Citi Trends' 1Q Earnings Disappoint - Analyst Blog
May 23 2013 - 10:00AM
Zacks
Value-priced retailer of urban
fashion apparel and accessories, Citi Trends Inc.
(CTRN) reported first-quarter fiscal 2013 earnings per share of 42
cents, missing the Zacks Consensus Estimate of 57 cents and down
39.1% from 69 cents earned in the year-ago quarter.
Turning to
Numbers
Citi Trends reported first-quarter
sales of $181.8 million, marking a decrease of 8.0% from $197.7
million in the prior-year quarter. The company’s first-quarter
sales also missed the Zacks Consensus Estimate of $198 million.
Comparable store sales in the
quarter was down 4.1% compared to the year-ago quarter, driven
mainly by weak sales at the company’s stores in February and March,
followed by a recovery in April as weather turned warmer after
Easter.
On the basis of months, the
company’s comparable store sales dipped 7% in February and 8% in
March, while it gained 9% in April. Comps remained weak in March
primarily due to shift in timing of Easter this year to March
against April last year. This shift caused March comps to decline
2% while April comps gained 3%.
Citi Trends' gross profit for the
quarter declined 9.8% to $67.3 million from $74.7 million in the
year-ago quarter, whereas gross margin contracted 80 basis points
to 37.0%. The decline in gross margin was equally distributed
between core merchandise margin, freight expense and shrinkage.
Selling, general and administrative
expenses in the quarter decreased 1.5% year over year to $51.9
million, while depreciation and amortization expenses waned 8.2% to
$5.6 million. The company's operating income came in at $9.8
million, a significant decline of 38.4% from $15.9 million in the
year-ago period.
Financials
Citi Trends had no debt on its
balance sheet at the end of the first quarter. Cash and cash
equivalents were $64.1 million compared with $64.0 million at the
end of first quarter fiscal 2012. Shareholders' equity totaled
$202.2 million compared with $206.3 million in the prior-year
period.
Store Count
Following a conservative store
growth strategy in 2013, Citi Trends opened only 1 new store in the
first quarter. In furtherance of streamlining its stores, the
company shuttered 6 troubled stores. This brought the company’s
total store count to 508 at the end of first-quarter fiscal
2013.
Stepping into the second quarter,
the company closed 2 more stores, with its current store count
reaching 506. The company operates across 29 states in the
Southeast, Mid-Atlantic and Midwest regions as well as in the
states of Texas and Calif.
Outlook
Looking into fiscal 2013, the
company continues to be focused on improving its sales via
enhancing the variety of its ladies business. Though the
significance of the company’s Urban Brands continues to decline and
non-branded business is not poised to make loss from the branded
business, the company expects to gain from better focus on its
ladies business in 2013.
A Look at Zacks
Rank
Citi Trends currently holds a Zacks
Rank #3 (Hold). Stocks that are performing well among apparel-shoe
retailers include Buckle Inc. (BKE), Gap
Inc. (GPS) and Zumiez Inc. (ZUMZ) , all
of which carry a Zacks Rank #2 (Buy).
BUCKLE INC (BKE): Free Stock Analysis Report
CITI TRENDS INC (CTRN): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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