Citi Trends (CTRN) is trending slightly lower today (-3%) after reporting Q1 (Apr) results this morning. In case you're not familiar, Citi Trends is an off-price retailer of urban fashion apparel and accessories for the entire family.
CTRN says its merchandise is designed to appeal to the fashion preferences of value-conscious consumers, particularly African-Americans. Its goal is to provide merchandise at discounts to department and specialty stores' regular prices of 20% to 70%. It currently operates 553 stores in both urban and rural markets in 31 states.
CTRN says it does not attempt to dictate trends, but rather it devotes considerable effort to identifying emerging trends and ensuring that its apparel assortment is timely and fashionable in the urban market. It also offers products under its proprietary brands such as "Citi Steps" and "Red Ape."
Its stores feature sportswear, dresses, outerwear, footwear, intimate apparel, accessories, scrubs, beauty and home. CTRN purchases merchandise from vendors through planned programs at reduced prices and opportunistically through close-outs, with the majority of its merchandise purchased for the current season and a lesser quantity held for sale in future seasons. Its stores are located in high traffic strip shopping centers that are convenient to low and moderate income neighborhoods.
Turning to the AprQ results, non-GAAP EPS rose 22% YoY to $0.83, which was a good bit below market expectations. Revenue rose 5.5% year/year to $211.0 mln, which was basically in-line. CTRN also reaffirmed full year EPS guidance of $1.55-1.70. Same store comps in AprQ were +2.1%, this was down from +5.6% comps in JanQ.
CTRN says it's pleased with its EPS growth in the quarter which reflected solid top-line growth, as well as benefits from a lower income tax rate and lower share count due to stock buybacks. During the first quarter, the company opened five new stores, expanded one store and closed one store.
Same store comps fluctuated somewhat in AprQ due to an earlier Easter and a later start to spring. However, by the end of the quarter, CTRN was pleased with the results. Looking ahead, CTRN is excited with its early Q2 (Jul) sales as the later spring is driving sales of warm-weather merchandise. Specifically, CTRN has seen robust +10% comps thus far in May.
In sum, CTRN's EPS and comp numbers are being seen as a disappointment. However, investors seem to be not penalizing them too much as they understand the spring has been quite cold which has softened customer traffic. Also, mitigating the weak results was CTRN's comment that May is seeing robust +10% comps. That is a real good start to JulQ, so hopefully that trend continues. Pun intended.