Citi Trends is staging a strong comeback from the pandemic.
The value retailer, which specializes in apparel, accessories and home goods primarily for African American and Latinx customers, reported earnings that topped expectations amid an increase in full-price selling, reduced markdown levels and improved inventory turns.
“We had a very strong start to our fiscal year, with record first-quarter results for total sales, gross margin and operating margin, building on our momentum from last year despite the backdrop of the continued pandemic, said David Makuen, CEO, Citi Trends, which operates 584 stores in 33 states.
Citi Trends in on track to open at least 30 stores and remodel approximately 20 locations this year. It plans to open at least 100 new stores, remodel at least 150 locations and grow its sales to more than $1 billion by the end of 2023.
"We remain extremely bullish about growing our footprint, with our long-term sight set on a fleet potential of 1,000 locations, over 70% growth from where we are today.," Makuen told analysts on the chain's earnings call.
Citi Trend's growth will remain focused on three distinct types of neighborhoods, according to Makuen, with the first being African-American centric, followed by a "melting pot" mix of African-American and Latinx populations, with the third being Latinx centric.
"As I’ve mentioned in the past, the role of the physical store is more important than ever as we develop relationships with customers in the heart of their communities, often literally a stone’s throw from where they live," he said.
The company’s net income totaled $30.9 million, or $3.23 per share, for the quarter ended May 1, compared to a loss of $20.9 million, or ($2.00) per share in the year-ago period, which was impacted by pandemic-related store closings. The chain reported earnings of $7.8 million for the first quarter of 2019, or $0.65 per share.
Total sales increased 145.8% to $285.4 million compared to $116.1 million in the year-ago period. Compared to the first quarter of 2019, sales rose 39.2%.
Same-store sales increased 142.0%, representing the seventh consecutive quarter of positive open-only comparable store sales. Comp sales increased 35% compared to the first quarter of 2019.
Citi Trends raised its earnings and net sales guidance for the full year 2021. The company now projects earnings in a range of $4.55 to $4.75 per share on net sales between $970 million and $990 million. Previously, it expected earnings in a range of $2.85 to $3.05 per share on net sales between $870 million and $900 million.
“Looking ahead, we feel very good about our overall positioning for the rest of fiscal 2021 and beyond,” Makuen said. “We are well ahead of our previously shared long-term plan and expect to achieve our growth target of $1 billion in sales sooner than originally planned. As such, our board of directors and leadership team are exploring new capital allocation strategies designed to accelerate our new store growth. We are confident that our growth strategies and the advantages of our business model will continue to fuel market share gains and drive long-term sustainable growth."