectations of management for future operations and capital allocation expectations, are forward-looking statements that are subject to material risks and uncertainties. The words "believe," "may," "could," "plans," "estimate," “expects,” "continue," "anticipate," "intend," "expect," “upcoming,” “trend” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements, although not all forward-looking statements contain such language. Statements with respect to earnings, sales or new store guidance are forward-looking statements. Investors are cautioned that any such forward-looking statements are subject to the finalization of the Company’s quarter-end 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 our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q, respectively, and any amendments thereto, filed with the
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||||
| (in thousands, except per share data) | |||||||||
| First Quarter | |||||||||
|
|
2022 |
|
|
2021 |
|
|
2019 |
|
|
| Net sales |
$ |
208,215 |
|
$ |
285,381 |
|
$ |
205,032 |
|
| Cost of sales (exclusive of depreciation shown separately below) |
|
(127,011 |
) |
|
(163,791 |
) |
|
(128,238 |
) |
| Selling, general and administrative expenses |
|
(71,026 |
) |
|
(77,892 |
) |
|
(63,447 |
) |
| Depreciation |
|
(5,445 |
) |
|
(4,697 |
) |
|
(4,614 |
) |
| Gain on sale of building |
|
34,920 |
|
|
— |
|
|
— |
|
| Income from operations |
|
39,653 |
|
|
39,001 |
|
|
8,733 |
|
| Interest income |
|
— |
|
|
4 |
|
|
379 |
|
| Interest expense |
|
(76 |
) |
|
(47 |
) |
|
(38 |
) |
| Income before income taxes |
|
39,577 |
|
|
38,958 |
|
|
9,074 |
|
| Income tax expense |
|
(9,374 |
) |
|
(8,061 |
) |
|
(1,286 |
) |
| Net income |
$ |
30,203 |
|
$ |
30,897 |
|
$ |
7,788 |
|
| Basic net income per common share |
$ |
3.59 |
|
$ |
3.27 |
|
$ |
0.65 |
|
| Diluted net income per common share |
$ |
3.59 |
|
$ |
3.23 |
|
$ |
0.65 |
|
| Weighted average number of shares outstanding | |||||||||
| Basic |
|
8,407 |
|
|
9,450 |
|
|
11,976 |
|
| Diluted |
|
8,407 |
|
|
9,571 |
|
|
12,006 |
|
| CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||||||||
| (in thousands) | |||||||||
| (unaudited) | (unaudited) | ||||||||
| Assets: | |||||||||
| Cash and cash equivalents |
$ |
61,657 |
|
$ |
131,276 |
|
|||
| Inventory |
|
129,715 |
|
|
101,803 |
|
|||
| Prepaid and other current assets |
|
16,354 |
|
|
19,290 |
|
|||
| Property and equipment, net |
|
68,213 |
|
|
65,532 |
|
|||
| Operating lease right of use assets |
|
241,686 |
|
|
184,694 |
|
|||
| Deferred tax assets |
|
4,316 |
|
|
5,141 |
|
|||
| Other noncurrent assets |
|
1,287 |
|
|
1,441 |
|
|||
| Total assets |
$ |
523,228 |
|
$ |
509,177 |
|
|||
| Liabilities and Stockholders' Equity: | |||||||||
| Accounts payable |
$ |
87,857 |
|
$ |
109,723 |
|
|||
| Accrued liabilities |
|
33,614 |
|
|
39,314 |
|
|||
| Current operating lease liabilities |
|
46,910 |
|
|
48,908 |
|
|||
| Other current liabilities |
|
7,657 |
|
|
12,410 |
|
|||
| Noncurrent operating lease liabilities |
|
203,856 |
|
|
148,596 |
|
|||
| Other noncurrent liabilities |
|
2,155 |
|
|
2,233 |
|
|||
| Total liabilities |
|
382,049 |
|
|
361,184 |
|
|||
