Citi Trends Q1 2026 Earnings Call Transcript

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Provided by Quartr
June 3, 2025

Key Takeaways

  • Q1 total sales rose 8.3% year-over-year to $201.7 million with comparable store sales up 9.9% (two-year stack of 13%) and adjusted EBITDA increasing by $6.2 million for a 40% sales-to-profit flow-through.
  • Gross margin expanded 90 basis points and SG&A leverage improved by 220 basis points, driven by higher initial markup, lower freight costs and disciplined expense control.
  • Inventory initiatives drove a 4.9% reduction in average in-store inventory and a 45% decrease in aged product over seven months, while shrink improved by 70 basis points.
  • Distribution center performance fell below expectations this quarter, prompting personnel and process changes to boost second-half operational efficiency.
  • Fiscal 2025 guidance updated to mid-single digit comp growth, ~200 basis points of gross margin expansion, 60–80 basis points of SG&A leverage and full-year EBITDA of $6 million to $10 million.
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Earnings Conference Call
Citi Trends Q1 2026
00:00 / 00:00

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Operator

Greetings, and welcome to the Citi Trends First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nita McKee, Senior Associate at ICR. Thank you. You may begin.

Nitza McKee
Senior Associate - IR at ICR

Thank you, and good morning, everyone. Thank you for joining us on Citi Trends' First Quarter twenty twenty five Earnings Call. On our call today is Chief Executive Officer, Ken Seipel and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 06:45 a. M.

Nitza McKee
Senior Associate - IR at ICR

Eastern Time. If you have not received a copy of the release, it's available on the company's website under the Investor Relations section at www.cititrends.com. You should be aware that prepared remarks today made during this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management may make additional forward looking statements in response to your questions. These statements do not guarantee future performance.

Nitza McKee
Senior Associate - IR at ICR

Therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10 ks and other subsequent filings within the Securities and 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, Ken Seipel. Ken?

Kenneth Seipel
CEO & Director at Citi Trends

Thank you, and good morning, everyone. Thanks for joining us today for our first quarter earnings call. I'm happy to report that Citi Trends were gaining traction on our strategic transformation. Pleased to report that our first quarter progress in which total sales grew $15,400,000 or 8.3% over the prior year and our adjusted EBITDA increased $6,200,000 representing a sales to profit flow through of 40%. Our strong profit flow through was driven by gross margin expansion of 90 basis points and meaningful operating expense leverage of two twenty basis points, demonstrating our ability to leverage the cost structure as we grow the top line.

Kenneth Seipel
CEO & Director at Citi Trends

The highlight of our first quarter performance was our comparable store sales growth of 9.9% over the prior year, which is a two year stack of 13%. These metrics demonstrate that we're clearly gaining market share. Before I provide a comprehensive review of our first quarter wins, as well as areas in which we see opportunity to improve, I'd also like to take a moment to recap the three strategic phases of our business journey. This is the framework on which we are building a high performance company positioned for long term sustainable and profit growth. So phase one is a repair phase.

Kenneth Seipel
CEO & Director at Citi Trends

In this phase, we focused on reestablishing fundamental practices and foundational improvements. So this includes implementing the three tiered product plan with opening price points, core value products and familiar brands, while also developing our extreme value product capabilities, which enables us to offer well known brands at amazing prices. The repair phase also included building and improving foundational retail processes across the organization from merchandise allocation and planning, along with standardization of our reporting and our metrics. So in phase two, the execute phase, we're focused on developing consistent execution capabilities and best practices. During this phase, we're improving our core product selection and value creation, as well as our supply chain speed, which will measurably reduce our working capital requirements and improve our inventory turns.

Kenneth Seipel
CEO & Director at Citi Trends

And we're leveraging SG and A expenses across all areas of the business to ensure sufficient sales to profit flow through. And finally, phase three, the optimization phase. This phase will prepare us for business acceleration. This means leveraging new systems and processes, fueling efficient sales to EBITDA flow through while simultaneously developing our new store expansion capabilities. The combination of these three phases, repair, execute, optimize, creates the foundation for accelerated growth and positions Citi Trends to capitalize on the significant market opportunity ahead of us as we expand into both existing and new markets.

