In This Article:
Release Date: December 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Citi Trends Inc (NASDAQ:CTRN) reported strong third-quarter sales of $179.1 million, achieving a positive comparable sales growth of 5.7%.
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The company saw broad-based performance improvements, with increased customer traffic, single-digit transaction growth, and larger basket sizes.
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Citi Trends Inc (NASDAQ:CTRN) experienced gross margin expansion of 160 basis points, driven by higher initial markups and lower shrink levels.
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The company has a strong balance sheet with no debt, $39 million in cash, and liquidity of approximately $114 million.
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Citi Trends Inc (NASDAQ:CTRN) is focusing on foundational improvements, including supply chain efficiencies, which have reduced the time from vendor to store by nearly two weeks.
Negative Points
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The company incurred approximately $1.6 million in one-time strategic costs in Q3, impacting SG&A expenses.
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Shrinkage remains a challenge, with a headwind of 50 to 70 basis points compared to historical levels, requiring ongoing efforts to address.
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Despite improvements, the company still faces operational challenges, with foundational practices needing further refinement.
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Citi Trends Inc (NASDAQ:CTRN) closed four stores in Q3 as part of its fleet optimization efforts, indicating ongoing adjustments in its store footprint.
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The company anticipates a mid-single-digit decline in total sales for the second half due to the 53rd week last year and store closures.
Q & A Highlights
Q: Congratulations Ken on the appointment and congratulations to the team on the improved results. I wanted to start by just coming back to the improved, you know, sales trends. So I think that I heard that the start of Q4 here in November was up high single digits on comps. You know, so I wanted to understand just in terms of the guidance for the quarter, if there's an element of conservatism in the low single to mid single digit guide for the quarter or if there are if there are some aspects to what you're going to lap in December and in January that that kind of lead to a bit more conservatism. A: Thank you, Jeremy. I'll answer a little bit from high level and certainly my fill in any details. Yeah, first off November was really exceptional compared to what we were expecting, as we put new product and fresh product out. I mean, certainly, business took off and we're just really pleased with customer response in November. Now, to your point around the conservatism or the potential of that, there's a lot of holiday season ahead yet. And certainly through December, you might remember the company had a reasonably good December last year in terms of comp performance. And so we also are against a little bit tougher comp, as well as, we also appreciate the calendar shifts that are ahead. So we're being a little bit more cautious about what December might bring, but still very optimistic around the overall Q4 numbers.