Citi Trends, Inc. reported results for the fourth quarter and fiscal year ended February 2, 2019.

The Company’s 2018 fiscal year included 52 weeks compared with 53 weeks in fiscal 2017. Accordingly, year-over-year comparisons of total sales for the fourth quarter and full year are affected by an extra week of sales in 2017. However, for comparable store sales, the Company is reporting on a comparable weeks basis (e.g. the 13 and 52 weeks ended February 2, 2019 compared with the 13 and 52 weeks ended February 3, 2018, respectively).

Having one fewer week in 2018 did not have a significant impact on the year-over-year earnings comparison.

Financial Highlights – 13-week fourth quarter ended February 2, 2019

Fourth quarter comparable store sales increased 0.2%, comparing the 13 weeks ended February 2, 2019 with the 13 weeks ended February 3, 2018. Total sales in the 13-week quarter ended February 2, 2019 decreased 5.2% to $201.2 million compared with $212.1 million in the 14-week quarter ended February 3, 2018. The extra week contributed $14.8 million to total sales in the fourth quarter of fiscal 2017.

This year’s fourth quarter net income was $7.3 million, compared with $5.2 million in the fourth quarter of 2017 on a GAAP basis, or $6.9 million* when adjusted for the effect of the Tax Cuts and Jobs Act (the “TCJA”). Earnings per diluted share in the fourth quarter of fiscal 2018 were $0.59, compared with $0.38 in last year’s fourth quarter on a GAAP basis, or $0.50* when adjusted for the effect of the TCJA.

Pretax income decreased 7.9% to $9.1 million in the fourth quarter of 2018 compared with $9.9 million in last year’s fourth quarter. Income tax expense decreased to $1.8 million in this year’s fourth quarter compared with $4.7 million in the fourth quarter of 2017, with the decrease including $1.6 million of tax expense, or $0.12 per diluted share, resulting from the enactment of the TCJA in December 2017, together with a lower tax rate in 2018 as a result of the TCJA.

Financial Highlights – 52-week fiscal year ended February 2, 2019

Comparable store sales increased 1.6%, comparing the 52 weeks ended February 2, 2019 with the 52 weeks ended February 3, 2018. Total sales in the 52-week fiscal year ended February 2, 2019 increased 1.9% to $769.6 million compared with $755.2 million in the 53-week fiscal year ended February 3, 2018.

The Company had net income of $21.4 million in 2018, compared with $14.6 million in 2017 on a GAAP basis, or $17.7 million* when adjusted for proxy contest-related expenses and the effect of the TCJA. Earnings per diluted share in 2018 were $1.64, compared with $1.03 in 2017 on a GAAP basis, or $1.26* when adjusted for proxy contest-related expenses and the effect of the TCJA.

Pretax income was $26.3 million in fiscal 2018, compared with $23.5 million in 2017 on a GAAP basis, or $26.0 million* when adjusted for proxy contest-related expenses in 2017. Income tax expense decreased to $5.0 million this year compared with $8.9 million last year, with the decrease including the aforementioned $1.6 million of expense resulting from the TCJA enactment, together with a lower tax rate in 2018.

Bruce Smith, Chief Executive Officer, commented, “I am pleased that we registered comparable store sales increases in every quarter of fiscal 2018, delivered a full year comparable store sales increase of 1.6%, and tightly managed expenses, leading to an increase in earnings despite a fashion miss during the second half of the year. During fiscal 2018, we made significant progress on a number of strategic initiatives, including the completed roll-out of our store-level merchandise planning system and the successful opening of 19 new stores. Also, we continued to execute our capital return program by returning $45 million to our shareholders during 2018 in the form of share repurchases and dividends. Since the initiation of the program in 2015, we have returned $94 million to our shareholders.”

Smith further noted, “As we enter 2019, we are focused on a number of important initiatives, including a project designed to reduce freight costs and several areas of operating expenses, the implementation of a markdown optimization system planned for later in the year and the opening of our first store in a predominantly Hispanic market.”

Citi Trends opened 19 new stores, relocated or expanded 8 other stores, and closed 6 stores in fiscal 2018.

Guidance

The first quarter of fiscal 2019 is off to a slow start with a comparable store sales decrease of 8% for the first five-plus weeks of the 13-week period. Delayed tax refunds and a decline of more than 3% in total tax refunds compared to last year resulted in significant fluctuations in sales beginning in mid-February. In addition, Easter falls three weeks later this year, which the Company believes will extend the spring season; however, there is limited visibility into how this might impact sales. Due to the volatility associated with tax refund-driven sales and the later Easter, the Company’s guidance for the first quarter is based on a comparable store sales decline of approximately 3%, which assumes that comparable store sales for the remainder of the quarter increase 2%, in line with budget. The Company’s guidance for first quarter earnings per diluted share is in a range of $0.83 to $0.87 which compares with last year’s first quarter of $0.83.

For fiscal 2019, the Company expects diluted earnings per share to be in a range of $1.85 to $1.95, assuming comparable store sales increase in a range of 1% to 2%, compared with diluted earnings per share of $1.64 in 2018.