Citi Trends Announces Third Quarter 2023 Results
Total third quarter sales of
Strong gross margin of 38.2%; Year-to-date gross margin of 37.7%, or 37.8% as adjusted*
Total liquidity of
Improved topline momentum fourth quarter to date
Company provides updated fiscal 2023 guidance
Financial Highlights – Third Quarter 2023
-
Total sales of
$179.5 million decreased 6.7% vs. Q3 2022; Comparable store sales decreased 6.2% compared to Q3 2022 - Gross margin of 38.2% vs. 39.8% in Q3 2022, flat to Q2 2023 gross margin
-
Operating loss of
$6.0 million , or a loss of$7.0 million as adjusted*, compared to operating income of$31.6 million , or$2.4 million as adjusted* in Q3 2022 -
Net loss per share of
$0.47 , or adjusted net loss per share* of$0.56 , vs. net earnings per share of$3.02 , or$0.24 as adjusted* - Quarter-end total dollar inventory increased 0.9% compared to Q3 2022
-
Total liquidity of approximately
$135 million at the end of the quarter, made up of$59.7 million of cash, no borrowings under a$75 million credit facility, and no debt - During Q3 2023, the Company closed 5 stores and remodeled 7 stores, which brings total remodels to 15 for the year. The Company ended the quarter with 606 stores
Financial Highlights – 39 weeks ended October 28, 2023
-
Total sales of
$532.8 million decreased 9.0% vs. 2022; Comparable store sales decreased 8.7% compared to 2022 - Gross margin of 37.7%, or 37.8% as adjusted*, vs. 39.0% in 2022
-
Operating loss of
$23.4 million , or a loss of$22.7 million as adjusted*, compared to operating income of$67.9 million in 2022, or$3.8 million as adjusted* -
Net loss of
$15.5 million , or$15.0 million as adjusted*, compared to net income of$52.3 million in 2022, or$2.9 million as adjusted* -
Adjusted EBITDA* of
($8.5) million vs.$19.6 million in 2022 -
Net loss per share of
$1.89 , or adjusted net loss per share* of$1.83 , vs. diluted earnings per share of$6.34 in 2022, or$0.35 as adjusted*
Chief Executive Officer Comments
Capital Return Program Update
In the third quarter of 2023, the Company did not repurchase any shares of its common stock. At the end of the third quarter of 2023,
Guidance
The Company is updating its outlook for fiscal 2023 as follows:
- Full year total sales are expected to be down mid-single digits as compared to fiscal 2022
- Full year gross margin is still expected to be in the high thirties
-
Full year EBITDA* expected to be in the range of
$1 million to$7 million -
Full year capex is expected to be in the range of
$17 million to$20 million -
Year end cash balance is expected to be in the range of
$80 million to$90 million -
Implied fourth quarter total sales are expected to be approximately flat to up low-single digits vs. Q4 2022 with EBITDA in the range of
$9 million to$15 million
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. The Company is unable to provide a full reconciliation of the forward-looking non-GAAP financial measure used in 2023 guidance without unreasonable effort because it is not possible to predict certain of its adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of the Company’s control and its unavailability could have a significant impact on its financial results.
