UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 4, 2024



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-41886

CITI TRENDS, INC.

(Exact name of registrant as specified in its charter)


Delaware		52-2150697
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


104 Coleman Boulevard
Savannah, Georgia		31408
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (912) 236-1561

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, $0.01 par value		CTRN		NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☐ Accelerated Filer ☒		Non-Accelerated Filer ☐

Smaller Reporting Company ☐		Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 25, 2024, the registrant had 8,595,297 outstanding shares of common stock, $0.01 par value per share.

Table of Contents

CITI TRENDS, INC.

FORM 10-Q

TABLE OF CONTENTS


		PAGE
		NUMBER
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Cash Flows	5

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Notes to the Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4	Controls and Procedures	15

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	15

Item 1A	Risk Factors	15

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3	Defaults Upon Senior Securities	16

Item 4	Mine Safety Disclosures	16

Item 5	Other Information	16

Item 6	Exhibits	17

	SIGNATURES	18

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Citi Trends, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)


	May 4,		February 3,
	2024		2024
Assets
Current assets:
Cash and cash equivalents	$	58,169	$	79,706
Inventory		119,014		130,432
Prepaid and other current assets		14,002		10,838
Income tax receivable		3,813		4,123
Total current assets		194,998		225,099
Property and equipment, net of accumulated depreciation of $288,437 and $276,446 as of May 4, 2024 and February 3, 2024, respectively		53,352		56,231
Operating lease right of use assets		226,918		231,281
Deferred income taxes		7,877		5,105
Other assets		957		1,005
Total assets	$	484,102	$	518,721

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	72,269	$	100,366
Operating lease liabilities		45,428		45,842
Accrued expenses		15,191		16,466
Accrued compensation		9,245		6,846
Layaway deposits		843		384
Total current liabilities		142,976		169,904
Noncurrent operating lease liabilities		184,463		188,810
Other long-term liabilities		1,831		2,301
Total liabilities		329,270		361,015

Stockholders’ equity:
Common stock, $0.01 par value. Authorized 32,000,000 shares; 16,340,729 shares issued as of May 4, 2024 and 16,354,714 shares issued as of February 3, 2024; 8,536,716 shares outstanding as of May 4, 2024 and 8,550,701 shares outstanding as of February 3, 2024		161		160
Paid in capital		106,237		105,686
Retained earnings		315,645		319,071
Treasury stock, at cost; 7,804,013 shares held as of May 4, 2024 and February 3, 2024		(267,211)		(267,211)
Total stockholders’ equity		154,832		157,706

Commitments and contingencies (Note 6)
Total liabilities and stockholders’ equity	$	484,102	$	518,721

See accompanying notes to the condensed consolidated financial statements (unaudited).

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Citi Trends, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)


	Thirteen Weeks Ended
	May 4,		April 29,
	2024		2023
Net sales	$	186,289	$	179,688

Cost of sales (exclusive of depreciation)		(114,254)		(113,659)
Selling, general and administrative expenses		(74,211)		(70,807)
Depreciation		(4,793)		(4,681)
Loss from operations		(6,969)		(9,459)
Interest income		849		1,023
Interest expense		(79)		(75)
Loss before income taxes		(6,199)		(8,511)
Income tax benefit		2,773		1,876
Net loss	$	(3,426)	$	(6,635)

Basic net loss per common share	$	(0.42)	$	(0.81)
Diluted net loss per common share	$	(0.42)	$	(0.81)

Weighted average number of shares outstanding
Basic		8,253		8,182
Diluted		8,253		8,182

See accompanying notes to the condensed consolidated financial statements (unaudited).

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Citi Trends, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Thirteen Weeks Ended
	May 4,		April 29,
	2024		2023
Operating activities:
Net loss	$	(3,426)	$	(6,635)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4,793		4,681
Non-cash operating lease costs		12,013		12,955
Loss on disposal of property and equipment		15		23
Deferred income taxes		(2,772)		(1,501)
Non-cash stock-based compensation expense		884		935
Changes in assets and liabilities:
Inventory		11,418		(8,528)
Prepaid and other current assets		(3,164)		(874)
Other assets		48		49
Accounts payable		(28,097)		9,179
Accrued expenses and other long-term liabilities		(14,494)		(19,982)
Accrued compensation		2,399		(2,337)
Income tax receivable/payable		310		(1,588)
Layaway deposits		459		568
Net cash used in operating activities		(19,614)		(13,055)
Investing activities:
Purchases of property and equipment		(1,590)		(950)
Net cash used in investing activities		(1,590)		(950)
Financing activities:
Cash used to settle withholding taxes on the vesting of nonvested restricted stock		(333)		(783)
Net cash used in financing activities		(333)		(783)
Net decrease in cash and cash equivalents		(21,537)		(14,788)
Cash and cash equivalents:
Beginning of period		79,706		103,495
End of period	$	58,169	$	88,707

Supplemental disclosures of cash flow information:
Cash paid for interest	$	41	$	39
Cash (refunds) payments of income taxes	$	(310)	$	1,213
Supplemental disclosures of non-cash investing activities:
Accrual for purchases of property and equipment	$	338	$	1,031

See accompanying notes to the condensed consolidated financial statements (unaudited).

