Citi Trends board adopts ‘poison pill’
Citi Trends has gone on the offense.
The value retailer focused primarily on African American and multicultural families has adopted a limited shareholder rights plan (often called a “poison pill”) in response to one of its holders accumulating a "significant" number of shares in the open market.
The plan was not adopted in response to any specific takeover bid or other proposal to acquire control of the company, Citi Trends stated in a release. And it isn’t intended to deter offers that are fair and otherwise in the best interests of the company and its stockholders.
The poison pill plan goes into effect if any person or group acquires 16% (or 20% for certain passive investors) of more of Citi Trends' outstanding common stock. The plan is set to expire on Dec. 4, 2024.
Jefferies LLC is serving as financial advisor and Vinson & Elkins L.L.P. is serving as legal advisor to Citi Trends.
Citi Trends announced the plan a week after it reported its third-quarter results. Total sales fell 6.7% to $179.5 million. Comparable store sales decreased 6.2%. The company had a net loss per share of $0.47, or adjusted net loss per share of $0.56, compared to net earnings per share of $3.02, or $0.24 as adjusted, in the year-ago quarter.
“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 Citi Trends CEO David Makuen. “Our primarily low-income customer base is being more selective and purchasing much closer to need as they navigate higher costs of living, a buying pattern further impacted by unseasonably warm weather throughout the quarter.”
“Importantly, the strength of our balance sheet with total liquidity of $135 million at quarter-end and no debt, provides us the necessary flexibility to navigate the dynamic macroeconomic and consumer environment while maintaining our focus on our strategic initiatives and creating long-term shareholder value,” Makuen said.
Citi Trends operates 606 stores located in 33 states.