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) | ||||||||||||
| Thirteen Weeks Ended | ||||||||||||
| Net sales |
$ |
179,520 |
|
$ |
192,323 |
|
$ |
227,959 |
|
|||
| Cost of sales (exclusive of depreciation shown separately below) |
|
(110,942 |
) |
|
(115,741 |
) |
|
(136,071 |
) |
|||
| Selling, general and administrative expenses |
|
(69,654 |
) |
|
(69,092 |
) |
|
(74,784 |
) |
|||
| Depreciation |
|
(4,749 |
) |
|
(5,076 |
) |
|
(5,527 |
) |
|||
| Asset impairment |
|
(178 |
) |
|
— |
|
|
— |
|
|||
| Gain on sale-leaseback |
|
— |
|
|
29,168 |
|
|
— |
|
|||
| (Loss) income from operations |
|
(6,003 |
) |
|
31,582 |
|
|
11,577 |
|
|||
| Interest income |
|
894 |
|
|
202 |
|
|
18 |
|
|||
| Interest expense |
|
(76 |
) |
|
(76 |
) |
|
(76 |
) |
|||
| (Loss) income before income taxes |
|
(5,185 |
) |
|
31,708 |
|
|
11,519 |
|
|||
| Income tax benefit (expense) |
|
1,322 |
|
|
(7,120 |
) |
|
(2,505 |
) |
|||
| Net (loss) income |
$ |
(3,863 |
) |
$ |
24,588 |
|
$ |
9,014 |
|
|||
| Basic net (loss) income per common share |
$ |
(0.47 |
) |
$ |
3.02 |
|
$ |
1.04 |
|
|||
| Diluted net (loss) income per common share |
$ |
(0.47 |
) |
$ |
3.02 |
|
$ |
1.03 |
|
|||
| Weighted average number of shares outstanding | ||||||||||||
| Basic |
|
8,238 |
|
|
8,145 |
|
|
8,706 |
|
|||
| Diluted |
|
8,238 |
|
|
8,145 |
|
|
8,787 |
|
|||
| Thirty-Nine Weeks Ended | ||||||||||||
| Net sales |
$ |
532,762 |
|
$ |
585,550 |
|
$ |
750,621 |
|
|||
| Cost of sales (exclusive of depreciation shown separately below) |
|
(331,827 |
) |
|
(357,341 |
) |
|
(440,404 |
) |
|||
| Selling, general and administrative expenses |
|
(210,004 |
) |
|
(208,599 |
) |
|
(228,059 |
) |
|||
| Depreciation |
|
(14,138 |
) |
|
(15,793 |
) |
|
(15,218 |
) |
|||
| Asset impairment |
|
(178 |
) |
|
— |
|
|
— |
|
|||
| Gain on sale-leasebacks |
|
— |
|
|
64,088 |
|
|
— |
|
|||
| (Loss) income from operations |
|
(23,385 |
) |
|
67,905 |
|
|
66,940 |
|
|||
| Interest income |
|
2,804 |
|
|
204 |
|
|
24 |
|
|||
| Interest expense |
|
(228 |
) |
|
(230 |
) |
|
(200 |
) |
|||
| (Loss) income before income taxes |
|
(20,809 |
) |
|
67,879 |
|
|
66,764 |
|
|||
| Income tax benefit (expense) |
|
5,279 |
|
|
(15,624 |
) |
|
(14,363 |
) |
|||
| Net (loss) income |
$ |
(15,530 |
) |
$ |
52,255 |
|
$ |
52,401 |
|
|||
| Basic net (loss) income per common share |
$ |
(1.89 |
) |
$ |
6.34 |
|
$ |
5.77 |
|
|||
| Diluted net (loss) income per common share |
$ |
(1.89 |
) |
$ |
6.34 |
|
$ |
5.71 |
|
|||
| Weighted average number of shares outstanding | ||||||||||||
| Basic |
|
8,215 |
|
|
8,237 |
|
|
9,081 |
|
|||
| Diluted |
|
8,215 |
|
|
8,237 |
|
|
9,179 |
|
|||
|
|
||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
||||||
|
(in thousands) |
||||||
| Assets: | ||||||
| Cash and cash equivalents |
$ |
59,726 |
$ |
77,771 |
||
| Inventory |
|
129,727 |
|
128,511 |
||
| Prepaid and other current assets |
|
14,572 |
|
12,903 |
||
| Property and equipment, net |
|
56,658 |
|
60,912 |
||
| Operating lease right of use assets |
|
239,282 |
|
264,667 |
||
| Deferred tax assets |
|
7,197 |
|
873 |
||
| Other noncurrent assets |
|
1,050 |
|
1,218 |
||
| Total assets |
$ |
508,212 |
$ |
546,855 |
||
| Liabilities and Stockholders' Equity: | ||||||
| Accounts payable |
$ |
83,393 |
$ |
83,451 |
||
| Accrued liabilities |
|
24,985 |
|
30,528 |
||
| Current operating lease liabilities |
|
46,511 |
|
48,294 |
||
| Other current liabilities |
|
1,269 |
|
1,486 |
||
| Noncurrent operating lease liabilities |
|
196,856 |
|
222,430 |
||
| Other noncurrent liabilities |
|
2,132 |
|
2,204 |
||
| Total liabilities |
|
355,146 |
|
388,393 |
