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Citi Trends Hits New High

Zacks Equity Research

Shares of Citi Trends, Inc. (CTRN) touched a new 52-week high of $17.72 on Monday, Sep 9, and eventually closed trade at $17.47. The stock has been performing well, based on the company’s better-than-expected second-quarter fiscal 2013 results and impressive outlook. This specialty retailer has amassed a year-to-date return of 28.8%.

The average volume of shares traded over the last 3 months was approximately 84K. The last traded price is 16.5% above the Zacks Consensus average analyst price target of $15.00. Additionally, the company’s long-term estimated earnings per share (EPS) growth rate is 11.7%.

Investors are optimistic about this Zacks Rank #1 (Strong Buy) stock as it reported loss of 37 cents per share for the second quarter, narrowing down from a loss of 54 cents in the comparable year-ago quarter. Moreover, it fared better than the Zacks Consensus Estimate of loss of 43 cents per share. Citi Trends’ strategic initiatives such as better utilization of floor area, improvising merchandise margins and efficient inventory management have helped it to make a significant turnaround.

Further, Citi Trends provided an upbeat guidance for fiscal 2013. The company expects to continue posting positive comparable store sales and improved gross margin with lower levels of inventory. Citi Trends intends to keep lesser inventory in the third and fourth quarters of this fiscal as compared with the year-ago quarter level.

Moreover, we believe that Citi Trends’ strong focus on its store expansion strategy will drive top-line growth. We also hold that the company’s debt-free balance sheet, along with cash and cash equivalents of $61.2 million as of Aug 3, 2013, provides it the financial flexibility to increase store count. Also, the company’s steps to reduce inventory shrinkage will help it to steadily improve its operational performance going forward.

Apart from Citi Trends, other stocks such as Deckers Outdoor Corp. (DECK), Tractor Supply Company (TSCO) and Boston Beer Co. Inc. (SAM) achieved new 52-week highs of $62.85, $127.62 and $227.10, respectively, on Sep 9, 2013.


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