CTRN

Image source: The Motley Fool. Tuesday, Aug. 25, 2026, at 9 a.m. ET Chairman and Chief Executive Officer-Ken Seipel Chief Financial Officer-Heather Plutino Operator: Greetings. Welcome to Citi Trends Second Quarter 26 Earnings Conference Call. At this time, participants are in a listen-only mode. The question and answer session will follow the formal presentation. Please note that this conference is being recorded. At this time, I will turn the conference over to Nitza McKee with ICR. Analyst: Thank you. You may begin. Thank you, and good morning, everyone. Thank you for joining us for Citi Trends second quarter 26 earnings call. On our call today are Chief Executive Officer, Kenneth Duane Seipel, and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 06:45 a.m. Eastern Time. If you have not received a copy of the release, it is available on the company's website at ir.cititrends.com. You should be aware that prepared remarks made today during this call may contain non GAAP information and forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2 thousand. Management may make additional forward looking statements in response to your questions. These statements do not guarantee future performance. Therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10 k and other subsequent filings with the Securities Exchange Commission for a more detailed discussion of the factors that can cause actual results to differ materially from those described in the forward-looking statements. I will now turn the call over to our Chief Executive Officer, Kenneth Seipel. Kenneth? Kenneth Duane Seipel: Thank you, Lynn. Good morning, everyone. Thank you for joining us today for our second quarter 26 earnings call. So building on the momentum from Q1, our second quarter results were defined by consistency. Consistent sales trend consistent execution, and a consistent customer response across every month of the quarter. And I am pleased to report that consistency has continued into the back to school season. Our year to date performance on top of strong 2025 results further validates that our strategy is working and our execution is improving. We remain keenly focused on our 3 2026 strategic priorities: Consistent execution, sales flow through to profit, and accelerated growth. As we noted in our sales press release on August 10, our second quarter comparable sales increased 10.5%. Which is 19.7% on a 2 year basis. This marked our eighth consecutive quarter of comparable store sales growth with the last 6-quarter momentum of plus 9% growth or better. The performance demonstrates the consistency and durability of our strategy and this focused and disciplined approach is driving a continuation of our 2 year stack comparable store sales trend of approximately 25% in the Q3 to date during our important back to school season. Heather will cover the Q2 P&L to-date results shortly. But I would like to highlight and thank our team for driving results driving sales along with controlling the expenses, which have converted sales to profit. And speaking of profit, adjusted EBITDA for the quarter was $5.5 million which was a $6.6 million improvement over last year's loss of $1.1 million For the first half of 26, we delivered EBITDA of $19.4 million, which is a $14.1 million improvement compared to the prior year. And in fact, we have generated more EBITDA in the first 6 months of 26 than we generated the entire year last year in 25. I am very proud of the total team effort that resulted in strong sales flow through to profit of 28% year to date. Beginning with the gross profit line, which has improved 50 basis points to date due to the hard work of our merchandising team. I would like to recognize the entire product team for improving our selling margin rate while continuing raising the bar on quality, and maintaining sharp pricing. Also, thank you to our loss prevention team. These really led efforts to reduce shrinkage. Improved selling margin and reduced shrinkage have helped offset the cost pressure of transportation fuel charges in gross profit. Store payroll has been leveraged by 70 basis points year to date, I want to recognize our store teams who have raised the bar on store standards with consistent execution. Keeping our stores neat, clean, and organized, while at the same time driving productivity gains. Distribution center productivity has also increased to keep pace with our growing business. And the team has found ways to lower our distribution center cost by 60 basis points in the first half through improved efficiency. And I also want to recognize our sales support teams in IT. Finance, merchandise support, human resources, and legal for very strong expense controls. The work in achieving cost efficiencies allowed us to invest in incremental marketing on social media to build brand awareness, while at the same time, we were able to leverage SG&A by 260 basis points year to date. In summary, job well done, Citi Trends team. I am really proud of the work here. Thank you. Now for a few more comments on sales. Q2 marks another quarter of balanced growth. With both transaction counts and basket size increasing over last year. The growth in basket size was also balanced with customer purchasing more units per transaction and higher average unit retail on mix shift. Which continues to validate the strength of our trend right assortment and the value we deliver across the 3 merchandising tiers. Q2 is 1 of our lower sales volume quarters, So it is really good to see the consistency of transaction and sell growth during our non peak periods. We delivered second quarter sales increases over last year in every merchandise division and across all store climate zones and store volume deciles. That growth was driven by a more trend right assortment, and an improved value proposition. As well as our heightened focus on delivering wear now product for the summer. Enabling us to capture demand during non peak weeks and capitalize on key moments like Juneteenth, fourth of July, and the early back to school season. We plan to apply a similar playbook for the non peak period performance this fall. Between back to school and holiday, building on the strategy that worked so well for us last year. From a merchandising perspective, apparel, nonapparel and home all increased over Q2 last year and year to date. Our men's team children's team and Family Basics produced consistently strong results in the quarter and year to date. And in addition, I would like to highlight and congratulate our Family Shoe division. The Shoe team delivered very strong performance in the quarter by focusing on summer wear now product, elevated on trend styles, and sharp price value offerings. I am often asked by our investors about Citi Trends long term ability to continue to grow sales. Our product momentum continues to be the result of ongoing refinement across our good, better, and best pricing tiers. Each quarter, our assortments have become more balanced. As we sharpen the quality for price equation on our core product, introduce updated trend product and ensure that we have a good flow of well known brands at extreme value pricing. We are really proud of the progress we do remain humbly aware of the opportunity for continual improvement and we see a long runway for continued growth in nearly every product category. So as a company, we remain sharply focused on our primary black customer. Our brand promise to our customers is, styles that see you, prices that amaze you, and trends that tell your story. And what is important to highlight again is that our customer base spans a wide range of income levels, including a meaningful portion of middle and higher income shoppers. In fact, customers with household incomes between $75 thousand and $150 thousand represent about 25% of our customer base, and generate more than 40% of our revenue. This creates a significant opportunity for us to expand our offering of recognizable brands at compelling prices that align with their style, and trend expectations. You often hear of us refer to good, better, and best product tiers as a way of describing how we build merchandise assortments. However, it is really not quite that linear for our customers. Tend to move fluidly between all 3 good, better, and best tiers rather than staying confined to a single pricing, and style level. As an example, during a recent visit, I observed 2 young male shoppers who fit our top tier customer coming to 1 of our stores. And in a single digit, purchase items from across all 3 pricing tiers. Beginning with buying a trendy outfit from our best product tier, shopping for everyday items in our better tier, and ramping up the trip with an opening price point t shirt. In another instance, an older male customer purchased from our core assortment, that his wife's urging also purchased a trend item. These moments reinforce what we are seeing daily across our stores. And in our shopping basket analysis. Balanced, good, better, and best assortments are important to round up the shopping basket and are a key component for consistent long term growth. These product strategies combined with our improved discipline in our to buy process and the continued benefits of our AI driven allocation systems are driving stronger inventory productivity and margin performance. I mentioned earlier that we made incremental investment in marketing on our social media platforms. Building on our first quarter, CITI Jingle Refresh contest, in which we invited customers to help modernize the Citi Trends Jingle and we received a meaningful volume of submissions. In the second quarter, we transitioned to the customer voting phase. Engagement has continued to exceed our expectations. Generating strong social reach and viral moments while also driving incremental store traffic. And the winning jingle is expected to be deployed in the second half of the year. But beyond the fun of the contest itself, this initiative reflects our broader marketing objective. Deepening our connection with our customers and reinforcing our role in the communities we serve. I encourage you to take a look at our