Citi Trends Posts Soft Holiday Sales, Defies Industry Trend

Shares of Citi Trends, Inc. (NASDAQ:CTRN) decreased 8.8% on Jan 15 as it reported soft holiday sales numbers compelling management to trim earnings view. Notably, this value-priced retailer of urban fashion apparel and accessories performed disappointingly unlike the other stocks in the Zacks Retail – Apparel and Shoes industry. Urban Outfitters (NASDAQ:URBN) , Zumiez (NASDAQ:ZUMZ) and Ascena Retail Group (NASDAQ:ASNA) posted decent holiday numbers.

In the past three months, Citi Trends has lost approximately 27% underperforming the industry’s 16.7% decline.



Citi Trends’ Dismal Holiday Performance

Citi Trends reported a 0.7% decrease in comparable store sales (comps) for the nine-week period (ended Jan 5, 2019) compared to a 4.8% increase recorded in the year-ago period. The company’s total sales during the said period declined 1.9% to $161.9 million from $165.1 million in the prior year period.

Analysts stated that stiff competition from e-commerce players and a constant struggle to cope up with rapidly changing consumer trends might have taken a toll on the company’s performance. Taking into account holiday sales results and expectations for the remaining part of the final quarter of fiscal 2018, Citi Trends revised its forecast.

For the fourth quarter, this Savannah, GA-based retailer expects earnings in the range of 54-58 cents per share, down from the prior guidance of 60-65 cents. Earnings for the fiscal year is now envisioned in the band of $1.60-$1.64 per share, lower than $1.66-$1.71 per share guided earlier.

Although the holiday season was dull for Citi Trends, other retailers such as Zumiez did brisk business during the period. In November and December, Zumiez witnessed 2.3% and 4.9% comps growth, respectively. Meanwhile, at Urban Outfitters, the Comparable Retail segment and Wholesale segment’s net sales grew 5% and 3%, respectively, during the two months (ended Dec 31, 2018). As for Ascena’s, the metric rose 3% during the festive season against a 3% decline registered in the year-ago period. Currently, Zumiez, Urban Outfitters and Ascena carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nevertheless, Citi Trends maintains its commitment to enhance shareholder value as it unveils an expanded capital return program. As on Nov 30, the company approved additional $25 million share buyback program. Further, the company repaid roughly $41 million to its shareholder in the form of dividends and share repurchases from the start of fiscal 2018.

The company highlighted its long-term goals as well. Citi Trends’ intends to increase its annual store square footage by 4-5% and earnings by $4 per share within the next five years.

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