UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 21, 2017

 

Citi Trends, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

000-51315

 

52-2150697

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

104 Coleman Boulevard, Savannah, Georgia

 

31408

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (912) 236-1561

 

Former name or former address, if changed since last report: Not applicable

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2 below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre- commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company            o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        o

 

 

 



 

Item 2.02. Results of Operations and Financial Condition.

 

On November 21, 2017, Citi Trends, Inc. (the “Company”) issued a press release reporting its financial results for its third quarter ended October 28, 2017 (the “Earnings Release”). A copy of the Earnings Release is attached to this Current Report on Form 8-K (“Current Report”) as Exhibit 99.1, the contents of which are incorporated herein solely for purposes of this Item 2.02 disclosure.

 

The information in this Item 2.02, including the Earnings Release attached to this Current Report, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Item 2.02, including the Earnings Release, shall not be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Earnings Release dated November 21, 2017

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

CITI TRENDS, INC.

 

 

Date: November 21, 2017

 

 

 

By:

/s/ Bruce D. Smith

 

Name:

Bruce D. Smith

 

Title:

Acting Chief Executive Officer, Chief Operating Officer and Chief Financial Officer

 

3


Exhibit 99.1

 

CITI TRENDS ANNOUNCES THIRD QUARTER 2017 RESULTS

 

Third quarter total sales increased 10.1%; comparable store sales up 7.4%

 

Quarterly earnings per share of $0.05 this year versus $(0.06) loss last year

 

SAVANNAH, GA (November 21, 2017) — Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the third quarter of fiscal 2017.

 

Financial Highlights — Third quarter ended October 28, 2017

 

Total sales in the third quarter ended October 28, 2017 increased 10.1% to $176.9 million compared with $160.7 million in the third quarter ended October 29, 2016.  Comparable store sales increased 7.4% in the quarter.

 

The Company had net income of $0.6 million, or $0.05 per diluted share, in the third quarter of 2017, compared with a net loss of $(0.8) million, or $(0.06) per diluted share, in last year’s third quarter.

 

During the third quarter, the Company opened five new stores, relocated or expanded two stores, and closed one store.

 

Financial Highlights — First three quarters ended October 28, 2017

 

Total sales in the first three quarters of fiscal 2017 increased 6.6% to $543.1 million compared with $509.7 million in the same period of fiscal 2016.  Comparable store sales increased 4.1% in the first three quarters of this year.

 

The Company had net income of $9.3 million, or $11.1 million when adjusted for proxy contest-related expenses*, in the first three quarters of 2017, compared with $7.8 million in the same period last year.  Earnings per diluted share in the first three quarters of 2017 were $0.65, or $0.77 when adjusted for proxy contest-related expenses*, compared with $0.53 in the first three quarters of 2016.

 

Bruce Smith, Acting Chief Executive Officer, commented, “We are extremely pleased to report strong sales and operating results for the third quarter.  The momentum that we saw in recent quarters continued at an accelerated pace in the third quarter and is being driven by our delivery of fashion-right, value-priced merchandise to our customers.  Comparable store sales growth was consistently strong throughout the quarter, with a 7% increase in August and 8% increases in both September and October.  Importantly, all five of our major merchandise categories once again contributed to the sales increases.

 

“In addition to 10% total sales growth in the third quarter, we were pleased with an improvement in gross margin and significant expense leverage, all of which led to operating margin expansion of 140 basis points and a $1.4 million increase in net income.

 

 



 

“We believe that we have entered the fourth quarter in a high-quality, liquid inventory position.  Early reads on the holiday season have been positive, as comparable store sales for the first three weeks of November have been up 7% on top of a 6% increase in the same three weeks last year.”

 

Investor Conference Call and Webcast

 

Citi Trends will host a conference call today at 9:00 a.m. ET.  The number to call for the live interactive teleconference is (212) 231-2932.  A replay of the conference call will be available until November 28, 2017, by dialing (402) 977-9140 and entering the passcode, 21861316.

 

The live broadcast of Citi Trends’ conference call will be available online at the Company’s website, www.cititrends.com, under the Investor Relations section, beginning today at  9:00 a.m. ET.  The online replay will follow shortly after the call and will be available for replay for one year.

 

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 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.  The Company operates 549 stores located in 31 states.  Citi Trends’ website address is www.cititrends.com.  CTRN-G

 

*Non-GAAP Financial Measure

 

The 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 our future financial results and position, business policy and plans, objectives of management for future operations and our intentions and ability to pay dividends and complete any share repurchase authorizations, 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, although not all forward-looking statements contain such language.  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 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 Citi Trends, Inc. filings with the Securities and Exchange Commission.  These risks and uncertainties include, but are not limited to, uncertainties relating to economic

 

2



 

conditions, growth risks, consumer spending patterns, competition within the industry, competition in our markets and the ability to anticipate and respond to fashion trends.  Any forward-looking statements by the Company, with respect to earnings guidance, the Company’s intention to declare and pay dividends, the repurchase of shares pursuant to a share repurchase program, or otherwise, are intended to speak only as of the date such statements are made.  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.