Instagram channel where we have been sharing some of the best moments from the campaign. On technology, we continue to expand the use of AI across the organization. I would describe as a steady evolution rather than a single milestone moment. We recently rolled out an enterprise AI tool to help our teams with data extraction and analytics. This closed AI environment is already helping associates across the business, including our buying teams, work smarter, more efficiently, and more timely manner. This complements the AI tools already in use for product allocation and real estate site selection. And we are in the early stages of applying similar tools to merchandising and assortment planning. On July 15, we launched our new customer relationship platform, which we are calling the Insiders Club. The Insiders Club turns traffic into loyalty, loyalty into frequency, and frequency then into EBITDA. This gives us the ability to speak directly to our best and most engaged customers and will generate insight about their shopping habits that we will use to refine and fine tune our strategies going forward. We are in the early stages of enrollment, and we expect to engage our customers later this fall and build momentum with our best customers during Q4 and well into 2027. And speaking of early stages, we are building new store opening momentum this year. I would like to welcome our 4 new stores opened at the end of July, 2 stores in Rochester, New York. Additional store in Baltimore, Maryland, and Jackson, Tennessee. We have opened 9 stores since Q4 of 25, all of which are exceeding our expectations. Our goal this year is to open approximately 20 stores and accelerate new store growth to around 40 in 2027 and beyond. Each new location is evaluated using our AI tools and held to strict financial return and investment criteria. For our new stores, we are targeting a roughly $1.5 million in mature sales and mid-teens 4-wall contributions. Now I will turn the call over to Heather to walk through the Q2 financial results in more detail as well as our updated outlook. Heather Plutino: Thank you, Kenneth, and good morning, everyone. I am pleased to walk you through our financial results for the second quarter and first half of 26. Our Q2 results reflect strong top line growth, continued gross margin expansion and disciplined expense management, leading to adjusted EBITDA of $5.5 million a $6.6 million increase compared to a year ago. These results are evidence that the transformation of Citi Trends is on track and that the operating model we have built can consistently deliver improved results. Based on our second quarter performance, we are raising our outlook for the year. I will walk you through that revised outlook shortly. Turning first to the specifics of our second quarter results. Total sales for the quarter were $212 million a 10.9% increase to Q2 25. Comparable store sales increased 10.5% or an increase of 19.7% on a 2 year basis. Q2 gross margin increased 60 basis points compared to a year ago to 40.6%. Driven by higher merchandise margin and lower shrink levels as we continue to leverage investments in improved store-level technology and processes. These tailwinds were partially offset by higher freight expense. As we discussed last quarter, rising fuel surcharges are leading to higher freight. We expect this to continue throughout the year and have incorporated that impact into our outlook. Second quarter adjusted SG&A expenses totaled $80.4 million compared to $77.4 million a year ago. With the increase to last year driven primarily by expenses to support $21 million in incremental sales. As a rate of sales, adjusted SG&A for the quarter was 38% leveraging 260 basis points versus last year, a result of higher sales and our largely fixed expense base. As I mentioned earlier, adjusted EBITDA grew $6.6 million over Q2 last year, to $5.5 million with adjusted EBITDA margin expanding 23 basis points to 2.6%. During the quarter, we opened 4 stores, as Kenneth mentioned, and closed 1 location, ending the period with 594 stores. We remodeled 26 stores in Q2 bringing total remodels so far this year to 51 stores. Before turning to the balance sheet, let me provide a few details on our performance in the first half of fiscal 26. First half comparable store sales were 12.2% with a 2 year comp of 21.8%. First half comps were driven by growth in basket and transaction count. Adjusted first half EBITDA was $19.4 million, an increase of $14.1 million to last year. EBITDA growth was driven by $50 million of incremental sales, 50 basis points of gross margin expansion, 260 basis points of SG&A leverage. And in the first half of the year, we improved our EBITDA margin by 300 basis points to 4.4%. Now turning to the balance sheet. Our initiative to improve inventory efficiency continue to deliver returns. We generated 10.5% comp sales growth in quarter with quarter end total inventory up only 7.5% the last year. Our balance sheet remains strong with $55.9 million in cash at the end of the quarter, no debt and no drawings on our $75 million revolver. We continue to expect our year end cash balance to be approximately flat to last year's 66 million and we expect to remain in a strong financial position throughout the year. Affording us the flexibility to pursue strategic alternatives. Turning to our guidance, We are updating our outlook for fiscal 26 to incorporate results of our second quarter while maintaining our outlook for the second half of the year. Our updated outlook for the full year is as follows: We now expect comparable store sales growth of 9% to 11%. Higher than previous outlook of 8% to 10%. With total sales now expected to grow 10% to 12%. Gross margin is expected to expand approximately 50 to 70 basis points compared to the 39.6% we delivered in fiscal 25. Consistent with previous outlook. As we discussed in our last earnings call, we are leveraging new systems and processes to drive improvements in both markdowns and shrink, while managing the impact of higher freight expense due to the fuel surcharges I mentioned earlier. We now expect adjusted SG&A leverage in the range of 160 to 180 basis points fiscal 25, higher than previous outlook of 31 to 1 and 60 basis points of leverage due to the impact of higher sales plus continuation of our disciplined expense control. Adjusted EBITDA is now expected to be in the range of $38 million to $42 million an increase to our previous outlook of $35 million to $40 million At the midpoint, adjusted EBITDA margin is now expected to expand 32 basis points over fiscal 25. Our outlook for new stores has been revised slightly to approximately 20 new stores in the year. The change from our previous outlook of 25 new stores is due to timing. We remain confident in our long range plan for footprint growth and in our ability to execute our store opening strategy. Importantly, our plan to accelerate our store openings to 40 stores in fiscal 27 remains unchanged. We will be shifting capital spend from new stores to expand our remodel program in 2026. As a result, we now expect to remodel approximately 60 to 65 locations versus our prior outlook of 50 remodels. And we continue to expect to close 4 locations in the year. Finally, our outlook for full year capital expenditures remains unchanged at a range of $3$35 million to $40 million To close, our second quarter results validate the direction we set out for the year. Inventory efficiency, disciplined expense management, and return focus investments are showing up in our financial results. And we expect that trend to continue. I am grateful to our team for the continued hard work behind these results and we look forward to updating you on our progress in our next earnings call. Kenneth Duane Seipel: With that, I will hand the call back to Kenneth. Thank you, Heather. As we look ahead, we are firmly in the execute phase of our growth plan. Focused on delivering against our customer brand promise. Our customers are discerning, They understand that value is more than just price. And they are willing to spend more when the style is right the trend is relevant, and quality meets their expectations. In short, value is not just price. Our brand promise is very clear. Styles that see you, prices that amaze you, and trends that tell your story. Our teams are focused every day on bringing that promise to life for our customers. To support this, we have established 3 clear priorities in 2020 are: consistent execution, strong sales flow, to profit, and accelerated growth. First and consistent execution. With foundational practices now in place, we have identified clear product opportunities to sustain comparable store sales growth into the foreseeable future. Our product team has sharpened focus on trend identification, trend curation, and style development. From opening price points to premium branded fashion, our merchant team translates these trends into compelling styles that deliver exceptional value to our customers. Each season, we are improving our product, trend, and style execution while delivering and leveraging AI to optimize allocation. This creates a long runway of growth as we continue to develop and refine our product execution. On the marketing front, we are focused on expanding our social and influencer presence and ensuring our brand is authentically represented in everything we do. This is not just about visibility. it is about deepening relationships and reinforcing Citi Trends' commitment to the communities that we proudly serve. Our second priority is ensuring strong sales flow to profit. Our plan for 2026 calls for a 10% to 12% sales growth while more than doubling EBITDA. Making this a very pivotal year in the evolution of our profit profile. Foundational to profit flow through is leveraging our fixed cost structure and improving productivity of our teams. In addition, we have several initiatives supporting this objective. Including our AI based allocation systems, enhanced store technology to reduce shrink, and ongoing supply chain improvements to increase capacity and efficiency. And as I have highlighted on prior calls, we continue to