Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the
fourth quarter and fiscal year ended February 2, 2008. The
Company�s 2007 fiscal year contained the traditional 52 weeks,
whereas, fiscal 2006 contained 53 weeks, with the extra week
falling in the fourth quarter. Accordingly, comparisons of total
sales and net income for the fourth quarter and full year of fiscal
2007 to the same periods in 2006 are affected by an extra week in
2006. However, for comparable store sales, the Company is reporting
on a comparable weeks basis (e.g. the 13 weeks ended February 2,
2008 compared to the 13 weeks ended February 3, 2007). Financial
Highlights � Fourth quarter ended February 2, 2008 Total sales in
the 13-week quarter ended February 2, 2008 increased 6.2% to $134.6
million compared with $126.8 million in the 14-week quarter ended
February 3, 2007. Comparable store sales decreased 1.1%, comparing
the 13 weeks ended February 2, 2008 to the 13 weeks ended February
3, 2007. Net income was $8.4 million compared with $10.4 million in
last year�s fourth quarter. Earnings per diluted share was $0.59 in
the fourth quarter of 2007 compared to $0.73 in 2006. The decline
in fourth quarter earnings was a result of the negative comparable
store sales and a related need to increase clearance markdowns,
together with the inclusion of the extra week in 2006. However,
these factors were partially offset by a favorable effective income
tax rate in 2007 due to income tax credits and tax-exempt income
increasing, while pretax income was decreasing. Financial
Highlights � Fiscal year ended February 2, 2008 Total sales in the
52-week fiscal year ended February 2, 2008 increased 14.6% to
$437.5 million compared with $381.9 million in the 53-week fiscal
year ended February 3, 2007. The extra week last year contributed
approximately $10 million of sales in 2006. Comparable store sales
increased 1.0%, comparing the 52 weeks ended February 2, 2008 to
the 52 weeks ended February 3, 2007. Net income was $14.2 million
in 2007 compared with $21.4 million in 2006. Earnings per diluted
share was $1.00 in 2007 compared with $1.51 in the prior year.
Fiscal 2008 Outlook The Company estimates 2008 earnings in a range
of $1.10 to $1.15 per diluted share. This guidance is based upon an
anticipated 2008 comparable store sales increase of 2% to 3%. For
the year, the Company expects to increase selling square footage by
at least 15%. The Company reminds investors of the complexity of
accurately assessing future results given the difficulty in
predicting fashion trends, consumer preferences and general
economic conditions and the impact of other business variables. See
�Forward-Looking Statements� below for more information regarding
these uncertainties. Investor Conference Call and Webcast Citi
Trends will host a conference call on March 26, 2008, at 5:00 p.m.
ET. The number to call for the live interactive teleconference is
(800)�218-0204. A replay of the conference call will be available
until April 2, 2008, by dialing (303)�590-3000 and entering the
passcode, 11105977#. The live broadcast of Citi Trends' quarterly
conference call will be available online at the Company's website,
www.cititrends.com, as well as
http://ir.cititrends.com/medialist.cfm on March 26, 2008, beginning
at 5:00 p.m. ET. The online replay will follow shortly after the
call and continue through April 2, 2008. During the conference
call, the Company may discuss and answer questions concerning
business and financial developments and trends. The Company�s
responses to questions, as well as other matters discussed during
the conference call, may contain or constitute information that has
not been disclosed previously. About Citi Trends Citi Trends, Inc.
