On August 27, 2024, Citi Trends Inc (CTRN, Financial) released its 8-K filing for the second quarter of fiscal 2024. Citi Trends Inc is a retailer of urban fashion apparel and accessories in the United States, offering a wide range of products including apparel, accessories, home products, and beauty items.
Financial Highlights
For the second quarter ended August 3, 2024, Citi Trends Inc reported net sales of $176.6 million, a 1.7% increase from the $173.6 million reported in the same period last year. However, the company posted a net loss of $18.4 million, or $2.21 per share, missing the analyst estimate of -$0.60 per share. The revenue also fell short of the estimated $179.12 million.
Strategic Actions and Challenges
During the quarter, Citi Trends Inc undertook significant actions to reset its inventory composition by marking down slow-selling and aged inventory. This move is aimed at offering fresher, more balanced assortments of products at various price points. The company also implemented measures to control and mitigate shrink, including upgrading store talent and theft prevention equipment.
Ken Seipel, Interim Chief Executive Officer, commented, “Following an evaluation of several key areas of our business including an extensive review of our product assortment, we made the strategic decision to execute an inventory reset to quickly clear through slow-selling and aged inventory. This action enables us to consistently offer fresher, more balanced assortments of good, better, and best products.”
Financial Position and Metrics
Citi Trends Inc reported a strong financial position with liquidity of approximately $134 million and no debt. The company’s total assets stood at $506.7 million, with total liabilities of $370.1 million and stockholders' equity of $136.6 million.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $176.6 million | $173.6 million |
| Net Loss | $(18.4) million | $(5.0) million |
| Basic Net Loss per Share | $(2.21) | $(0.61) |
| Cash and Cash Equivalents | $59.3 million | $65.8 million |
| Inventory | $135.0 million | $134.5 million |
Operational Efficiency and Future Outlook
The company achieved traffic growth in the quarter, indicating strong consumer engagement. Categories such as home and impulse delivered double-digit comps, and the back-to-school children's categories showed a strong start. Citi Trends Inc is optimistic about the second half of fiscal 2024, with a positive outlook for comparable store sales growth.
“We remain in a healthy financial position with strong liquidity and no debt, allowing us to execute the foundational work necessary for future profit acceleration. While there is still much work ahead, I am energized and optimistic about our company’s future,” Seipel concluded.
Despite the challenges, Citi Trends Inc is taking strategic steps to position itself for future profitable growth. Investors and stakeholders will be keenly watching the company's performance in the upcoming quarters.
Explore the complete 8-K earnings release (here) from Citi Trends Inc for further details.