leverage KPI dashboards across all functions to ensure disciplined execution. A benefit of our improved execution is our ability to absorb macroeconomic challenges, like increased fuel surcharges into our business model while still achieving improvements as noted for our outlook in the year. Our third priority is growth. Which will be disciplined, return focused and strategic. This year, we are making a deliberate investment in owning our customer relationship and building a sustainable, data driven growth engine that compounds over time. The objective is to invest early to build customer relationships And as the CRM system learns and scales, it becomes a meaningful contributor to long term shareholder value. The Insiders Club transforms Citi Trends from a transaction based retailer into a relationship driven brand. It allows us to know our customer reward our customer and grow with our customer while reinforcing the treasure hunt excitement that makes shopping with us a unique and rewarding experience. In 2026, we expect to open 20 new stores as Heather mentioned, remodel approximately 60 to 65 locations, while preparing to accelerate expansion in 27. Our approach is grounded in data driven site selection, local market expertise, and disciplined financial criteria. Next, an important priority is ensuring our entire team has embraced the concepts of personal accountability for results and the ownership of continuous skill development. Citi Trends is evolving into a learning organization. We are a company that facilitates the continuous learning and development of all employees to transform adapt to changes, and improve performance positioning us to maximize growth opportunities as they arise. And as a part of this initiative, we are focusing on succession planning for our key leadership roles to ensure continuity of our transformation plan while strengthening our bench of talent. Finally, our strong debt free balance sheet provides us with flexibility to pursue growth beyond our current organic plan. We continue to evaluate acquisition opportunities that are strategically aligned financially compelling and capable of enhancing long term shareholder value. Any potential transaction will be held to the same disciplined financial standards that have guided our turnaround. To further enhance that flexibility, our Board has approved the implementation of a $100 million shelf registration. We view this as a prudent corporate finance measure that provides additional capital capacity should we identify new opportunities to accelerate profitable growth. Including potential strategic investments or acquisitions. Importantly, we expect our existing liquidity and operating cash flow to fully support our current business and our organic growth plans. The shelf does not reflect a current financing need or an intention to raise immediate capital. Rather, it provides us with additional flexibility to efficiently access the capital markets if and when we identify an opportunity where doing so would create compelling long term shareholder value. Our existing share repurchase authorization remains in place with $40 million of authorization on the outstanding agreement. Together our balance sheet, the shelf registration, and our repurchase authorization provides us with a flexible set of capital management tools. We will deploy or return capital based on the opportunities available to us market conditions and ultimately, where we believe we can generate the greatest long term value for our shareholders. In closing, progress at Citi Trends is well underway. Our track record of consistent comparable store sales shows that our strategy is working. Our execution is more consistent and our customer connection is stronger than ever. We are debt free, disciplined, and positioned for growth. We have a clear path to profitable expansion, stronger earnings and lasting shareholder value. We are clearly focused on our customer. The foundation is stronger and the opportunity ahead of us is significant. But we still have processes to refine, categories to optimize, and systems to build. We are more than just a retailer. We are a neighborhood destination for black families. Delivering style, trend, value, and trust that no 1 else can deliver. I am confident in our strategy and our team's ability to execute. The foundation we built positions us well for continued growth throughout the rest of this year and well beyond. I would like thank you for your continued support. And now I could turn it over to the operator for Q&A, please. Operator: Thank you. We will now be conducting a question and answer session. We ask you please limit yourself to 1 question and 1 follow-up. If you would like to ask a question at this time, please press 1 on your telephone keypad. May press 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star key. 1 moment please for our first question. Thank you. Thank you. And the first question is from the line of Jeremy Hamblin with Craig Hallum. Please proceed with your question. Jeremy Hamblin: Thanks and congratulations on the results and the sustained momentum. I wanted to see if I could get a little bit more granular on the same store sales and in terms of what you saw in Q2, what portion of that 10% plus comp in the quarter was driven by more transactions versus and then the breakdown on your average ticket of UPTs versus average unit retail. Kenneth Duane Seipel: Yeah. For sure, Jeremy. Hi Jeremy. Yeah. Thank you for the question. In terms of our same store sales growth in the quarter, and it is been fairly consistent for the last several quarters, actually. About half of our growth is coming through increased transaction count. And we view that as a very positive sign, obviously, for the business. And as I mentioned in the call, that was also through a non peak period, which I think is noteworthy at a point where the consumer really did not have a compelling reason to come in. We still maintain nice strong traffic And so we are quite pleased, with that. Now we have not publicly released all the details around average unit retail and average transaction. But if you think about it this way, or, excuse me, AUR and units per transaction. Think about it this way, about half of the growth is really transaction count, and the other half are the components of the shopping basket. Jeremy Hamblin: Fair enough. And then it is just in terms of it sounds like you have seen a little bit of an acceleration here to start Q3. And you are lapping your toughest compares of the year. So quite impressive. Wanted to just understand in terms of category performance, where you are seeing that uptick. I know that you have talked quite positively about footwear, men's, juniors, wanted to see if that is potentially, you know, the uptick being a result of maybe women's business picking up or you know, any additional color you might share on the momentum? Kenneth Duane Seipel: Yes for sure. Yes. Thank you, Jeremy. Yes. We have seen increased momentum in the quarter. As I mentioned, we are looking at about a 25% 2-year stack at this stage, which is good. And we got a lot of quarter to go. So more ahead yet. But the early results, are good for back to school for sure. Again, the momentum that almost all of our categories experienced in Q2 literally has continued into Q3. And that is noteworthy because and, again, you are kind of going from a non peak to a peak period to maintain that growth momentum is quite impressive. Of the teams that I called out, men's team, our kids team, and family basics, very consistent performers, and that has been the case here as well. I would highlight on your question we did see a nice step change in our women's business. This is the first quarter that our women's team has been able to deliver trend modules into the stores on a fairly consistent basis. And so we were getting some strong reaction there, and it is a little bit more of a balanced assortment We are enjoying growth in our missy categories and really across the board there. So it is been gratifying to see a nice step change in our women's business. As a result of the trend effort. Great. Great. I will hop out of the queue and let others ask questions. Thank you. Congratulations. Thanks, Jeremy. Appreciate it. Operator: Thank you. At this time, I will turn the floor back to management for further remarks. Kenneth Duane Seipel: All right. Well, I would like to just thank everybody for your time and attention today and your interest in our brand. And we look forward to updating you on our Q3 results as we continue here. So thank you very much. Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation, and have a wonderful day. 