Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the
fourth quarter and fiscal year ended January 29, 2011.
Financial Highlights – Fourth quarter
ended January 29, 2011
Total sales in the fourth quarter ended January 29, 2011
increased 1.3% to $172.0 million compared with $169.8 million in
the quarter ended January 30, 2010. Comparable store sales
decreased 11.4% in the fourth quarter. Sales were particularly weak
in December due largely to a delay in the government’s distribution
of extended unemployment benefits until just before Christmas, a
significant shortfall in sales of long denim, and a heavy
promotional environment that included going-out-of-business sale
events by a major competitor. Sales in January were negatively
impacted by a later income tax refund season due to a lack of
refund anticipation loan availability for the Company’s
customers.
Net income in the fourth quarter of 2010 was $9.4 million
compared with $11.3 million in last year’s fourth quarter. Earnings
per diluted share decreased to $0.64 in the fourth quarter of 2010
compared with $0.78 in the fourth quarter of 2009. Financial
results for the fourth quarter of 2010 included an immaterial
correction of an error related to an accounting policy. Prior to
the fourth quarter, the Company’s policy was to expense the cost of
inbound freight associated with the delivery of inventory to the
Company’s distribution centers in the period incurred, rather than
capitalizing such costs as a component of inventory and expensing
them as the related inventory was sold. In the fourth quarter of
2010, the Company began to capitalize freight costs as a component
of the cost of inventory. The impact of this adjustment in the
fourth quarter was a non-recurring reduction in cost of sales of
$2.7 million and a resulting increase in net income of $1.8
million, or $0.12 per diluted share.
The Company opened 3 stores in the fourth quarter of 2010,
reaching a total store count of 461 at the end of the year. In
addition, the Company converted 15 of its stores to its new Citi
Lights prototype format in January 2011, and now has a total of 25
stores operating under the new format.
Financial Highlights – Fiscal year
ended January 29, 2011
Total sales in the fiscal year ended January 29, 2011 increased
12.8% to $622.5 million compared with $551.9 million in the fiscal
year ended January 30, 2010. Comparable store sales decreased 1.8%
for the full year.
Net income was $20.9 million in 2010 compared with $19.7 million
in the prior year. Earnings per diluted share increased to $1.44 in
2010 compared to $1.36 in 2009, with 2010 including the
aforementioned benefit related to capitalized freight.
The Company opened 60 stores, relocated or expanded 13 others,
and closed 2 stores in 2010.
Fiscal 2011 Outlook – Fiscal year
ending January 28, 2012
The Company estimates fiscal 2011 earnings of approximately
$1.40 to $1.50 per diluted share, including an anticipated
comparable store sales increase of approximately 2% and an increase
in selling square footage of at least 15%. Through the first
five-plus weeks of the new fiscal year, comparable store sales are
down 2%, versus an 11% increase during the same period of time last
year.
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 today at 9:00 a.m. ET.
The number to call for the live interactive teleconference is
(212) 231-2901. A replay of the conference call will be
available until March 18, 2011, by dialing (402) 977-9140 and
entering the passcode, 21510236. The live broadcast of Citi Trends'
conference call will be available online at the Company's website,
www.cititrends.com, as well as http://ir.cititrends.com/events.cfm,
beginning today at 9:00 a.m. ET. The online replay will follow
shortly after the call and continue through March 18, 2011.
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. After opening three
stores and closing one thus far in the first quarter of 2011, the
Company currently operates 463 stores located in 27 states. 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 Thirteen Weeks
Ended January 29, 2011 January 30, 2010
(unaudited) (unaudited) Net sales $ 172,043 $ 169,811 Cost of sales
105,184 104,258 Gross profit 66,859
65,553 Selling, general and administrative expenses 47,112 44,050
Depreciation and amortization 5,692 4,752
Income from operations 14,055 16,751 Interest income 34 75
Interest expense (7 ) (6 ) Income before income tax
expense 14,082 16,820 Income tax expense 4,718
5,569 Net income $ 9,364 $ 11,251 Basic
net income per common share $ 0.64 $ 0.78 Diluted net
income per common share $ 0.64 $ 0.78 Net
income attributable to common shares (1): Basic $ 9,364 $
11,251 Diluted $ 9,364 $ 11,251
Weighted average shares used to compute basic net income per share
14,523 14,402 Weighted average shares
used to compute diluted net income per share 14,537
14,447
Fifty-Two Weeks Ended
Fifty-Two Weeks Ended January 29, 2011 January 30,
2010 (unaudited) (unaudited) Net sales $ 622,528 $ 551,869 Cost
of sales 383,318 338,898 Gross profit
239,210 212,971 Selling, general and administrative expenses
187,231 165,166 Depreciation and amortization 20,535
18,431 Income from operations 31,444 29,374 Interest
income 174 404 Interest expense (24 ) (92 ) Income
before income tax expense 31,594 29,686 Income tax expense
10,742 9,969 Net income $ 20,852 $
19,717 Basic net income per common share $ 1.44
$ 1.36 Diluted net income per common share $ 1.44
$ 1.36 Net income attributable to common
shares (1): Basic $ 20,852 $ 19,540 Diluted $ 20,852
$ 19,541 Weighted average shares used to
compute basic net income per share 14,503
14,364 Weighted average shares used to compute diluted net
income per share 14,523 14,396
(1) Net of income allocated to nonvested restricted
stockholders
CITI TRENDS, INC.
CONDENSED BALANCE SHEETS (unaudited) (in thousands)
January 29, 2011 January 30, 2010 (unaudited)
(unaudited) Assets: Cash and cash equivalents $ 69,231 $ 62,993
Short-term investment securities 586 33,025 Inventory 121,432
100,874 Other current assets 16,669 14,927 Property and equipment,
net 85,299 63,791 Long-term investment securities 9,205 - Other
noncurrent assets 3,980 4,376 Total
assets $ 306,402 $ 279,986 Liabilities and
Stockholders' Equity: Accounts payable $ 67,934 $ 62,706 Accrued
liabilities 23,184 22,273 Other current liabilities 444 3,669
Noncurrent liabilities 10,036 9,995
Total liabilities 101,598 98,643 Total stockholders' equity
204,804 181,343 Total liabilities and
stockholders' equity $ 306,402 $ 279,986
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