Kenneth Seipel
CEO & Director at Citi Trends

So with that backdrop, let me walk you through what worked in the first quarter, what the opportunities are, and what's next in our journey. So during the first quarter, we made significant progress on our strategic product initiatives. We took another meaningful step toward offering, off price deals and an extreme value branded product. Our enhanced focus on delivering exceptional value merchandise continued to resonate strongly with our customers across all of our categories. We see strong first quarter performance across all apparel and home categories, and many of our focus categories experienced double digit growth.

Kenneth Seipel
CEO & Director at Citi Trends

Plus size business, which we flagged as a growth opportunity, showed meaningful improvement in the first quarter. As you might recall from prior calls, we've been focused on rebuilding our footwear business and the shift to off prices enabled us to generate consistent top line improvements in this category as well. In all categories, our merchants continue to improve the product value equation, adding several new brands to the assortment at exceptional prices, while enhancing the style and quality of the overall assortment. On the opportunity side, the accessory business is currently in transition and was slightly below plan for the quarter. We're actively refining this assortment to better meet our customer needs.

Kenneth Seipel
CEO & Director at Citi Trends

Our merchants are in the midst of adjusting our offering of handbags, jewelry, and beauty to be more consumer relevant, and I look forward to updating you on their progress here in the future. Looking ahead, we have several initiatives underway to further strengthen our product offering. We're specifically focused on product intensification areas that offer significant growth potential. This includes a broader, more consistent assortment of plus sizes for women and extended sizes for big men. We're improving trend relevancy for our juniors and young men's offering alongside continual development of our women's accessories and family footwear.

Kenneth Seipel
CEO & Director at Citi Trends

And as we're nearing the important back to school season, our children's team was laser focused on building on the strength that they've developed in the market by executing an enhanced assortment of branded and core product. Our comprehensive product strategy, combining our three tiered approach of opening prices, value products, and familiar brands with our expanding extreme value capabilities positions us well to serve customers across all income levels while driving both traffic and basket growth. As we also mentioned in the Q4 call, we have leveraged extensive consumer research to sharpen our focus on understanding both the demographics and ethnography of our African American customer base. This research revealed that we have a significant group of average and higher income customers, which creates a tremendous opportunity for us expanding our product assortment to continue to meet their fashion needs. Our customers have responded very positively to recognizable brands at amazing prices as many of our brands have quickly become some of our best selling products.

Kenneth Seipel
CEO & Director at Citi Trends

As we advance our assortment relevancy, we expect to add a large number of new brands to our product offering this year with a longer term goal of ensuring that most desired brands are available to our customers at a strong value. As we've moved deeper into the execute phase of the transformation, a notable highlight has been our sustainability oh, excuse me, our substantially improved preseason product planning and in season execution capabilities. Our detailed focus on planning, combined with enhanced product allocation practices, has allowed us to maximize sales opportunities while operating on a leaner inventory base. As I mentioned, we registered the first quarter comparable store sales increase of 9.9, and that was with average in store inventories down roughly 5%. This achievement reflects our disciplined approach to inventory management, our continued focus on maximizing productivity across all areas of the business and positions us well for continued working capital optimization.

Kenneth Seipel
CEO & Director at Citi Trends

Regarding our stores, we've made meaningful strides in ex consistently executing neat, clean, and organized shopping experiences for our customers. We've implemented new way finding signage systems to improve in store navigation, making it easier for customers to find what they're looking for and enhancing their overall shopping experience. These improvements support our strategy of creating a welcoming environment that encourages both traffic and basket growth. And while we're pleased with our store level operational improvements, distribution center performance was below expectations for this quarter. Although our DCs still remain very stable and functional, we recognize that there's significant room for improvement in this critical area.

Kenneth Seipel
CEO & Director at Citi Trends

We're actively making personnel and process changes to drive improved second half performance as efficient distribution capabilities are essential to our long term success. And we're also in the final stages right now of testing our new AI based allocation system. And I am excited to report that test performance has exceeded our expectations. We're currently planning for a full chain rollout following the back to school season and prior to the holiday period. This technology will be a game changer for our inventory efficiency and represents a significant step forward in our operational capabilities.