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Company raises Fiscal 2026 outlook Q2 2026 total sales increased 10.9% to $211.6 million; year-to-date total sales increased 12.7% to $442.5 million Q2 2026 comparable store sales growth of 10.5%, 19.7% on a two-year basis; year-to-date comparable store sales of 12.2%, 21.8% on a two-year basis Net Income for the first half of Fiscal 2026 of $6.8 million; adjusted EBITDA* of $19.4 million, an increase of $14.1 million to first half 2025 results SAVANNAH, Ga., August 25, 2026--(BUSINESS WIRE)--Citi Trends, Inc. (NASDAQ: CTRN), a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States, today reported results for the second quarter ended August 1, 2026. For purposes of comparison, unless otherwise stated, metrics in this release are compared to the 13-week quarter and 26-week year-to-date period ended August 2, 2025. Chief Executive Officer Comments Ken Seipel, Chairman and Chief Executive Officer said, "CITITRENDS delivered another strong quarter, with comparable store sales increasing 10.5% and 19.7% on a two-year basis, marking our eighth consecutive quarter of comparable store sales growth. Just as importantly, our disciplined execution is translating that sales momentum into significantly improved profitability, with first half net income of $6.8 million and adjusted EBITDA* of $19.4 million -- already exceeding the adjusted EBITDA* we generated for all of fiscal 2025." Seipel continued, "We remain focused on consistent execution, strong sales flow-through to profit, and disciplined growth. With continued momentum in our merchandise strategy, launch of our new Insiders Club customer relationship management platform, a growing new-store pipeline, and a strong, debt-free balance sheet, we believe CITITRENDS is increasingly well positioned to accelerate profitable growth and create meaningful long-term shareholder value." CITITRENDS Brand Promise: Styles That See You, Prices That Amaze You and Trends That Tell Your Story Financial Highlights – Second Quarter 2026 Total sales of $211.6 million increased $20.9 million, or 10.9% vs. Q2 2025; comparable store sales increased 10.5% compared to Q2 2025 driven by increases in average basket and transaction count Gross margin of 40.6% an increase of 60 basis points vs. Q2 2025 due to improved merchandise margin and investments to reduce shrink, slightly offset by higher freight due to increased fuel surcharges SG&A expense dollars of $82.3 million, $80.4 million as adjusted*, or 38.0% of sales vs. Q2 2025 SG&A expense of $78.9 million, or $77.4 million as adjusted*, or 40.6% of sales Net loss of $0.9 million or adjusted net income* of $0.4 million vs. net income of $3.8 million in Q2 2025 (which included an $11.0 million gain on the sale of the Savannah office building), or adjusted net loss* of $5.4 million Adjusted EBITDA* of $5.5 million, an increase of $6.6 million compared to adjusted EBITDA* loss of $1.1 million in Q2 2025 Real Estate: Opened four stores and closed one, ending the period with 594 locations. Remodeled 26 stores, completing 51 remodels for the year Cash of $55.9 million at quarter-end, with no debt and no borrowings under a $75 million credit facility Merchandise inventory was $126.4 million at the end of the quarter, an increase of 7.5% vs. Q2 2025 Financial Highlights – 26 weeks ended August 1, 2026 Total sales of $442.5 million increased $50.0 million, or 12.7% vs. 2025; comparable store sales increased 12.2% compared to 2025, 21.8% on a two-year basis Net income of $6.8 million, $10.1 million as adjusted*, vs. net income of $4.7 million in 2025, or adjusted net loss* of $3.0 million Adjusted EBITDA* of $19.4 million compared to $5.3 million in 2025; improvement to last year of $14.1 million driven by higher sales, 50 basis point increase in gross margin rate and 260 basis points of SG&A leverage Fiscal 2026 Outlook The Company is updating its outlook for fiscal 2026 to incorporate second quarter results while maintaining its outlook for the second half of the year. Resulting outlook for fiscal 2026 compared to fiscal 2025 is as follows: Expecting comparable store sales growth in the range of 9% to 11%, slightly higher than previous outlook of 8% to 10%. Total sales growth is expected to be 10% to 12% for the year, slightly higher than previous outlook of 9% to 11% Gross margin is expected to expand approximately 50 to 70 basis points, in line with our previous outlook Adjusted SG&A* is expected to leverage approximately 160 to 180 basis points, higher than previous outlook of 130 to 160 basis points, due to the impact of higher sales on the fixed cost structure and ongoing disciplined expense control Adjusted EBITDA* is expected to be in the range of $38 million to $42 million, higher than previous outlook of $35 million to $40 million; at the midpoint, adjusted EBITDA margin* is expected to expand by approximately 230 basis points, higher than previous outlook of approximately 200 basis points New store count for 2026 is expected to be 20 versus the prior estimate of 25. The company also expects to invest in an additional 10 to 15 remodels, above the prior guidance of 50 remodels Capital expenditures are expected to be in the range of $35 million to $40 million, consistent with previous outlook, with the majority of the spend on new stores and remodels Investor Conference Call and Webcast CITITRENDS will host a conference call today at 9:00 a.m. ET. The live broadcast of CITITRENDS' conference call will be available online at the Company's website, cititrends.com, under the Investor Relations section, beginning today at 9:00 a.m. ET. The online replay will follow shortly after the call and will be available for replay for one year. The live conference call can also be accessed by dialing (877) 407-0779. A replay of the conference call will be available until September 1, 2026, by dialing (844) 512-2921 and entering the passcode, 13761505. During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the call, may contain or constitute information that has not been disclosed previously. *Non-GAAP Financial Measures The historical non-GAAP financial measures discussed herein are reconciled to their corresponding GAAP measures at the end of this press release. The Company is unable to provide a full reconciliation of the forward-looking non-GAAP financial measures under the header "Fiscal 2026 Outlook" without unreasonable effort because it is not possible to predict certain of its adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of the Company’s control and its unavailability could have a significant impact on its financial results. About CITITRENDS Citi Trends, Inc. is a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States. The CITITRENDS brand promise is clear: styles that see you, prices that amaze you and trends that tell your story. The Company operates 594 stores located in 33 states. For more information, visit cititrends.com or your local store. Forward-Looking Statements All statements other than historical facts contained in this news release, including statements regarding the Company’s future financial results and position, business policy and plans, objectives and expectations of management for future operations and capital allocation expectations, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 that are subject to material risks and uncertainties. The words "believe," "may," "could," "plans," "estimate," "expects," "continue," "anticipate," "intend," "expect," "upcoming," "trend," "guidance," "outlook" and similar expressions, as they relate to the Company, are intended to identify forward-looking statements, although not all forward-looking statements contain such language. Statements with respect to earnings, sales or new store guidance, including under the section "Fiscal 2026 Outlook" and our ability to deliver on such financial outlook are forward-looking statements. Investors are cautioned that any such forward-looking statements are subject to the finalization of the Company’s quarter-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 our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q, respectively, and any amendments thereto, filed with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions or trade relationships; impacts of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; the Company’s ability to negotiate effectively the cost and purchase of merchandise inventory risks due to shifts in market demand and to manage inventory shrinkage; the Company’s ability to gauge fashion trends and changing consumer preferences; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in the Company’s markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; risks related to cybersecurity, data privacy and intellectual property; temporary changes in demand due to weather patterns; seasonality of the Company’s business; the results of pending or threatened litigation; delays and costs associated with building, remodeling, assuming leases, opening and operating new stores; delays and costs associated with building, and opening or expanding new or existing distribution centers; changes in regulator’s requirements or stakeholder’s expectations on environmental, social and sustainability related topics; challenges in effectively managing the use of artificial intelligence; and strategic transactions that could negatively impact our liquidity, increase our expenses, or present significant distractions to management. Any forward-looking statements by the Company, with respect to guidance, the repurchase of shares pursuant to a share repurchase program, or otherwise, are intended to speak only as of the date such statements are made. 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, the Company 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260825840364/en/ Contacts Tom FilandroICR, [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved eighth consecutive quarter of comparable store sales growth, driven by a balanced increase in both transaction counts and basket size. Refined 'good, better, best' pricing tiers to capture a broad demographic, noting that 25% of customers earn between $75,000 and $150,000 and generate 40% of revenue. Leveraged AI-driven allocation systems and enterprise data tools to improve inventory productivity and merchandising efficiency. Improved selling margins and reduced shrinkage through store-level technology investments, successfully offsetting increased transportation fuel surcharges. Transitioned to a relationship-driven model with the launch of the 'Insiders Club' loyalty platform to drive customer frequency and long-term EBITDA. Maintained a debt-free balance sheet while generating more EBITDA in the first half of 2026 than in the entirety of fiscal 2025. Raised full-year comparable store sales guidance to 9%-11% based on strong back-to-school momentum and a 25% two-year stack trend. Planned acceleration of new store openings to approximately 40 locations in 2027, following a disciplined 20-store rollout in 2026. Shifted near-term capital allocation to expand the remodel program to 60-65 locations, prioritizing existing store productivity. Anticipate continued gross margin expansion of 50 to 70 basis points, supported by markdown improvements and sustained shrink reduction. Implemented a $100 million shelf registration to provide capital flexibility for potential strategic acquisitions or investments beyond organic growth. Identified rising fuel surcharges as a persistent headwind for freight expenses, which has been factored into the revised full-year outlook. Revised the 2026 new store opening target from 25 down to 20 due to timing shifts, while maintaining the long-term footprint expansion goals. Focused on leadership succession planning to ensure the continuity of the current transformation plan and strengthen the internal talent bench. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that approximately half of the 10.5% comp growth was driven by increased transaction counts. The remaining growth was attributed to basket size components, including higher units per transaction and average unit retail due to mix shifts. Reported a significant step-change in the women's business due to the consistent delivery of new trend modules. Noted that men's, children's, and family basics remain consistent performers, while the shoe division saw strong summer wear-now demand.

