Citi Trends Inc (CTRN) Reports Decline in Q3 Sales and Earnings
Total third-quarter sales decreased by 6.7% year-over-year to $179.5 million.
Gross margin for Q3 stood at 38.2%, a decline from 39.8% in the same quarter last year.
Net loss per share reported at $0.47, with an adjusted net loss per share of $0.56.
Citi Trends Inc (NASDAQ:CTRN) updates fiscal 2023 guidance amid challenging market conditions.
On November 28, 2023, Citi Trends Inc (NASDAQ:CTRN) released its 8-K filing, announcing its financial results for the third quarter ended October 28, 2023. The company, a leading specialty value retailer, faced a challenging quarter with a decrease in total sales and a reported net loss. The earnings release highlighted several financial metrics and provided updated guidance for fiscal 2023.
Financial Performance Overview
Citi Trends Inc (NASDAQ:CTRN) reported total sales of $179.5 million for the third quarter, marking a 6.7% decrease compared to the third quarter of 2022. Comparable store sales also saw a decline of 6.2% year-over-year. The company's gross margin for the quarter was 38.2%, a slight decrease from the 39.8% reported in the same period last year, and flat compared to the second quarter of 2023.
The company experienced an operating loss of $6.0 million, or an adjusted operating loss of $7.0 million, a significant shift from the operating income of $31.6 million, or $2.4 million as adjusted, in the third quarter of 2022. Net loss per share was reported at $0.47, with an adjusted net loss per share of $0.56, compared to net earnings per share of $3.02, or $0.24 as adjusted, in the prior year.
For the 39 weeks ended October 28, 2023, total sales were $532.8 million, a 9.0% decrease from the previous year. The year-to-date gross margin was 37.7%, or 37.8% as adjusted, compared to 39.0% in 2022. The operating loss for this period was $23.4 million, or a loss of $22.7 million as adjusted, compared to operating income of $67.9 million in 2022, or $3.8 million as adjusted. Net loss stood at $15.5 million, or $15.0 million as adjusted, versus net income of $52.3 million in 2022, or $2.9 million as adjusted.
CEO Commentary
"In the third quarter, our team continued to advance our strategic initiatives while navigating a very challenging selling environment and controlling the controllables like we always do. We successfully managed the middle of the P&L as we registered a strong gross margin of 38.2% and kept operating expense dollars essentially flat compared to the prior year. That said, our third quarter topline performance did not meet our expectations, with sales held back more than we expected by the ongoing challenging macroeconomic backdrop," said David Makuen, Chief Executive Officer.
"I am pleased to report that weve experienced improved top line momentum fourth quarter to date. Our customers are loving our Ready. Set. GIFT! Campaign with a timely in-store setup of a wide offering of gifts, from great toys to fragrances to Bluetooth speakers and apparel for the whole family, all at incredible values," Makuen added.
Balance Sheet and Liquidity
Citi Trends Inc (NASDAQ:CTRN) ended the quarter with total liquidity of approximately $135 million, consisting of $59.7 million in cash, no borrowings under a $75 million credit facility, and no debt. The quarter-end total dollar inventory increased by 0.9% compared to the third quarter of 2022. During the third quarter of 2023, the company closed 5 stores and remodeled 7 stores, bringing the total number of remodels to 15 for the year, and ended the quarter with 606 stores.
Updated Fiscal 2023 Guidance
The company provided updated guidance for fiscal 2023, reflecting the impact of the challenging economic environment on its performance. Details of the updated guidance were not specified in the earnings release.
For value investors and potential GuruFocus.com members, the detailed financial tables and the reconciliation of non-GAAP financial measures provide a deeper insight into Citi Trends Inc (NASDAQ:CTRN)'s financial health and operational performance. The company's ability to maintain a strong gross margin and control operating expenses in a difficult retail environment may be of particular interest to those looking for resilient investment opportunities.
For more detailed information on Citi Trends Inc (NASDAQ:CTRN)'s financial results, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Citi Trends Inc for further details.
This article first appeared on GuruFocus.