Kenneth Seipel
CEO & Director at Citi Trends

As part of our execute phase, we've implemented comprehensive KPIs and performance dashboards across all key functions. This enhanced visibility into performance metrics combined with standard operating procedures gives us confidence in our ability to drive continual operational improvement through the balance of the year. These systems create the accountability and transfer and transparency necessary to achieve our operational excellence goals and support our path to sustainable profitability. Our growth initiatives continue to gain momentum as we build the foundation for expansion. During the quarter, we maintained our disciplined approach to fleet optimization and enhancement, continuing our remodel program with 36 store refreshes completed year to date.

Kenneth Seipel
CEO & Director at Citi Trends

These investments are showing solid returns, and we're seeing strong customer response to our refreshed store environments, which aligns with our strategy of maximizing market share in existing locations. We're taking a data driven approach to our expansion strategy that positions us for intelligent, profitable growth. We've engaged a third party expert to help develop company specific site selection tools tailored to our unique customer base and market positioning. This partnership represents a significant investment in our growth capabilities and will provide us with sophisticated analytics to guide our real estate expansion decisions. We've leveraged actual transaction data from the past three years across every single store location and recently completed a comprehensive fleet wide geolocation study to complement the Schrift dataset.

Kenneth Seipel
CEO & Director at Citi Trends

This combination of transactional and geographical intelligence gives us unprecedented insight into our customer behavior patterns and market dynamics. In the near future, we'll have detailed store specific profiles of our shoppers and their shopping habits, which will enable us to more accurately identify and duplicate our most successful locations. This analytical approach is crucial to our strategy of both backfilling existing markets with new locations and entering new select markets. By understanding the specific characteristics that drive success in our current locations, we can minimize risk and maximize probability of success as we expand our footprint. And finally, we're working closely with our Board of Directors to develop a comprehensive plan that will guide our growth strategy for the next three years.

Kenneth Seipel
CEO & Director at Citi Trends

As I previously stated, we have a clear path to achieving a target of $40,000,000 to $50,000,000 of EBITDA. And this plan will provide the detailed initiatives roadmap to achieve that goal. The strategic planning process ensures that our growth initiatives are aligned with our financial objectives and that we have the operational capabilities to support sustainable expansion while maintaining our focus on profitability and shareholder returns. And now a few comments, if I may, regarding the current tariff environment. As we discussed on our last call, we're maintaining an aggressive approach to business growth while ensuring that we have adequate flexibility to react and adjust to the evolving macro environment.

Kenneth Seipel
CEO & Director at Citi Trends

The new administration's introduction of potential changes in tariffs continues to create uncertainty for business, but our teams have demonstrated remarkable agility in navigating these challenges. I'd like to specifically recognize our entire merchant team for their outstanding work over the last couple months in this unpredictable tariff environment. They have successfully navigated the ever changing landscape and have been able to hold overall product costs flat, identify alternative sourcing opportunities when needed, and position us to take advantage of off price opportunities presented by this disrupted environment. Their expertise and quick adaption have been instrumental in protecting our margin profile while maintaining our competitive price advantage. So while the tariff situation has introduced many challenges, it's also created a good deal of opportunity.

Kenneth Seipel
CEO & Director at Citi Trends

As an off price extreme value retailer, we're well positioned to capitalize on tariff related disruptions in the market. In fact, we're currently reviewing a large amount of extreme value deal flow and expect that deal flow to increase as the fall progresses. In the end, my direction to the team is in addition to being aggressive and flexible, also stay focused on our strategy. Let's play our game, and let's win at our game. So with that, I would like turn it over to Heather for a review of the first quarter results. Heather?

