Citi Trends, Inc., a leading specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families in the United States, today reported results for the first quarter ended April 29, 2023.

Financial Highlights – First Quarter 2023

Total sales decreased 13.7% vs. Q1 2022 in line with guidance; Comparable store sales decreased 14.1% compared to Q1 2022
Gross margin of 36.7%, or 37.0% as adjusted* vs. 39.0% in Q1 2022
Operating loss was $9.5 million, or a loss of $7.9 million as adjusted*, compared to operating income of $39.7 million, or $4.7 million as adjusted* in Q1 2022
Net loss per share was ($0.81), or adjusted net loss per share* of ($0.66), vs. diluted earnings per share of $3.59, or adjusted diluted earnings per share* of $0.42 in Q1 2022
Quarter-end total dollar inventory decreased 11.9% compared to Q1 2022; average in-store inventory increased 8.1% compared to Q1 2022 reflecting work to rebuild inventory levels in targeted departments
Total liquidity of approximately $164 million at the end of the quarter, made up of $88.7 million of cash, no borrowings under a $75 million credit facility, and no debt
Chief Executive Officer Comments

David Makuen, Chief Executive Officer, commented, “Against what remained a challenging macro backdrop for the low-income families that we serve, our first quarter results were in line with our previously stated guidance. During the quarter, we made progress rebuilding inventory in key areas of the business, which we believe will position us to recoup market share. Although we are seeing good response to our spring and early summer merchandise, our customers are being selective about what they put in their basket. That said, we continue to see strong shopper conversion, a clear signal that our assortments are resonating and the Citi Trends brand position remains healthy.”

Mr. Makuen continued, “With a macro environment that remains uncertain, we are prudently adjusting our outlook for the fiscal year, incorporating the impact of continued headwinds on our customers’ spending through the first half with modest improvement in the second half. Importantly, we remain laser focused on controlling what we can control, including tight expense and capital management. Looking forward, we’ll leverage our strong financial position to procure a fresh assortment of exciting products at amazing values that will set us up for successful back-to-school and holiday selling seasons.”

Capital Return Program Update

In the first quarter of 2023, the Company did not repurchase any shares of its common stock. At the end of the first quarter of 2023, $50.0 million remained available under the Company’s share repurchase program.

Guidance

Given the uncertain macro-economic environment, the Company is updating its outlook for fiscal 2023 as follows:

Full year total sales are expected to be in the range of negative mid single-digits to negative low single-digits as compared to fiscal 2022, assuming a challenging first half with modest improvement in the second half of the year
Full year EBITDA now expected to be in the range of $5 million to $20 million
The Company now plans to open 5 new stores and remodel 10 to 20 stores in the year
Full year capital expenditures are now expected to be in the range of $15 million to $20 million
Year end cash balance is expected to be in the range of $85 million to $105 million
The remaining aspects of the prior guidance are unchanged with full year gross margin expected to be in the high thirties and the closure of 10 to 15 underperforming stores