| Total stockholders' equity |
|
141,179 |
|
|
147,993 |
|
|||
| Total liabilities and stockholders' equity |
$ |
523,228 |
|
$ |
509,177 |
|
|||
| RECONCILIATION OF GAAP BASIS OPERATING RESULTS TO | |||||||||
| ADJUSTED NON-GAAP OPERATING RESULTS | |||||||||
| (unaudited) | |||||||||
| (in thousands, except per share data) | |||||||||
| The Company makes reference in this release to adjusted earnings per diluted share and adjusted operating income. The Company believes these supplemental measures reflect operating results that are more indicative of the Company's ongoing operating performance while improving comparability to prior and future periods, and as such, may provide investors with an enhanced understanding of the Company's past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for net income or earnings per diluted share prepared in accordance with generally accepted accounting principles (GAAP). | |||||||||
| First Quarter 2022 | |||||||||
| As Reported | Adjustment (1) | As Adjusted | |||||||
| Net sales |
$ |
208,215 |
|
$ |
— |
|
$ |
208,215 |
|
| Cost of sales (exclusive of depreciation shown separately below) |
|
(127,011 |
) |
|
— |
|
|
(127,011 |
) |
| Selling, general and administrative expenses |
|
(71,026 |
) |
|
— |
|
|
(71,026 |
) |
| Depreciation |
|
(5,445 |
) |
|
— |
|
|
(5,445 |
) |
| Gain on sale of building |
|
34,920 |
|
|
(34,920 |
) |
|
— |
|
| Income from operations |
|
39,653 |
|
|
(34,920 |
) |
|
4,733 |
|
| Interest expense |
|
(76 |
) |
|
— |
|
|
(76 |
) |
| Income before income taxes |
|
39,577 |
|
|
(34,920 |
) |
|
4,657 |
|
| Income tax expense |
|
(9,374 |
) |
|
8,271 |
|
|
(1,103 |
) |
| Net income |
$ |
30,203 |
|
$ |
(26,649 |
) |
$ |
3,554 |
|
| Basic net income per common share |
$ |
3.59 |
|
$ |
0.42 |
|
|||
| Diluted net income per common share |
$ |
3.59 |
|
$ |
0.42 |
|
|||
| Weighted average number of shares outstanding | |||||||||
| Basic |
|
8,407 |
|
|
8,407 |
|
|||
| Diluted |
|
8,407 |
|
|
8,407 |
|
|||
| First Quarter 2019 | |||||||||
| As Reported | Adjustment (2) | As Adjusted | |||||||
| Net sales |
$ |
205,032 |
|
$ |
— |
|
$ |
205,032 |
|
| Cost of sales (exclusive of depreciation shown separately below) |
|
(128,238 |
) |
|
— |
|
|
(128,238 |
) |
| Selling, general and administrative expenses |
|
(63,447 |
) |
|
1,042 |
|
|
(62,405 |
) |
| Depreciation |
|
(4,614 |
) |
|
— |
|
|
(4,614 |
) |
| Income from operations |
|
8,733 |
|
|
1,042 |
|
|
9,775 |
|
| Interest expense |
|
(38 |
) |
|
— |
|
|
(38 |
) |
| Income before income taxes |
|
9,074 |
|
|
1,042 |
|
|
10,116 |
|
| Income tax expense |
|
(1,286 |
) |
|
(148 |
) |
|
(1,434 |
) |
| Net income |
$ |
7,788 |
|
$ |
894 |
|
$ |
8,682 |
|
| Basic net income per common share |
$ |
0.65 |
|
$ |
0.72 |
|
|||
| Diluted net income per common share |
$ |
0.65 |
|
$ |
0.72 |
|
|||
| Weighted average number of shares outstanding | |||||||||
| Basic |
|
11,976 |
|
|
11,976 |
|
|||
| Diluted |
|
12,006 |
|
|
12,006 |
|
|||
| (1) Gain on sale of distribution center in |
|||||||||
| (2) Proxy contest expenses and related tax effects | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20220524005455/en/
CitiTrendsIR@icrinc.com
Source: