Citi Trends Upgraded to Outperform - Analyst Blog
January 14 2013 - 8:50AM
Zacks
On January 9, we upgraded
value-priced retailer of urban fashion apparel and accessories,
Citi Trends, Inc. (CTRN) to ‘Outperform’ based on
its improved results in the third quarter of fiscal 2012.We are
impressed with Citi Trends’ turnaround efforts, where the company
registered growth in its top line and narrowed its loss despite
reporting weaker comps.
Why the
Upgrade?
Citi Trends marked an improvement
in its third quarter 2012 results by reporting a loss per share of
25 cents, which fared better than both the prior-year quarter’s
loss of 38 cents as well as the Zacks Consensus Estimate of a loss
of 41 cents per share. During the quarter, Citi Trends’ net sales
improved 4.1% to $149 million, and surpassed the Zacks Consensus
Estimate of $142 million.
Following the release of Citi
Trends’ third-quarter results, the Zacks Consensus Estimate of
earnings for 2012 has shot up 83.3% to 22 cents per share. Apart
from the better-than-expected third-quarter results, the company’s
store-growth initiatives, efficient inventory management and
healthy financial position underline its strength. We believe that
these factors are also the reasons behind the rise in earnings
estimate.
In our point of view, Citi Trends’
extensive focus on store-expansion strategy may drive its top-line
growth. Further, the company has taken prudent steps towards
inventory management, such as enhanced supervision and installation
of sophisticated surveillance systems in high-shrinkage stores. We
expect these initiatives to help the company improve its
operational performance.
Other Stocks to
Consider
Besides Citi Trends, other stocks
in the retail-apparel/shoe sector that are currently performing
well include DSW Inc. (DSW) and Foot
Locker Inc. (FL). All these companies carry a Zacks Rank
#1 (Strong Buy).
CITI TRENDS INC (CTRN): Free Stock Analysis Report
DSW INC CL-A (DSW): Free Stock Analysis Report
FOOT LOCKER INC (FL): Free Stock Analysis Report
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