is a value-priced retailer of urban fashion apparel and accessories
for the entire family. The Company currently operates 330 stores
located in 20 states in the Southeast, Mid-Atlantic and Midwest
regions and the state of Texas. Citi Trends� website address is
www.cititrends.com. CTRN-E Forward-Looking Statements All
statements other than historical facts contained in this news
release, including statements regarding our future financial
results and position, business policy and plans and objectives of
management for future operations, are forward-looking statements
that are subject to material risks and uncertainties. The words
"believe," "may," "could," "plans," "estimate," "continue,"
"anticipate," "intend," "expect" and similar expressions, as they
relate to Citi Trends, are intended to identify forward-looking
statements. Statements with respect to earnings guidance are
forward-looking statements. Investors are cautioned that any such
forward-looking statements are subject to the finalization of the
Company�s year-end financial and accounting procedures, are not
guarantees of future performance or results and are inherently
subject to risks and uncertainties, some of which cannot be
predicted or quantified. Actual results or developments may differ
materially from those included in the forward-looking statements,
as a result of various factors which are discussed in Citi Trends,
Inc. filings with the Securities and Exchange Commission. These
risks and uncertainties include, but are not limited to,
uncertainties relating to economic conditions, growth risks,
consumer spending patterns, competition within the industry,
competition in our markets and the ability to anticipate and
respond to fashion trends. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the Securities and Exchange Commission, Citi
Trends does not undertake to publicly update any forward-looking
statements in this news release or with respect to matters
described herein, whether as a result of any new information,
future events or otherwise. CITI TRENDS, INC. CONDENSED STATEMENTS
OF INCOME (unaudited) (in thousands, except per share data) � �
Thirteen Weeks Ended Fourteen Weeks Ended February 2, 2008 February
3, 2007 (unaudited) (unaudited) Net sales $ 134,571 $ 126,788 Cost
of sales � 87,145 � � 78,104 � Gross profit 47,426 48,684 Selling,
general and administrative expenses 32,892 31,374 Depreciation and
amortization � 3,488 � � 2,363 � Income from operations 11,046
14,947 Interest income 680 585 Interest expense � (97 ) � (190 )
Income before provision for income taxes 11,629 15,342 Provision
for income taxes � 3,251 � � 4,970 � Net income $ 8,378 � $ 10,372
� � Net income per share, basic $ 0.60 $ 0.75 Net income per share,
diluted $ 0.59 $ 0.73 � Weighted average shares used to compute net
income per share, basic 14,034 13,739 Weighted average shares used
to compute net income per share, diluted 14,188 14,200 � � � CITI
TRENDS, INC. CONDENSED STATEMENTS OF INCOME (unaudited) (in
thousands, except per share data) � � Fifty-Two Weeks Ended
Fifty-Three Weeks Ended February 2, 2008 February 3, 2007
(unaudited) (unaudited) Net sales $ 437,515 $ 381,918 Cost of sales
� 278,783 � � 235,744 � Gross profit 158,732 146,174 Selling,
general and administrative expenses 127,470 107,535 Depreciation
and amortization � 12,583 � � 8,326 � Income from operations 18,679
30,313 Interest income 2,383 2,014 Interest expense � (469 ) � (359
) Income before provision for income taxes 20,593 31,968 Provision
for income taxes � 6,379 � � 10,617 � Net income $ 14,214 � $
21,351 � � Net income per share, basic $ 1.02 $ 1.57 Net income per
share, diluted $ 1.00 $ 1.51 � Weighted average shares used to
compute net income per share, basic 13,946 13,575 Weighted average
shares used to compute net income per share, diluted 14,223 14,138
� � � CITI TRENDS, INC. CONDENSED BALANCE SHEETS (unaudited) (in
thousands) � February 2, 2008 February 3, 2007 (unaudited)
(unaudited) Assets: Cash and cash equivalents $ 6,203 $ 7,707
Short-term investments (1) 56,165 65,956 Inventory 82,420 73,360
Other current assets 8,726 7,000 Property and equipment, net 52,207
34,754 Other noncurrent assets � 4,456 � � 3,330 � Total assets $
210,177 � $ 192,107 � � Liabilities and Stockholders' Equity:
Accounts payable $ 43,566 $ 46,894 Accrued liabilities 17,089
15,587 Other current liabilities 3,370 3,174 Noncurrent liabilities
� 8,005 � � 8,243 � Total liabilities 72,030 73,898 � Total
stockholders' equity � 138,147 � � 118,209 � Total liabilities and
stockholders' equity $ 210,177 � $ 192,107 � � � (1) Short-term
investments consist of municipal auction rate securities (ARS)
issued by state governments to fund student loans. These securities
are high-grade (AAA rated), most of which are either guaranteed by
the U.S. Department of Education or backed by insurance.
Historically, the ARS provided liquidity via an auction process
that reset the interest rate every 35 days, allowing investors
either to roll over their investments or sell them at par. Since
these auction rate securities have typically traded at short-term
intervals, they have been classified as current assets. Subsequent
to February 2, 2008, there has been insufficient demand for these
types of investments during the auctions and, as a result, these
securities are not currently liquid. The Company may not be able to
access cash by selling these securities without a loss of principal
until either, liquidity returns to the auction process, a secondary
market emerges, they are redeemed by the issuer, or they mature in
years ranging from 2010 to 2040. At this time, there is no evidence
to conclude that the ARS are impaired. If it is later determined
that the market value of these securities is impaired, the Company
would be required to write down the investments to fair value.
Also, if liquidity is not restored to this market in the near term,
the Company may be required to reclassify these investments as
long-term assets.
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