Citi Trends, Inc. reported unaudited results for the second quarter of fiscal 2019.

Financial Highlights – Second quarter ended August 3, 2019

Total sales in the second quarter ended August 3, 2019 increased 0.5% to $182.8 million, compared with $182.0 million in the second quarter ended August 4, 2018. Comparable store sales decreased 1.2% in the quarter.

The Company had net income of $0.4 million, or $0.03 per diluted share, in the second quarter of fiscal 2019, compared with $3.2 million, or $0.24 per diluted share, in last year’s second quarter.

During the second quarter, the Company opened four new stores, relocated or expanded one store and closed three stores.

Financial Highlights – First half ended August 3, 2019

Total sales in the first half of fiscal 2019 decreased 1.3% to $387.9 million, compared with $393.0 million in the first half of fiscal 2018. Comparable store sales decreased 2.9% in the first half of this year.

In the first half of 2019, the Company had net income of $8.2 million on a GAAP basis, or $9.1 million when adjusted for proxy contest-related expenses, compared with net income in last year’s first half of $14.5 million. Earnings per diluted share in the first half of 2019 were $0.68 on a GAAP basis, or $0.76 when adjusted for proxy contest-related expenses, compared with earnings per diluted share of $1.08 in the first half of 2018.

Bruce Smith, President and Chief Executive Officer, commented, “As discussed in our last earnings release, the second quarter started off slowly, with comparable store sales down 6% during the first two-plus weeks of the quarter. Subsequent to that release, we were encouraged to see sales trends improve, leading to comparable store sales that were nearly flat during the remaining ten-plus weeks in the quarter and at the more favorable end of guidance for the full quarter. Sales of accessories and home merchandise experienced continued momentum with increases during the quarter, while the apparel categories declined, but with improving trends in the latter part of the quarter. We continue to strategically shift our merchandise mix more towards the growing non-apparel lines and expect to accelerate this mix shift in the second half of the year.”

Smith further noted, “We are pleased with the quality and age of our inventory entering the back half of the year, as we ended the quarter with 5% less inventory than at the end of last year’s second quarter, including a 14% decline in inventory in comparable stores.”

Smith continued, “Peter Sachse, our new director and Special Advisor to the CEO, has been working with management on a number of initiatives, including the appropriate mix of apparel and non-apparel for the important holiday season, organizational structure and resources, system opportunities, customer research, real estate optimization, and other strategic projects. We are executing on these initiatives and believe the benefits will better position Citi Trends to grow and deliver value for its customers, associates and shareholders.”

Guidance

The Company is maintaining its full year fiscal 2019 earnings guidance in a range of $1.30 to $1.50 per diluted share when adjusted for proxy contest-related expenses*. As the Company enters the third quarter, comparable store sales thus far have been up 4%. Given the favorable inventory position and the acceleration of our efforts to shift our merchandise mix, coupled with the sales results of the past 13 weeks, the Company’s earnings per share guidance includes an assumption that comparable store sales will increase in a range of 1% to 3% in the second half of 2019.

Capital Return Program

The Company announced that its Board of Directors has declared a quarterly cash dividend of $0.08 per common share, payable on September 17, 2019, to shareholders of record as of the close of business on September 3, 2019.

During the first half of 2019, the Company repurchased 273,000 shares of its common stock at an aggregate cost of $4.5 million. At August 3, 2019, $5.1 million remained available under the existing stock repurchase authorization, and the Company had no debt and $82.2 million of cash and investment securities.