 

Contact:                          Bruce Smith

Acting Chief Executive Officer,

Chief Operating Officer and

Chief Financial Officer

(912) 443-2075

 

3



 

CITI TRENDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

 

 

 

 

Thirteen Weeks Ended

 

Thirteen Weeks Ended

 

 

 

October 28, 2017

 

October 29, 2016

 

 

 

(unaudited)

 

(unaudited)

 

Net sales

 

$

176,943

 

$

160,716

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

(110,094

)

(100,386

)

Selling, general and administrative expenses

 

(61,118

)

(57,637

)

Depreciation

 

(4,976

)

(4,223

)

Asset impairment

 

 

(61

)

Income (loss) from operations

 

755

 

(1,591

)

Interest income

 

216

 

146

 

Interest expense

 

(38

)

(39

)

Income (loss) before income taxes

 

933

 

(1,484

)

Income tax (expense) benefit

 

(286

)

648

 

Net income (loss)

 

$

647

 

$

(836

)

 

 

 

 

 

 

Basic net income (loss) per common share

 

$

0.05

 

$

(0.06

)

Diluted net income (loss) per common share

 

$

0.05

 

$

(0.06

)

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

Basic

 

13,563

 

14,677

 

Diluted

 

13,614

 

14,677

 

 

 

 

Thirty-Nine Weeks Ended

 

Thirty-Nine Weeks Ended

 

 

 

October 28, 2017

 

October 29, 2016

 

 

 

(unaudited)

 

(unaudited)

 

Net sales

 

$

543,098

 

$

509,664

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

(334,659

)

(313,345

)

Selling, general and administrative expenses

 

(181,439

)

(172,073

)

Depreciation

 

(13,863

)

(12,961

)

Asset impairment

 

(77

)

(282

)

Income from operations

 

13,060

 

11,003

 

Interest income

 

617

 

408

 

Interest expense

 

(112

)

(120

)

Income before income taxes

 

13,565

 

11,291

 

Income tax expense

 

(4,238

)

(3,510

)

Net income

 

$

9,327

 

$

7,781

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.66

 

$

0.53

 

Diluted net income per common share

 

$

0.65

 

$

0.53

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

Basic

 

14,221

 

14,649

 

Diluted

 

14,270

 

14,652

 

 



 

CITI TRENDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

 

 

 

October 28, 2017

 

October 29, 2016

 

 

 

(unaudited)

 

(unaudited)

 

Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

34,866

 

$

36,956

 

Short-term investment securities

 

30,298

 

34,132

 

Inventory

 

133,245

 

130,752

 

Prepaid and other current assets

 

16,405

 

18,570

 

Property and equipment, net

 

63,571

 

54,478

 

Long-term investment securities

 

26,117

 

29,183

 

Other noncurrent assets

 

8,171

 

9,211

 

Total assets

 

$

312,673

 

$

313,282

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

Accounts payable

 

$

68,047

 

$

59,098

 

Accrued liabilities

 

28,921

 

25,718

 

Other current liabilities

 

1,913

 

1,974

 

Noncurrent liabilities

 

8,786

 

8,130

 

Total liabilities

 

107,667

 

94,920

 

 

 

 

 

 

 

Total stockholders’ equity

 

205,006

 

218,362

 

Total liabilities and stockholders’ equity

 

$

312,673

 

$

313,282

 

 



 

CITI TRENDS, INC.

 

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 net income adjusted for proxy contest expenses and earnings per diluted share adjusted for proxy contest expenses.  The Company believes that excluding proxy contest expenses and their related tax effects from its financial results reflects operating results that are more indicative of the Company's ongoing operating performance while improving comparability to prior 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, earnings per common share, or expense information prepared in accordance with generally accepted accounting principles (GAAP).

 

 

 

Thirteen Weeks Ended October 28, 2017

 

 

 

As Reported

 

Adjustment (1)

 

As Adjusted

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

Net sales

 

$

176,943

 

$

 

$

176,943

 

 

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

(110,094

)

 

(110,094

)

Selling, general and administrative expenses

 

(61,118

)

 

(61,118

)

Depreciation

 

(4,976

)

 

(4,976

)

Asset impairment

 

 

 

 

Income from operations

 

755

 

 

755

 

Interest income

 

216

 

 

216

 

Interest expense

 

(38

)

 

(38

)

Income before income taxes

 

933

 

 

933

 

Income tax expense

 

(286

)

 

(286

)

Net income

 

$

647

 

$

 

$

647

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.05

 

 

 

$

0.05

 

Diluted net income per common share

 

$

0.05

 

 

 

$

0.05

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

Basic

 

13,563

 

 

 

13,563

 

Diluted

 

13,614

 

 

 

13,614

 

 

 

 

Thirty-Nine Weeks Ended October 28, 2017

 

 

 

As Reported

 

Adjustment (1)

 

As Adjusted

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

Net sales

 

$

543,098

 

$

 

$

543,098

 

 

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

(334,659

)

 

(334,659

)

Selling, general and administrative expenses

 

(181,439

)

2,516

 

(178,923

)

Depreciation

 

(13,863

)

 

(13,863

)

Asset impairment

 

(77

)

 

(77

)

Income from operations

 

13,060

 

2,516

 

15,576

 

Interest income

 

617

 

 

617

 

Interest expense

 

(112

)

 

(112

)

Income before income taxes

 

13,565

 

2,516

 

16,081

 

Income tax expense

 

(4,238

)

(786

)

(5,024

)

Net income

 

$

9,327

 

$

1,730

 

$

11,057

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.66

 

 

 

$

0.78

 

Diluted net income per common share

 

$

0.65

 

 

 

$

0.77

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

Basic

 

14,221

 

 

 

14,221

 

Diluted

 

14,270

 

 

 

14,270

 

 


(1)  Proxy contest expenses and related tax effects