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Thank you, Tim, and good morning, everyone. I'm excited to have the opportunity to walk you through our first quarter results and how we're thinking about the balance of the year. Before I dive in, let me set the stage by stating that we remain encouraged by the broad positive trends we are seeing across the business as we gain market share, thanks to the strategic and foundational improvements implemented over the last few quarters by our Citi Trends teams. Now the details of the first quarter. Starting with the top line, Q1 sales were $201,700,000 up $15,400,000 or 8.3% compared to Q1 twenty twenty four.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Comparable store sales grew 9.9%, our third quarter of sequential comp improvement, and we delivered a two year stack of 13%. Comp store sales were positive each month of the quarter, starting with low single digit comps in February, impacted by weather and delayed tax refunds, then significantly improving to low double digit comps in March and April as tax refunds caught up and the Easter selling season kicked in. Importantly, improvement to last year was fairly consistent across climate zones and store volumes with broad based strength across most product categories. We delivered strong results across our retail metrics in the quarter with increased traffic, mid single digit transaction count growth and strong and improved conversion rates. We also saw an increase in basket as customers showed a willingness to add units while trading into higher ticket extreme value product procured as part of our strategy shift.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Gross margin was 39.6% in the quarter, a 90 basis points expansion compared to last year. The primary drivers of the year over year increase were higher initial markup and lower freight, partially offset by higher markdowns as we followed our updated approach to take more in season markdowns, keeping our inventory fresh. Gross margin was also helped by a 70 basis point improvement in shrink as we continue to make notable progress again this quarter, evidenced by improved results from the 179 physical inventory counts taken in the quarter. Adjusted SG and A expense totaled $74,400,000 or 36.9% of revenue compared to $72,800,000 or 39.1% in the prior period. The two twenty basis point improvement in SG and A rate was driven largely by disciplined cost control and the impact of improved top line results, demonstrating our ability to leverage the cost structure as we grow the top line.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Adjusted EBITDA for the quarter was $5,400,000 an increase of $6,200,000 versus Q1 twenty twenty four result. Sales to EBITDA flow through, as Ken mentioned, was 40%, well above our goal of 20% to 25%. Diluted earnings per share were $0.11 or $0.17 as adjusted compared to a loss per share of $0.42 or $0.32 as adjusted in the first quarter of twenty twenty four. During Q1, we remodeled 19 stores ending the quarter with 25% of the fleet in an updated format. Second quarter to date, we've completed an additional 17 remodels getting up to the year to date remodel count of 36 stores Ken spoke of in his remarks.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Now turning to the balance sheet. Total inventory dollars at quarter end decreased 7.6% compared to last year, with average in store inventory down 4.9%. Importantly, Q1 inventory was significantly fresher than last year with a 45% reduction in product aged seven months or more, reflecting the impact of our 2024 markdown of aged goods plus our dedication to taking timely in season markdowns. We are pleased with our current inventory level, composition and freshness. At the end of the quarter, we remained in a healthy financial position with a strong balance sheet, including no debt, no drawings on our $75,000,000 revolver and $42,000,000 in cash.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

With liquidity of approximately $117,000,000 we remain able to more than sufficiently fund our business initiatives, building on our foundational strengths for future profitable growth. In the first quarter, we repurchased approximately 251,000 shares for a total spend of $6,300,000 ending the quarter with $40,000,000 remaining on our repurchase authorization. Now turning to our fiscal twenty twenty five outlook. Based on our first quarter results and our confidence in the continued effectiveness of our turnaround plan, along with recognition that there is a significant degree of uncertainty in the macroeconomic environment, we are pleased to update our outlook for 2025 as follows. With the strength of our first quarter sales, we now expect full year comp store sales growth of mid single digits on the high end of our previous outlook of low to mid single digit growth.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

We now expect full year gross margin expansion of approximately 200 basis points versus 2024, slightly below previous outlook due to an extended timeline for the repair phase of our supply chain transformation. SG and A is now expected to leverage in the range of 60 to 80 basis points versus twenty twenty four, above our previous outlook of 30 to 50 basis points. The improvement is driven by leverage from higher sales and includes the build of our incentive compensation accrual. I want to share a few comments on the incentive comp accrual to keep in mind for modeling purposes. Bonus expense accrual was reinstated in the first quarter of twenty twenty five after no accrual in the last three quarters of twenty twenty four.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

