Citi Trends, Inc. (NASDAQ: CTRN) today reported unaudited sales
results for the fourth quarter and fiscal year ended February 2,
2013.
The Company’s 2012 fiscal year contained 53 weeks compared with
the traditional 52 weeks in fiscal 2011. Accordingly, comparisons
of total sales for the fourth quarter and full year of fiscal 2012
to the same periods in 2011 are affected by an extra week of sales
in 2012. However, for comparable store sales, the Company is
reporting on a comparable weeks basis (e.g. the 14 weeks ended
February 2, 2013 compared to the 14 weeks ended February 4,
2012).
Total sales in the 14-week quarter ended February 2, 2013
decreased 1.5% to $175.7 million compared with $178.4 million in
the 13-week quarter ended January 28, 2012. The extra week
contributed $8.8 million to total sales in fiscal 2012.
For the year, total sales in the 53 weeks ended February 2, 2013
increased 2.2% to $654.7 million compared with $640.8 million in
the 52 weeks ended January 28, 2012.
Ed Anderson, Chairman and Chief Executive Officer, commented,
“While the sales results for the fourth quarter are disappointing,
we continue to make very good progress in our turnaround efforts.
There are several reasons for the disappointing sales in the fourth
quarter and following is a fairly detailed explanation.”
Impact from Delayed Tax
Refunds
Fourth quarter comparable store sales decreased 11.8%, comparing
the 14 weeks ended February 2, 2013 to the 14 weeks ended February
4, 2012. The largest impact on the Company’s comparable store sales
for the fourth quarter was the delay by the Internal Revenue
Service of 2012 tax refunds. The IRS moved back the date it would
accept tax returns from January 13 a year ago to January 30 this
year. As a result, all tax refund driven sales this year were
pushed into fiscal 2013. In the last two weeks of fiscal January,
sales dropped by over $16 million, most of which, we believe, was
due to the delay in tax refunds. This alone impacted the fourth
quarter comparable store sales by 7.5%. Sales for the first 12
weeks of the 14-week fourth quarter (November, December and the
first three weeks of the five-week January) decreased 4.3%.
Although the year-end closing process is not complete, we expect
to report a net loss of approximately $0.07 per diluted share for
the fourth quarter, with the aforementioned $16 million decrease in
sales during the last two weeks of January adversely impacting net
loss per diluted share by approximately $0.35.
Mr. Anderson added, “Last week, we finally saw the beginnings of
tax refund driven sales activity. Although we can’t quantify the
impact, we are hopeful that this activity will help produce a
successful first quarter of fiscal 2013.”
Fourth Quarter Comparable Sales by
Month
Comparable store sales in November increased 1%, continuing the
slight positive trend that we began in the third quarter.
Comparable store sales in December decreased 10%. We mentioned
on the third quarter earnings call that we expected a drag on
fourth quarter sales from lower layaways. The drag impacted the
December month by more than 3% and the quarter by about 2%.
Additionally, we cautioned about the potential difficulty of
comparing to last year’s promotional environment. Last year’s
promotional environment was felt most in the ladies’ business in
December. Sales in December were also impacted at the end of the
month by a shift in sales around the first of January into the
January fiscal month.
Comparable store sales in January dropped 28%. January
comparable sales were actually up 10% for the first three weeks of
the five-week month, benefiting from the calendar change mentioned
above regarding December. But as mentioned, sales the last two
weeks dropped over $16 million due primarily to the timing of tax
refund driven sales.
Outlook Commentary
“While there were several positives in merchandising in the
quarter, improving sales remains our number one objective,” noted
Mr. Anderson. “In particular, we are laser-focused on our ladies’
business. Urban brands continue to diminish in importance and
non-branded business has not yet improved enough to offset the
branded decreases. We have further intensified our focus on the
fashion element of our ladies’ business and expect improved results
in 2013.
“We believe that we are in a fashion cycle where price is still
very important. At the beginning of 2012, we had two merchandising
issues - we were not as competitively priced nor as fashion right
as we needed to be. We solved the pricing issue and now compete
with anyone on price. We have made progress on the fashion issue
and believe we can solve it in 2013.
“We ended the year with inventories in a very healthy position.
Our balance sheet is strong and we ended the year with
approximately $55 million of cash and investments, and no debt.
“Note that fiscal 2013 will be a 52-week year, following the 53
weeks of fiscal 2012. The week that will be lost is week one of
fiscal 2012 which was a $21 million week. We expect this impact,
together with the related shift in the fiscal calendar, to be felt
primarily in quarters one and four of 2013.
“Looking forward to the first quarter of 2013, we expect sales
to be negatively impacted by the calendar change mentioned above.
We do expect some benefit from the tax refunds moving from late
2012 into 2013. But, we also know that our ladies’ apparel business
is still significantly challenged by the diminished brand sales.
So, our outlook for the first quarter of 2013 remains cautious.
“We continue to be optimistic about our future and believe we
are taking the actions we need to take to complete the turnaround
of Citi Trends.”
Investor Conference Call and
Webcast
The Company will report complete financial results for its
fourth quarter and fiscal 2012 before the market opens on March 15,
2013. Citi Trends will host a conference call on the same day at
9:00 a.m. ET. The number to call for the live interactive
teleconference is (212) 231-2921. A replay of the conference
call will be available until March 22, 2013, by dialing
(402) 977-9140 and entering the passcode, 21645977.
The live broadcast of Citi Trends' quarterly conference call
will be available online at the Company's website,
www.cititrends.com, on March 15, 2013, beginning at 9:00 a.m.
ET. The online replay will follow shortly after the call and
continue until March 22, 2013.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and trends
after quarter-end. 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 operates
513 stores located in 29 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. Any forward-looking statements by the
Company, with respect to earnings guidance or otherwise, are
intended to speak only as of the date such statements are made.
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.
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