This article first appeared on GuruFocus. Total Sales: $211.6 million, a 10.9% increase compared to Q2 2025. Comparable Store Sales: Increased 10.5% in Q2, marking the 8th consecutive quarter of growth; up 19.7% on a two-year basis. Gross Margin: Expanded 60 basis points to 40.6%, driven by higher merchandise margin and lower shrink, partially offset by higher freight expense. Adjusted SG&A: Totaled $80.4 million, leveraging 260 basis points as a rate of sales versus last year. Adjusted EBITDA: $5.5 million in Q2, a $6.6 million improvement over last year's loss of $1.1 million; margin expanded 320 basis points to 2.6%. First Half Adjusted EBITDA: $19.4 million, a $14.1 million improvement compared to the prior year. First Half Comparable Store Sales: Increased 12.2%, with a two-year comp of 21.8%. First Half Gross Margin: Improved 50 basis points year-to-date. First Half SG&A Leverage: Leveraged 260 basis points year-to-date. Inventory: Quarter-end total inventory up only 7.5% to last year, despite 10.5% comp sales growth. Cash Position: $55.9 million in cash at quarter-end, with no debt and no drawings on the $75 million revolver. Store Count: Ended the quarter with 594 stores, opening four and closing one location. Remodels: Remodeled 26 stores in Q2, bringing total remodels to 51 stores in the first half. Fiscal 2026 Outlook: Comparable store sales growth of 9% to 11%; total sales growth of 10% to 12%; adjusted EBITDA of $38 million to $42 million. Warning! GuruFocus has detected 4 Warning Sign with STU:L74. Is CTRN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 25, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Citi Trends Inc (NASDAQ:CTRN) reported a 10.5% increase in comparable store sales for Q2 2026, marking the eighth consecutive quarter of growth and a 19.7% two-year stack, with momentum continuing into Q3 with a 25% two-year stack. Adjusted EBITDA improved significantly to $5.5 million in Q2, a $6.6 million increase year-over-year, and first-half EBITDA of $19.4 million exceeded the full-year 2025 figure, demonstrating strong sales flow-through to profit. Gross margin expanded by 60 basis points in Q2 and 50 basis points year-to-date, driven by higher merchandise margins and reduced shrink, which helped offset higher freight costs. The company raised its full-year 2026 outlook, now expecting comparable store sales growth of 9% to 11% and adjusted EBITDA of $38 million to $42 million, up from previous guidance. Citi Trends Inc (NASDAQ:CTRN) maintains a strong balance sheet with $55.9 million in cash, no debt, and no drawings on its $75 million revolver, providing flexibility for growth initiatives and potential acquisitions. The launch of the Insiders Club CRM platform and increased social media marketing efforts are expected to deepen customer relationships and drive long-term loyalty and frequency. Higher freight expenses due to rising fuel surcharges are pressuring gross profit, and this cost pressure is expected to continue throughout the year, partially offsetting margin gains. The company revised its new store opening target down to approximately 20 stores for 2026 from 25, due to timing issues, which may delay some growth plans. Despite strong sales growth, the company faces the challenge of lapping tough comparisons in the second half of the year, which could impact the sustainability of growth rates. The implementation of the $100 million shelf registration, while providing flexibility, may signal potential future dilution or capital raising activities, which could concern investors. The company's reliance on a narrow customer base (primarily Black families) and the need to continually refine product assortments to meet evolving trends poses execution risks. While the company is investing in new systems and technologies, these initiatives are in early stages and may not deliver expected returns as quickly as anticipated. Q: Can you provide more granularity on the same-store sales performance in Q2, specifically the breakdown between transactions and average ticket components like units per transaction (UPT) and average unit retail (AUR)? A: Kenneth Seipel (CEO): Approximately half of our same-store sales growth is driven by increased transaction counts, which is a very positive sign, especially during a non-peak period. The other half of the growth comes from the components of the shopping basket, though we don't publicly release all the details on AUR and UPT breakdowns. Q: You mentioned an acceleration in momentum to start Q3 while lapping your toughest compares. Can you share which categories are driving this uptick, and is the women's business starting to pick up? A: Kenneth Seipel (CEO): We have seen increased momentum in Q3 with a two-year stack of approximately 25%. The strong performance from men's, kids, and family basics has continued. Notably, we saw a nice step change in our women's business, as this was the first quarter the team consistently delivered trend modules to stores, leading to strong reactions and growth across the Missy category. Q: What is driving the significant improvement in adjusted EBITDA, and how are you managing the impact of higher freight costs? A: Heather Plutino (CFO): The improvement is driven by strong top-line growth, 50 basis points of gross margin expansion, and 260 basis points of SG&A leverage. While higher fuel surcharges are increasing freight expense, we are offsetting this with improved merchandise margins and lower shrink levels, which have been incorporated into our updated outlook. Q: Can you elaborate on the company's growth strategy, specifically regarding new store openings and the decision to shift capital from new stores to remodels? A: Heather Plutino (CFO): We revised our new store outlook to approximately 20 openings due to timing, but our plan to accelerate to 40 stores in fiscal 2027 remains unchanged. We are shifting capital spend to expand our remodel program to 60-65 locations this year. Our full-year capital expenditure outlook remains unchanged at $35 million to $40 million. Q: What is the purpose of the new $100 million shelf registration, and does it indicate a need for capital? A: Kenneth Seipel (CEO): The shelf registration is a prudent corporate finance measure that provides additional capital capacity for potential strategic investments or acquisitions. It does not reflect a current financing need or intention to raise immediate capital. Our existing liquidity and operating cash flow fully support our current business and organic growth plans. Q: How is the new "Insiders Club" customer relationship platform expected to contribute to the business? A: Kenneth Seipel (CEO): The Insiders Club transforms us from a transaction-based retailer into a relationship-driven brand. It allows us to speak directly to our best customers, reward them, and generate insights about their shopping habits. We are in early enrollment stages and expect to build momentum with our best customers during Q4 and into 2027. Q: Can you provide more detail on the performance of the family shoe division and its contribution to the quarter? A: Kenneth Seipel (CEO): The shoe team delivered very strong performance in Q2 by focusing on summer wear-now product, elevated on-trend styles, and sharp price value offerings. This contributed to the overall balanced growth we saw across all merchandise divisions in the quarter. Q: How is the company leveraging AI technology to improve operations and drive growth? A: Kenneth Seipel (CEO): We recently rolled out an enterprise AI tool for data extraction and analytics to help teams work more efficiently. This complements existing AI tools used for product allocation and real estate site selection. We are in early stages of applying similar tools to merchandising and assortment planning, which is driving stronger inventory productivity and margin performance. