Citi Trends (NASDAQ:CTRN)
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Citi Trends, Inc. (NASDAQ: CTRN) today reported results for the fourth
quarter and fiscal year ended February 2, 2008.
The Company’s 2007 fiscal year contained the
traditional 52 weeks, whereas, fiscal 2006 contained 53 weeks, with the
extra week falling in the fourth quarter. Accordingly, comparisons of
total sales and net income for the fourth quarter and full year of
fiscal 2007 to the same periods in 2006 are affected by an extra week in
2006. However, for comparable store sales, the Company is reporting on a
comparable weeks basis (e.g. the 13 weeks ended February 2, 2008
compared to the 13 weeks ended February 3, 2007).
Financial Highlights –
Fourth quarter ended February 2, 2008
Total sales in the 13-week quarter ended February 2, 2008 increased 6.2%
to $134.6 million compared with $126.8 million in the 14-week quarter
ended February 3, 2007. Comparable store sales decreased 1.1%, comparing
the 13 weeks ended February 2, 2008 to the 13 weeks ended February 3,
2007.
Net income was $8.4 million compared with $10.4 million in last year’s
fourth quarter. Earnings per diluted share was $0.59 in the fourth
quarter of 2007 compared to $0.73 in 2006. The decline in fourth quarter
earnings was a result of the negative comparable store sales and a
related need to increase clearance markdowns, together with the
inclusion of the extra week in 2006. However, these factors were
partially offset by a favorable effective income tax rate in 2007 due to
income tax credits and tax-exempt income increasing, while pretax income
was decreasing.
Financial Highlights –
Fiscal year ended February 2, 2008
Total sales in the 52-week fiscal year ended February 2, 2008 increased
14.6% to $437.5 million compared with $381.9 million in the 53-week
fiscal year ended February 3, 2007. The extra week last year contributed
approximately $10 million of sales in 2006. Comparable store sales
increased 1.0%, comparing the 52 weeks ended February 2, 2008 to the 52
weeks ended February 3, 2007.
Net income was $14.2 million in 2007 compared with $21.4 million in
2006. Earnings per diluted share was $1.00 in 2007 compared with $1.51
in the prior year.
Fiscal 2008 Outlook
The Company estimates 2008 earnings in a range of $1.10 to $1.15 per
diluted share. This guidance is based upon an anticipated 2008
comparable store sales increase of 2% to 3%. For the year, the Company
expects to increase selling square footage by at least 15%.
The Company reminds investors of the complexity of accurately assessing
future results given the difficulty in predicting fashion trends,
consumer preferences and general economic conditions and the impact of
other business variables. See “Forward-Looking
Statements” below for more information
regarding these uncertainties.
Investor Conference Call and Webcast
Citi Trends will host a conference call on March 26, 2008, at 5:00 p.m.
ET. The number to call for the live interactive teleconference is
(800) 218-0204. A replay of the conference call will be available until
April 2, 2008, by dialing (303) 590-3000 and entering the passcode,
11105977#. The live broadcast of Citi Trends' quarterly conference call
will be available online at the Company's website, www.cititrends.com,
as well as http://ir.cititrends.com/medialist.cfm
on March 26, 2008, beginning at 5:00 p.m. ET. The online replay will
follow shortly after the call and continue through April 2, 2008.
During the conference call, the Company may discuss and answer questions
concerning business and financial developments and trends. The Company’s
responses to questions, as well as other matters discussed during the
conference call, may contain or constitute information that has not been
disclosed previously.
About Citi Trends
Citi Trends, Inc. is a value-priced retailer of urban fashion apparel
and accessories for the entire family. The Company currently operates
330 stores located in 20 states in the Southeast, Mid-Atlantic and
Midwest regions and the state of Texas. Citi Trends’
website address is www.cititrends.com.