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Citi Trends, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Common Stock			Paid in		Retained		Treasury Stock
	Shares	Amount		Capital		Earnings		Shares	Amount		Total
Balances — February 3, 2024	16,354,714	$	160	$	105,686	$	319,071	7,804,013	$	(267,211)	$	157,706
Vesting of nonvested shares	—		1		—		—	—		—		1
Issuance of nonvested shares	2,811		—		—		—	—		—		—
Forfeiture of nonvested shares	(5,178)		—		—		—	—		—		—
Stock-based compensation expense	—		—		884		—	—		—		884
Net share settlement of nonvested shares	(11,618)		—		(333)		—	—		—		(333)
Net loss	—		—		—		(3,426)	—		—		(3,426)
Balances — May 4, 2024	16,340,729	$	161	$	106,237	$	315,645	7,804,013	$	(267,211)	$	154,832


	Common Stock			Paid in		Retained		Treasury Stock
	Shares	Amount		Capital		Earnings		Shares	Amount		Total
Balances — January 28, 2023	16,158,494	$	160	$	102,445	$	331,050	7,804,013	$	(267,211)	$	166,444
Vesting of nonvested shares	—		1		—		—	—		—		1
Issuance of nonvested shares	1,500		—		—		—	—		—		—
Forfeiture of nonvested shares	(9,647)		—		—		—	—		—		—
Stock-based compensation expense	—		—		935		—	—		—		935
Net share settlement of nonvested shares	(33,432)		(1)		(782)		—	—		—		(783)
Net income	—		—		—		(6,635)	—		—		(6,635)
Balances — April 29, 2023	16,116,915	$	160	$	102,598	$	324,415	7,804,013	$	(267,211)	$	159,962

See accompanying notes to the condensed consolidated financial statements (unaudited).

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Citi Trends, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

May 4, 2024

1. Significant Accounting Policies

Basis of Presentation

Citi Trends, Inc. and its subsidiary (the “Company”) is a leading specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families. As of May 4, 2024, the Company operated 599 stores in urban, suburban and rural markets in 33 states.

The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of February 3, 2024 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (the “2023 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2023 Form 10-K. Operating results for the first quarter of 2024 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business and the current economic uncertainty.

Fiscal Year

The following contains references to fiscal years 2024 and 2023, which represent fiscal years ending or ended on February 1, 2025 and February 3, 2024, respectively. Fiscal 2024 has a 52-week accounting period, and fiscal 2023 had a 53-week accounting period.

2. Cash and Cash Equivalents/Concentration of Credit Risk

For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits.

3. Earnings per Share

Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive.

The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. The Company includes as assumed proceeds the amount of compensation cost attributed to future services and not yet recognized. For the first quarter of 2024 and 2023, there were 272,000 and 102,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

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The following table provides the weighted average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share:


	Thirteen Weeks Ended
	May 4, 2024	April 29, 2023
Weighted average number of common shares outstanding (basic)	8,252,556	8,182,231
Incremental shares from assumed vesting of nonvested restricted stock	—	—
Weighted average number of common shares and common stock equivalents outstanding (diluted)	8,252,556	8,182,231

4. Revolving Credit Facility

In October 2011, the Company entered into a five-year, $50 million credit facility with Bank of America. The facility was amended in August 2015 and May 2020 to extend the maturity dates. The facility was further amended in April 2021 to modify terms and extend the maturity date to April 15, 2026. In May 2023, the facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”). The amended facility provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature that under certain circumstances could allow the Company to increase the size of the facility to $100 million. The facility is secured by the Company’s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of 0.20% and permits the payment of cash dividends subject to certain limitations. Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10% plus either 1.25%, 1.50% or 1.75%, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5% or (iii) the Eurodollar Rate plus 1.0%, plus, in each case either 0.25%, 0.50% or 0.75%, based in any such case on the average daily availability for borrowings under the facility.

As of May 4, 2024, the Company had no borrowings under the credit facility and $1.4 million of letters of credit outstanding.

5. Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. If there is a change in tax rates, the Company would recognize the impact of such change in income in the period that includes the enactment date.

For the first quarter of 2024, the Company utilized the annual effective tax rate method to calculate income taxes. For the first quarter of 2023, the Company used the discrete effective tax rate method to determine its tax expense based upon interim period results. The Company determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the annual effective tax rate method would not have provided a reliable estimate for the first quarter of 2023.

6. Commitments and Contingencies

The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, landlords, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, the Company establishes appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.

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7. Stock Repurchases

The Company periodically repurchases shares of its common stock under board-authorized repurchase programs. Such repurchases may be made in the open market, through block trades or through other negotiated transactions. There were no stock repurchases in the first quarter of fiscal 2024 or the first quarter of fiscal 2023.

At May 4, 2024, $50.0 million remained available under the Company’s stock repurchase authorization.

8. Revenue

Revenue Recognition

The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise.

Sales Returns

The Company allows customers to return merchandise for up to 30 days after the date of sale. Expected refunds to customers are recorded based on estimated margin using historical return information.

Disaggregation of Revenue

The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers.

In the following table, the Company’s revenue from contracts with customers is disaggregated by “CITI” or major merchandise category. The percentage of net sales for each CITI with the merchandise assortment was approximately:

SEC Form 10-Q filed by Citi Trends Inc.