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Citi Trends, Inc.? Here are five stocks we like better. Citi Trends delivered strong second-quarter momentum: Comparable-store sales rose 10.5% and total sales increased 10.9% to $211.6 million, while adjusted EBITDA improved to $5.5 million from a $1.1 million loss a year earlier. Management raised its fiscal 2026 outlook for comparable-sales growth to 9%–11% and adjusted EBITDA to $38 million–$42 million, citing improved merchandise margins, lower shrink and expense leverage. The company is balancing growth investments with operational upgrades, planning about 20 new stores and 60–65 remodels in fiscal 2026. Citi Trends also launched its Insiders Club loyalty platform and ended the quarter with $55.9 million in cash and no debt. Citi Trends (NASDAQ:CTRN) reported second-quarter fiscal 2026 results marked by double-digit comparable-store sales growth, higher margins and a return to positive adjusted EBITDA, prompting the retailer to raise its full-year outlook. Comparable-store sales increased 10.5% in the second quarter, following growth of 19.7% on a two-year basis. Total sales rose 10.9% from a year earlier to $211.6 million. Chief Executive Officer Ken Seipel said the quarter marked the company’s eighth consecutive period of comparable-store sales growth and its sixth straight quarter with growth of at least 9%. → Rocket Lab's Sell-Off Is Fading—Is It Finally Safe to Buy? “Our second quarter results were defined by consistency, consistent sales trend, consistent execution, and a consistent customer response across every month of the quarter,” Seipel said. He added that the sales momentum had continued into the back-to-school period, with a two-year comparable-sales stack of about 25% in the third quarter to date. Adjusted EBITDA was $5.5 million in the second quarter, compared with an adjusted EBITDA loss of $1.1 million in the prior-year quarter. The $6.6 million improvement brought adjusted EBITDA margin to 2.6%, an increase of 320 basis points from a year ago. → Travel + Leisure Goes Big—Is It Ready to Rally? Gross margin increased 60 basis points to 40.6%. Chief Financial Officer Heather Plutino said the improvement reflected higher merchandise margins and lower shrink, partially offset by higher freight costs tied to rising fuel surcharges. Adjusted selling, general and administrative expenses rose to $80.4 million from $77.4 million a year earlier, largely due to costs supporting $21 million of incremental sales. However, adjusted SG&A declined as a percentage of sales by 260 basis points to 38% as the company leveraged its largely fixed expense base. → What Rising Delivery Forecasts Say About Rivian's Stock Prospects For the first half of fiscal 2026, comparable-store sales increased 12.2%, or 21.8% on a two-year basis. Adjusted EBITDA reached $19.4 million, up $14.1 million from the prior-year period, while EBITDA margin improved 300 basis points to 4.4%. Seipel said first-half gross profit benefited from a 50-basis-point improvement in gross margin, supported by stronger selling margins and lower shrink. Store payroll was leveraged by 70 basis points year to date, while distribution-center costs declined by 60 basis points through productivity improvements, he said. Sales growth in the quarter was driven by both transaction count and basket size. During the question-and-answer session, Seipel said roughly half of comparable-sales growth came from higher transaction counts, while the other half came from components of the shopping basket, including units per transaction and average unit retail. The company said every merchandise division, store climate zone and store-volume decile posted sales increases from the prior year. Apparel, non-apparel and home categories all grew during the quarter and year to date. Men’s, children’s and family basics were consistent performers, while the family footwear business recorded strong results from summer-oriented products, trend-focused styles and value pricing. Seipel also pointed to an improvement in the women’s business. He said the second quarter was the first period in which the women’s team had delivered trend modules consistently to stores, resulting in a “nice step change” in performance across women’s categories, including Missy merchandise. The retailer continues to organize assortments across good, better and best price tiers, combining opening-price products, core offerings, trend items and recognizable brands. Seipel said customers move across the tiers rather than shopping within a single price level. He added that shoppers with household incomes between $75,000 and $150,000 account for about 25% of Citi Trends’ customer base and generate more than 40% of its revenue. Citi Trends opened four stores during the second quarter and closed one location, ending the period with 594 stores. The new locations included two stores in Rochester, New York, as well as stores in Baltimore and Jackson, Tennessee. The company has opened nine stores since the fourth quarter of 2025, and Seipel said those locations are exceeding expectations. The company remodeled 26 locations during the quarter, bringing its first-half total to 51 remodels. It now expects to open about 20 new stores in fiscal 2026, down from its prior projection of 25 due to timing, while increasing its remodel plan to approximately 60 to 65 locations from 50 previously. Citi Trends continues to target roughly 40 new store openings in fiscal 2027 and beyond. Management said new locations are evaluated with AI-based site-selection tools and strict return requirements. The company is targeting approximately $1.5 million in mature sales and mid-teens four-wall contribution margins for new stores. On July 15, Citi Trends launched its new customer relationship platform, the Insiders Club. Seipel said the program is intended to build loyalty, increase purchase frequency and provide customer insights that can help refine merchandising and marketing strategies. The company expects to begin engaging customers more broadly later in the fall and build momentum during the fourth quarter and into 2027. Based on second-quarter results, Citi Trends raised its full-year fiscal 2026 guidance. The company now expects: Comparable-store sales growth of 9% to 11%, up from prior guidance of 8% to 10%. Total sales growth of 10% to 12%. Gross-margin expansion of approximately 50 to 70 basis points from fiscal 2025’s 39.6% margin. Adjusted SG&A leverage of 160 to 180 basis points, compared with prior expectations of 130 to 160 basis points. Adjusted EBITDA of $38 million to $42 million, up from prior guidance of $35 million to $40 million. Capital expenditures of $35 million to $40 million. The company ended the quarter with $55.9 million in cash, no debt and no borrowings on its $75 million revolving credit facility. Plutino said Citi Trends expects year-end cash to be approximately flat with the $66 million reported at the end of the prior year. Seipel also said the board approved a $100 million shelf registration to provide capital-market flexibility for potential strategic investments or acquisitions. He said the registration does not reflect an immediate financing need, and that existing liquidity and operating cash flow are expected to support the company’s current operations and organic growth plan. The company also has $40 million remaining under its existing share-repurchase authorization. Citi Trends, Inc (NASDAQ: CTRN) is an off-price retail apparel chain that focuses on value-priced urban fashion apparel and accessories for men, women, and children. Headquartered in Savannah, Georgia, the company offers a broad assortment of merchandise, including denim, sportswear, activewear, and seasonal styles, complemented by footwear, jewelry, cosmetics, and home goods. Through its purchasing model, Citi Trends sources closeouts, overstocks and canceled orders from name-brand vendors, enabling it to offer trending styles at competitive price points. The company operates more than 500 stores across the Southeastern and Mid-Atlantic regions of the United States, with typical store footprints of approximately 11,000 square feet. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Citi Trends Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Q2 2026 preliminary total sales increased 10.9% to $211.6 million Q2 2026 preliminary comparable store sales increase of 10.5%, 19.7% on a two-year basis Year-to-date 2026 preliminary total sales increased 12.7% to $442.5 million with comparable store sales increase of 12.2%, 21.8% on a two-year basis SAVANNAH, Ga., August 10, 2026--(BUSINESS WIRE)--Citi Trends, Inc. (NASDAQ: CTRN), a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States, today announced that the Company will be participating in the virtual 2026 Small Cap Conference hosted by D. A. Davidson on Monday August 10, 2026. The Company will be represented at the conference by Ken Seipel, Chief Executive Officer, and Heather Plutino, Chief Financial Officer. The Company is pre-announcing preliminary unaudited Q2 2026 sales of $211.6 million and comparable store sales growth of 10.5%, or 19.7% on a two-year basis. For the year-to-date period through Q2 2026, preliminary unaudited sales are $442.5 million with comparable store sales growth of 12.2%, or 21.8% on a two-year basis. Ken Seipel, Chief Executive Officer, said: "Our second quarter preliminary unaudited sales results, including 10.5% comparable store sales growth, demonstrate that our strategic transformation is working. Customers are responding to our enhanced merchandise assortments and improved value proposition, while our teams remain focused on disciplined execution, converting sales into profit, and accelerating growth. This approach is driving continuation of our two-year comparable store sales trend of approximately 20% into the early back-to-school season. During the quarter we delivered sales increases to last year in every merchandise category due to an elevated focus on improved value equation on wear-now product for the summer season, which in turn drove consistent transaction and basket growth in each month. Importantly, this marks our eighth consecutive quarter of comparable store sales growth, demonstrating the consistency and durability of our strategy. Our unwavering commitment to the Black consumer remains at the center of everything we do, and we are building long-term shareholder value while staying true to our purpose of serving the neighborhoods that depend on us. We look forward to sharing additional details on our earnings call on August 25, 2026." Investor Conference Call and Webcast CITITRENDS today announced plans to release its earnings for the second quarter 2026 before the market opens on Tuesday, August 25, 2026. CITITRENDS will host a conference call on the same day at 9:00 a.m. ET. A live broadcast of CITITRENDS’ conference call will be available online at the Company's Investor Relations website, ir.cititrends.com on August 25, 2026, beginning at 9:00 a.m. ET. The online replay will follow shortly after the call and will be available for one year. The live conference call can also be accessed by dialing 1-877-407-0779. During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. 