||
| Total stockholders' equity |
|
153,066 |
|
158,462 |
||
| Total liabilities and stockholders' equity |
$ |
508,212 |
$ |
546,855 |
||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) |
||||||||
|
(in thousands, except per share data) |
||||||||
|
The Company makes reference in this release to adjusted gross margin, adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA. 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). |
||||||||
| Thirteen Weeks Ended | ||||||||
| Reconciliation of Adjusted Operating (Loss) Income | ||||||||
| Operating (loss) income |
$ |
(6,003 |
) |
$ |
31,582 |
|
||
| Gain on insurance |
|
(1,188 |
) |
|
— |
|
||
| Asset impairment |
|
178 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(29,168 |
) |
||
| Adjusted operating (loss) income |
$ |
(7,013 |
) |
$ |
2,414 |
|
||
| Thirteen Weeks Ended | ||||||||
| Reconciliation of Adjusted Diluted EPS | ||||||||
| Diluted (loss) earnings per share |
$ |
(0.47 |
) |
$ |
3.02 |
|
||
| Gain on insurance |
|
(0.14 |
) |
|
— |
|
||
| Asset impairment |
|
0.02 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(3.58 |
) |
||
| Tax effect |
|
0.03 |
|
|
0.80 |
|
||
| Adjusted diluted (loss) earnings per share |
$ |
(0.56 |
) |
$ |
0.24 |
|
||
| Thirty-Nine Weeks Ended |
||||||||
| Reconciliation of Adjusted Gross Margin | ||||||||
| Net sales |
$ |
532,762 |
|
|||||
| Cost of sales |
|
(331,827 |
) |
|||||
| Gross profit |
$ |
200,935 |
|
|||||
| Gross margin |
|
37.7 |
% |
|||||
| Cyber incident expenses |
$ |
513 |
|
|||||
| Adjusted gross profit |
$ |
201,448 |
|
|||||
| Adjusted gross margin |
|
37.8 |
% |
|||||
| Thirty-Nine Weeks Ended | ||||||||
| Reconciliation of Adjusted Operating (Loss) Income | ||||||||
| Operating (loss) income |
$ |
(23,385 |
) |
$ |
67,905 |
|
||
| Gain on insurance |
|
(1,188 |
) |
|
— |
|
||
| Asset impairment |
|
178 |
|
|
— |
|
||
| Cyber incident expenses |
|
1,723 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(64,088 |
) |
||
| Adjusted operating (loss) income |
$ |
(22,672 |
) |
$ |
3,817 |
|
||
| Thirty-Nine Weeks Ended | ||||||||
| Reconciliation of Adjusted Net (Loss) Income | ||||||||
| Net (loss) income |
$ |
(15,530 |
) |
$ |
52,255 |
|
||
| Gain on insurance |
|
(1,188 |
) |
|
— |
|
||
| Asset impairment |
|
178 |
|
|
— |
|
||
| Cyber incident expenses |
|
1,723 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(64,088 |
) |
||
| Tax effect |
|
(181 |
) |
|
14,751 |
|
||
| Adjusted net (loss) income |
$ |
(14,998 |
) |
$ |
2,918 |
|
||
| Thirty-Nine Weeks Ended | ||||||||
| Reconciliation of Adjusted Diluted EPS | ||||||||
| Diluted (loss) earnings per share |
$ |
(1.89 |
) |
$ |
6.34 |
|
||
| Gain on insurance |
|
(0.14 |
) |
|
— |
|
||
| Asset impairment |
|
0.02 |
|
|
— |
|
||
| Cyber incident expenses |
|
0.21 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(7.78 |
) |
||
| Tax effect |
|
(0.02 |
) |
|
1.79 |
|
||
| Adjusted diluted (loss) earnings per share |
$ |
(1.83 |
) |
$ |
0.35 |
|
||
| Thirty-Nine Weeks Ended | ||||||||
| Reconciliation of Adjusted EBITDA | ||||||||
| Net (loss) income |
$ |
(15,530 |
) |
$ |
52,255 |
|
||
| Interest income |
|
(2,804 |
) |
|
(204 |
) |
||
| Interest expense |
|
228 |
|
|
230 |
|
||
| Income tax (benefit) expense |
|
(5,279 |
) |
|
15,624 |
|
||
| Depreciation |
|
14,138 |
|
|
15,793 |
|
||
| Gain on insurance |
|
(1,188 |
) |
|
— |
|
||
| Asset impairment |
|
178 |
|
|
— |
|
||
| Cyber incident expenses |
|
1,723 |
|
|
— |
|
||
| Gain on sale-leaseback |
|
— |
|
|
(64,088 |
) |
||
| Adjusted EBITDA |
$ |
(8,534 |
) |
$ |
19,610 |
|
||
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