Citi Trends, Inc., the leading value retailer of apparel, accessories and home goods primarily for African American families in the United States, today reported results for the first quarter ended May 2, 2020.

COVID-19 Business Actions Highlights

• Due to “stay-at-home” and “shelter-in-place” orders to serve the health and safety needs of all associates and customers, on March 20, 2020 temporarily closed all 574 stores across 33 states

• Temporarily closed both corporate offices and both distribution centers

• Furloughed substantially all store and distribution center personnel, as well as about 40% of corporate staff starting April 3, 2020, while providing eligible associates with benefits at no cost

• Temporarily reduced cash compensation for Chief Executive Officer, senior executives and Board members by 15% to 25%

• Created a “COVID-19” response team focused on business continuity that developed new protocols and action plans to limit and reduce operating expenses, address forward looking health and safety requirements and prepare the business for reopening

• Proactively drew down $43.7 million on our credit facility to have the financial flexibility to manage through the crisis and stages of recovery during the remainder of 2020

• Substantially reduced capital expenditures to a limited number of store projects under contract, as well as minimal maintenance capital spending

• Temporarily suspended any repurchases of shares under the stock repurchase program

• Temporarily suspended quarterly cash dividend beginning in the second quarter

Financial Highlights – 13-week first quarter ended May 2, 2020

• For the first quarter through March 7, 2020 and prior to the country-wide store traffic and sales deceleration resulting from COVID-19, comparable store sales increased 3.1%

• With the chain substantially closed for the last two weeks of March and all of April, total sales decreased 43.4% to $116.1 million compared with $205.0 million in the first quarter of fiscal 2019

• Gross margin contracted 1,011bps to 27.3% compared to 37.5% for the first quarter of 2019 reflecting permanent markdowns on merchandise receipts that would have normally sold during the first quarter and into the first month of the second quarter

• Selling, general and administrative expenses declined 14.8% year-over-year due to proactive actions taken by the Company in response to COVID-19

• Operating loss was $27.6 million compared to an operating profit of $8.7 million in the first quarter of fiscal 2019 on a GAAP basis, or an operating loss of $26.7 million* when adjusted for CEO transition expenses and asset impairment expenses compared to an operating profit of $9.8 million* for the first quarter of fiscal 2019 on an adjusted basis

• Operating margin was (23.7)% compared to 4.3% in the first quarter of fiscal 2019

• Net loss was $20.9 million compared to net income of $7.8 million in the first quarter of fiscal 2019 on a GAAP basis, or a net loss of $20.2 million* when adjusted for CEO transition expenses and asset impairment expenses compared to $8.7 million* in the first quarter of fiscal 2019 on an adjusted basis

• Net loss per share was $(2.00) compared to earnings per share of $0.65 in the first quarter of fiscal 2019 on a GAAP basis, or a net loss per share of (1.94)* when adjusted for CEO transition expenses and asset impairment expenses compared to earnings per share of $0.72* in the first quarter of fiscal 2019 on an adjusted basis

• Cash and investments of $108.1 million at the end of the first quarter of fiscal 2020, compared to $80.4 million at the end of the first quarter of fiscal 2019

• Quarter-end inventory was down 7.1% compared to the end of the first quarter of fiscal 2019

Chief Executive Officer Comments:

David Makuen, Chief Executive Officer, commented, “We are in unprecedented times and COVID-19 has had a tremendous human impact, as well as an impact on our economy and the retailing landscape. Throughout this crisis, our top priority has been, and continues to be, the health and safety of our employees, our customers and the communities we serve. Throughout this pandemic, we have made some difficult but prudent decisions to ensure that Citi Trends remains in a strong financial position and is poised to exit this crisis well-positioned for a safe recovery and long-term growth.”

Makuen continued, “I would like to thank our leadership team and associates for their unwavering dedication to the business throughout this crisis. Our people are the heart and soul of Citi Trends, and alongside many other priorities in their personal lives, they rose to the challenge of balancing life needs with the needs of the business. As we hunkered down in our respective homes, we both maximized the strengths of our model and identified opportunities to improve in nearly every operating function. I am so incredibly proud of their efforts and all that we have collectively accomplished."

“Under the guidelines of state and local authorities, as of today we have safely reopened 498 stores across 26 states and I am pleased to report that just shy of four weeks into our fiscal second quarter the reopened stores are registering comparable store sales growth that has substantially exceeded our expectations. The strong results have been driven by healthy transaction trends and an increase in the average number of items per transaction. While still very early in the recovery from this pandemic, our results prove that our customers in the communities we serve are voting on the style, quality and extreme value of our mix of basics, fashion, trends and sought-after brands as they fulfill many of their apparel, accessories and home needs.”

Makuen concluded, “The health of our balance sheet pre-COVID-19 helped us to manage through this uncertain period, and along with the prudent actions we have taken, we believe we are in a strong financial position to weather the current environment. I am confident in our leadership team’s ability to execute our long-term strategy and that our unique position in the market place presents many opportunities for the long-term growth of the business.”