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 CITITRENDS Citi Trends, Inc. is a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States. The CITITRENDS brand promise is clear: styles that see you, prices that amaze you and trends that tell your story. The Company operates 594 stores located in 33 states. For more information, visit cititrends.com or your local store. Preliminary Results The preliminary unaudited selected financial results for the second quarter and six months ended August 1, 2026 are an estimate, based on information available to management as of the date of this release, are subject to further changes upon completion of the Company’s standard closing procedures, and do not present all information necessary for an understanding of the Company’s results of operations for the second quarter and six months ended August 1, 2026, or financial condition as of August 1, 2026. Management may identify items that require changes to the preliminary unaudited selected financial results set forth above, and any such changes may be material. Forward-Looking Statements All statements other than historical facts contained in this news release, including statements regarding the Company’s preliminary unaudited selected financial results for the second quarter and six months ended August 1, 2026, future financial results and position, business policy and plans, objectives and expectations of management for future operations and capital allocation expectations, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 that are subject to material risks and uncertainties. The words "believe," "may," "could," "plans," "estimate," "expects," "continue," "anticipate," "intend," "expect," "upcoming," "trend," "guidance," "outlook" and similar expressions, as they relate to the Company, are intended to identify forward-looking statements, although not all forward-looking statements contain such language. Investors are cautioned that any such forward-looking statements are subject to the finalization of the Company’s quarter-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 our Annual Reports and Quarterly Reports on Forms 10-K and 10-Q, respectively, and any amendments thereto, filed with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions or trade relationships; impacts of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; the Company’s ability to negotiate effectively the cost and purchase of merchandise inventory risks due to shifts in market demand and to manage inventory shrinkage; the Company’s ability to gauge fashion trends and changing consumer preferences; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in the Company’s markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; risks related to cybersecurity, data privacy and intellectual property; temporary changes in demand due to weather patterns; seasonality of the Company’s business; the results of pending or threatened litigation; delays and costs associated with building, remodeling, assuming leases, opening and operating new stores; delays and costs associated with building, and opening or expanding new or existing distribution centers; changes in regulator’s requirements or stakeholder’s expectations on environmental, social and sustainability related topics; challenges in effectively managing the use of artificial intelligence; and strategic transactions that could negative impact our liquidity, increase our expenses, or present significant distractions to management. Any forward-looking statements by the Company, with respect to guidance, the repurchase of shares pursuant to a share repurchase program, or otherwise, are intended to speak only as of the date such statements are made. 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, the Company 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260810682009/en/ Contacts Tom FilandroICR, [email protected]

This article first appeared on GuruFocus. Revenue: Total sales for Q1 2026 were $230.9 million, a 14.4% increase compared to Q1 2025. EBITDA: Adjusted EBITDA for Q1 2026 was $13.9 million, more than doubling from $6.4 million in Q1 2025. Comparable Store Sales: Increased by 13.9% in Q1 2026, marking 21 consecutive months of sales growth. Gross Margin: Expanded by 40 basis points to 40% in Q1 2026. SG&A Expenses: Adjusted SG&A expenses were $78.3 million, leveraging 250 basis points versus last year. Store Locations: Opened two new stores and closed one, ending the quarter with 591 stores. Cash Position: $81.1 million in cash at the end of Q1 2026, with no debt. Inventory: Total inventory increased by 4.8% compared to last year. Warning! GuruFocus has detected 7 Warning Signs with ODD. Is CTRN fairly valued? Test your thesis with our free DCF calculator. Release Date: June 02, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Citi Trends Inc (NASDAQ:CTRN) reported a strong first quarter with EBITDA more than doubling from $6.4 million to $13.9 million. Comparable store sales increased by 13.9%, marking 21 consecutive months of sales growth. The company achieved a gross margin expansion of 40 basis points, driven by improved merchandise margin rates. Citi Trends Inc (NASDAQ:CTRN) saw broad-based sales increases across all product divisions and store climate zones. The company's strategic transformation and operating model strength are reflected in a 14.4% increase in total sales compared to Q1 2025. Higher freight expenses due to increased fuel surcharges negatively impacted the company's financials. Despite strong sales, the company had to adjust its gross margin outlook due to ongoing fuel surcharge challenges. The company anticipates continued headwinds from rising fuel costs throughout the year. Citi Trends Inc (NASDAQ:CTRN) had to increase its incentive compensation accruals, which could impact profitability. The company's store opening cadence in 2026 is irregular, indicating potential challenges in executing its expansion plans. Q: Can you elaborate on the impact of tax refunds on your sales trends and what you consider the tax refund period? A: Kenneth Seipel, CEO: The tax refund period for us is typically from mid-February up to Easter, about six to seven weeks. Our sales trends before and after this period have remained consistent, indicating strong underlying business health. The spike in sales during this period is likely due to tax refunds, but the overall trend remains positive. Q: You mentioned high single-digit growth for the foreseeable future. Can you clarify what you mean by "foreseeable future"? A: Kenneth Seipel, CEO: By "foreseeable future," we mean through the end of 2026. We have strong merchandising plans in place and see a long runway for continued growth. While 2027 may see a moderation to mid-single digits, we are confident in our ability to continue compounding growth. Q: What are the biggest opportunities for growth in your product categories, particularly looking into 2027? A: Kenneth Seipel, CEO: We see significant opportunities across various departments, such as footwear, which we believe can more than double over time. Additionally, appealing to higher-income consumers and expanding our young men's and women's fashion lines present substantial growth potential. Q: Can you discuss your plans for unit growth and the timing of store openings? A: Kenneth Seipel, CEO: We plan to open stores in three cycles annually: February, July, and October, aligning with peak periods. This strategy will improve execution and ensure new stores have a strong start. For 2026, the cadence is irregular, but from 2027 onwards, we will follow this structured approach. Q: How are fuel surcharges affecting your gross margin, and what is the status of your inventory shrink performance? A: Heather Plutino, CFO: Fuel surcharges have impacted our gross margin outlook, reducing expected expansion from 100 basis points to a lower figure. However, improvements in markdowns and shrink, driven by AI-based systems, are positive tailwinds. We expect fuel surcharges to continue affecting margins throughout the year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Citi Trends, Inc.? Here are five stocks we like better. Strong first quarter performance: Citi Trends reported total sales of $230.9 million, up 14.4%, with comparable sales rising 13.9% and adjusted EBITDA more than doubling to $13.9 million. Management said the turnaround strategy is gaining traction, with traffic and basket size both improving. Broad merchandising improvements drove gains: The company saw strength across key categories including family footwear, men’s, children’s, accessories and women’s apparel. Executives said their “good, better and best” pricing strategy and added extreme-value deals are helping boost customer response. Full-year outlook was raised: Citi Trends now expects fiscal 2026 comparable sales growth of 8% to 10% and adjusted EBITDA of $35 million to $40 million. The company also plans continued store expansion, remodels and the July launch of its new CRM program, the Insiders Club. Citi Trends (NASDAQ:CTRN) reported a sharply stronger first quarter for fiscal 2026, with management pointing to broad-based comparable sales gains, improved margins and expense leverage as evidence that its turnaround strategy is gaining traction. Chief Executive Officer Ken Seipel opened the company’s earnings call by calling the quarter “excellent,” saying momentum from 2025 carried into the new fiscal year. He said nearly every metric accelerated in the first quarter and that early second-quarter comparable sales were running in the high single digits. → Best Buy’s AI Laptop Boost Sparks Hope for a BBY Turnaround “Our strategy is working and our execution is becoming increasingly consistent,” Seipel said. Citi Trends generated total sales of $230.9 million in the first quarter, up 14.4% from the same period last year, Chief Financial Officer Heather Plutino said. Comparable store sales increased 13.9%, ahead of the company’s expectations, and were up 23.8% on a two-year stacked basis. → 3 Up-and-Coming Stocks That Could Be the Next NVIDIA Seipel said the company has now posted 21 consecutive months of sales growth, with gains across all product divisions and store climate zones. While tax refund timing helped the quarter, he said underlying sales trends before and after the refund period remained strong on a two-year basis. In response to a question from D.A. Davidson analyst Michael Baker, Seipel said Citi Trends generally considers the tax refund period to run from mid-February