CTRN-E
Forward-Looking Statements
All statements other than historical facts contained in this news
release, including statements regarding our future financial results and
position, business policy and plans and objectives of management for
future operations, are forward-looking statements that are subject to
material risks and uncertainties. The words "believe," "may,"
"could," "plans," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions, as they relate to Citi Trends, are
intended to identify forward-looking statements. Statements with
respect to earnings guidance are forward-looking statements. Investors
are cautioned that any such forward-looking statements are subject to
the finalization of the Company’s year-end
financial and accounting procedures, are not guarantees of future
performance or results and are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Actual
results or developments may differ materially from those included in the
forward-looking statements, as a result of various factors which are
discussed in Citi Trends, Inc. filings with the Securities and Exchange
Commission. These risks and uncertainties include, but are not
limited to, uncertainties relating to economic conditions, growth risks,
consumer spending patterns, competition within the industry, competition
in our markets and the ability to anticipate and respond to fashion
trends. Except as required by applicable law, including the
securities laws of the United States and the rules and regulations of
the Securities and Exchange Commission, Citi Trends does not undertake
to publicly update any forward-looking statements in this news release
or with respect to matters described herein, whether as a result of any
new information, future events or otherwise.
CITI TRENDS, INC.
CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Thirteen Weeks Ended
Fourteen Weeks Ended
February 2, 2008
February 3, 2007
(unaudited)
(unaudited)
Net sales
$
134,571
$
126,788
Cost of sales
87,145
78,104
Gross profit
47,426
48,684
Selling, general and administrative expenses
32,892
31,374
Depreciation and amortization
3,488
2,363
Income from operations
11,046
14,947
Interest income
680
585
Interest expense
(97
)
(190
)
Income before provision for income taxes
11,629
15,342
Provision for income taxes
3,251
4,970
Net income
$
8,378
$
10,372
Net income per share, basic
$
0.60
$
0.75
Net income per share, diluted
$
0.59
$
0.73
Weighted average shares used to compute net income per share, basic
14,034
13,739
Weighted average shares used to compute net income per share, diluted
14,188
14,200
CITI TRENDS, INC.
CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Fifty-Two Weeks Ended
Fifty-Three Weeks Ended
February 2, 2008
February 3, 2007
(unaudited)
(unaudited)
Net sales
$
437,515
$
381,918
Cost of sales
278,783
235,744
Gross profit
158,732
146,174
Selling, general and administrative expenses
127,470
107,535
Depreciation and amortization
12,583
8,326
Income from operations
18,679
30,313
Interest income
2,383
2,014
Interest expense
(469
)
(359
)
Income before provision for income taxes
20,593
31,968
Provision for income taxes
6,379
10,617
Net income
$
14,214
$
21,351
Net income per share, basic
$
1.02
$
1.57
Net income per share, diluted
$
1.00
$
1.51
Weighted average shares used to compute net income per share, basic
13,946
13,575
Weighted average shares used to compute net income per share, diluted
14,223
14,138
CITI TRENDS, INC.
CONDENSED BALANCE SHEETS
(unaudited)
(in thousands)
February 2, 2008
February 3, 2007
(unaudited)
(unaudited)
Assets:
Cash and cash equivalents
$
6,203
$
7,707
Short-term investments (1)
56,165
65,956
Inventory
82,420
73,360
Other current assets
8,726
7,000
Property and equipment, net
52,207
34,754
Other noncurrent assets
4,456
3,330
Total assets
$
210,177
$
192,107
Liabilities and Stockholders' Equity:
Accounts payable
$
43,566
$
46,894
Accrued liabilities
17,089
15,587
Other current liabilities
3,370
3,174
Noncurrent liabilities
8,005
8,243
Total liabilities
72,030
73,898
Total stockholders' equity
138,147
118,209
Total liabilities and stockholders' equity
$
210,177
$
192,107
(1) Short-term investments consist of municipal auction rate
securities (ARS) issued by state governments to fund student
loans. These securities are high-grade (AAA rated), most of which
are either guaranteed by the U.S. Department of Education or
backed by insurance. Historically, the ARS provided liquidity via
an auction process that reset the interest rate every 35 days,
allowing investors either to roll over their investments or sell
them at par. Since these auction rate securities have typically
traded at short-term intervals, they have been classified as
current assets. Subsequent to February 2, 2008, there has been
insufficient demand for these types of investments during the
auctions and, as a result, these securities are not currently
liquid. The Company may not be able to access cash by selling
these securities without a loss of principal until either,
liquidity returns to the auction process, a secondary market
emerges, they are redeemed by the issuer, or they mature in years
ranging from 2010 to 2040. At this time, there is no evidence to
conclude that the ARS are impaired. If it is later determined that
the market value of these securities is impaired, the Company
would be required to write down the investments to fair value.
Also, if liquidity is not restored to this market in the near
term, the Company may be required to reclassify these investments
as long-term assets.