through Easter, or about six to seven weeks this year. He said the company believes the difference between its baseline trend and the stronger first-quarter sales performance was “probably attributed dominantly” to tax refunds. → These 3 CLO ETFs Target a Niche Corner of the Fixed-Income Market Seipel also said increased customer traffic drove nearly half of the sales increase, while basket size improved as customers responded to the company’s assortment and value proposition. Management attributed the quarter’s sales performance to refinements in trend, style and value across Citi Trends’ core merchandising assortment, along with selected “extreme value” deals intended to add excitement to the shopping experience. Seipel highlighted several categories: Family footwear continued momentum from the fourth quarter, helped by expanded branded offerings across genders. Men’s delivered a strong quarter, supported by streetwear trends for younger customers and updated styling for the company’s core male customer. Children’s benefited from improved in-stock levels and product selection, with Seipel calling the category a “cornerstone” of the business. Women’s accessories posted meaningful gains as the company adjusted the assortment toward more branded and trend-right products. Women’s apparel showed improvement, particularly in Missy, though management said the broader women’s business remains a significant opportunity. Seipel said Citi Trends continues to refine a three-tier “good, better and best” merchandising strategy. The opening-price “Citi Score” offering is aimed at budget-conscious customers, while the “better” tier, typically priced between $7 and $12, remains the foundation of the business. The “best” tier includes more fashion-forward and branded extreme value products, sometimes offered at discounts of up to 75% off MSRP, he said. Asked by Craig-Hallum Capital Group analyst Jeremy Hamblin about future category opportunities, Seipel said footwear is still in the early stages of improvement and could “more than double” over time. He also cited young men’s trend assortments and women’s fashion, including Missy, as areas with substantial growth potential. Adjusted EBITDA rose to $13.9 million in the first quarter, up from $6.4 million a year earlier. Plutino said adjusted EBITDA margin expanded 280 basis points to 6% of sales. Gross margin increased 40 basis points year over year to 40%, helped by improved merchandise margins and the company’s investments in allocation and loss prevention systems. Higher freight costs, driven by fuel surcharges, partially offset those gains. Adjusted selling, general and administrative expenses were $78.3 million, compared with $73.4 million a year earlier. Plutino said the increase was mainly tied to higher sales support costs and higher store and corporate bonus accruals due to stronger performance. As a percentage of sales, adjusted SG&A improved by 250 basis points to 33.9%. Plutino said the company adjusted its incentive compensation accrual earlier than usual in the first quarter, moving from 100% at the start of the year to about 128%. Citi Trends updated its fiscal 2026 outlook following the stronger-than-expected first quarter. The company now expects comparable store sales growth of 8% to 10% for the full year, implying high single-digit comps for the remaining quarters. Total sales are expected to increase 9% to 11%. Gross margin is expected to expand by about 50 to 70 basis points from 39.6% in fiscal 2025. Plutino said that is lower than the prior outlook for 100 basis points of expansion because of freight pressure from fuel surcharges, though markdowns and shrink are improving. Adjusted SG&A leverage is now expected to range from 140 to 160 basis points, better than the previous forecast of 70 to 100 basis points. Adjusted EBITDA is projected at $35 million to $40 million, with adjusted EBITDA margin expected to expand about 200 basis points over fiscal 2025. The company ended the quarter with $81.1 million in cash, no debt and no borrowings on its $75 million revolving credit facility. Plutino said Citi Trends expects year-end cash to be approximately flat with last year’s $66 million as it invests in inventory, new stores and remodels. Citi Trends opened two stores in the quarter, in St. Louis and Baltimore, and closed one location, ending the period with 591 stores. The company also remodeled 25 stores during the quarter and another 26 in early second quarter, completing its remodel program for the year. Management maintained plans to open approximately 25 new stores, close four locations and remodel approximately 50 locations in fiscal 2026. Capital expenditures are expected to be $35 million to $40 million. Seipel said the company is preparing to accelerate store growth in 2027, with a target of about 40 new stores. He said Citi Trends is using artificial intelligence tools and three years of transaction data to guide site selection, and that the model has demonstrated about 90% accuracy in sales prediction. The company is targeting mature store averages of about $1.5 million in sales and mid-teens four-wall contribution margins. The company also plans to launch a customer relationship management platform in July called the Insiders Club. Seipel said the program is intended to turn traffic into loyalty and frequency, while helping Citi Trends become more of a “relationship-driven brand.” Seipel said the company remains focused on consistent execution, profit flow-through from sales growth and accelerated but disciplined expansion. He also said Citi Trends is beginning to evaluate potential synergistic acquisitions that align with its strategic priorities, while maintaining a focus on financial returns. Citi Trends, Inc (NASDAQ: CTRN) is an off-price retail apparel chain that focuses on value-priced urban fashion apparel and accessories for men, women, and children. Headquartered in Savannah, Georgia, the company offers a broad assortment of merchandise, including denim, sportswear, activewear, and seasonal styles, complemented by footwear, jewelry, cosmetics, and home goods. Through its purchasing model, Citi Trends sources closeouts, overstocks and canceled orders from name-brand vendors, enabling it to offer trending styles at competitive price points. The company operates more than 500 stores across the Southeastern and Mid-Atlantic regions of the United States, with typical store footprints of approximately 11,000 square feet. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Citi Trends Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for June 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a 13.9% comparable store sales increase, marking the 21st consecutive month of growth and validating the execution of the three-tiered 'good, better, best' merchandising strategy. Management attributed nearly half of the sales growth to increased customer traffic, indicating that the brand's trend-right product and value proposition are resonating across diverse income levels. The footwear and men's divisions outperformed due to expanded branded offerings and increased relevance in streetwear trends for younger consumers. Gross margin expansion of 40 basis points was fueled by improved merchandise margins and AI-driven allocation systems, though partially offset by rising fuel surcharge expenses in freight. Operational leverage was a key theme, with SG&A leveraging by 250 basis points as the company successfully scaled sales against a largely fixed cost structure. The 'treasure hunt' experience is being reinforced through periodic extreme value deals, offering discounts up to 75% off MSRP to drive both traffic and basket size. Updated full-year 2026 guidance projects comparable store sales growth of 8% to 10%, implying high single-digit performance for the remainder of the year. Management plans to launch the 'Insiders Club' CRM program in July to transition the business from transaction-based to relationship-driven, aiming to increase shopping frequency. Store expansion is set to accelerate, with 25 new stores planned for 2026 and a target of approximately 40 new stores in 2027, supported by AI-driven site selection tools. The company is shifting to a disciplined three-cycle annual store opening cadence (February, July, October) to align new launches with peak seasonal shopping periods. Strategic focus for the back half of 2026 includes repositioning the women's apparel business to better capture style and sizing opportunities in the Missy and Plus categories. Freight expense remains a significant headwind due to rising fuel surcharges, leading management to temper their gross margin expansion outlook from 100 basis points down to a range of 50-70 basis points. The company is maintaining a debt-free balance sheet with $81.1 million in cash, providing the flexibility to evaluate synergistic acquisition opportunities that complement organic growth. Incentive compensation accruals were adjusted upward to 128% in Q1 to reflect the significant outperformance against internal targets. Inventory efficiency remains a priority, with total inventory up only 4.8% despite a 13.9% comp increase, reflecting the impact of new allocation and loss prevention systems. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that while tax refunds drove a spike to 23.8% on a 2-year stack during the 6-7 week peak period, underlying trends before and after remain in the upper teens. Current Q2 performance to date continues to show high single-digit comps, confirming the durability of the growth beyond the tax season. The CEO identified the footwear department as a major growth lever, suggesting a path to potentially double the size of that business over time. Growth is expected to come from appealing to higher-income consumers through better fashion execution and the expansion of the Missy category. Management expressed confidence in maintaining high single-digit comps through the end of 2026, with a potential moderation to mid-single digits in 2027 as they 'comp the comp.' The strategy relies on store-by-store and category-by-category refinements rather than a reliance on macro tailwinds.