As a result, sales to EBITDA flow through, particularly in the second half of twenty twenty five, will be lower than what we delivered this quarter. We anticipate returning to an EBITDA flow through rate that meets or exceeds our goal of 20% to 25% once this period of bonus to no bonus comparison is behind us. Turning back to outlook. With these updates, we now expect full year EBITDA to be in the range of $6,000,000 to $10,000,000 a 20,000,000 to $24,000,000 improvement versus fiscal twenty twenty four. There is no change to our expected effective tax rate of approximately 0% for the year.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

We continue to plan to open up to five new stores, to close-up to five stores and to remodel approximately 50 locations in the year. And finally, expected full year capital expenditures remain in the range of 18,000,000 to $22,000,000 Before I turn the call back to Ken, I want to emphasize how pleased we are with our first quarter results and the improving trends we've seen over the past three quarters. There is a new level of energy at Citi Trends, and we're getting used to the idea of winning. We're committed, and we're focused. The foundational enhancements we've already made and the improvements we are continuing to make are setting this company up for sustainable profitable growth.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

I'm confident that our strategic initiatives plus our disciplined execution will continue to deliver meaningful value to our shareholders. With that, I'll turn the call back to Ken. Ken?

Kenneth Seipel
CEO & Director at Citi Trends

Thanks, Heather. But before we open the call for questions, I do want to take a minute and express my sincere gratitude to our entire Citi Trends team for their exceptional hard work during this quarter. I'm particularly impressed by the willingness to embrace our strategic initiatives and execute them in a clear, focused, and consistent manner. The progress we're seeing today is a direct result of their dedication and commitment to our transformation journey. And also speaking on behalf of our entire team, we are very pleased with the meaningful progress we've made.

Kenneth Seipel
CEO & Director at Citi Trends

But collectively, we remain humbly aware of the need, for continual business improvement. We understand that we're still in early stages of the turnaround with significant opportunity ahead of us as we continue to strengthen our foundation and build toward our long term objectives. Our strategic plan remains crystal clear, maintain an unwavering focus on our core African American customer, deliver compelling product to value proposition that features trendy fashions, great brands, and extreme value treasures that our customers can't find anywhere else, execute our business model with consistency and precision, drive attractive profit flow through as we leverage our cost structure, and position ourselves for long term square footage expansion as we capitalize on the substantial opportunities ahead of us. The combination of our highly differentiated market position, our strengthened operational capabilities and our healthy balance sheet position Citi Trends to generate meaningful free cash flow and drive significant shareholder returns. We have a clear line of sight to our targeted EBITDA range of 40,000,000 to $50,000,000 and we are excited about the upside potential as we continue to execute our strategy.

Kenneth Seipel
CEO & Director at Citi Trends

So I'd like to thank everyone for your continued interest and support of Citi Trends. And with that, I'd like to turn it over to the operator to open up the lines for questions. Operator?

Operator

Thank session. Thank you. Our first question comes from the line of Michael Baker with D. A. Davidson. Please proceed with your question.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

Okay. Hi. Can you hear me okay?

Kenneth Seipel
CEO & Director at Citi Trends

We got Great.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

Awesome. I wanted to focus on the merchandising and and the closeout aspect, if if I could. You just remind us where you are in in that process? I think in the past, you you did some level of closeouts, more end of season. And as I understand it, this is more in season sort of treasure hunt type stuff.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

So can you just articulate the change in your closeout strategy and then to the extent that you can quantify what closeouts were in the past, what they are now in season versus end of season, what it could be over time? Just a little bit more context and color on that whole closeout opportunity would be great. Thanks.

Kenneth Seipel
CEO & Director at Citi Trends

Yeah. For sure, Mike. Good question. I I think probably best to kinda dimensionalize the word off price, which gets tossed around quite a bit and and really does mean a lot of different things to different retailers. So very specifically, when you think about off prices released to Citi Trends, it really falls in a couple of different buckets.

Kenneth Seipel
CEO & Director at Citi Trends

So there is an end of season closeout opportunity, as you described, which the company over the years had participated in from time to time. So there were certain points of it. I actually don't have a specific number of what the company had done historically. There was some of that in the assortment, in many of our categories. So that's that typical in of season buy a good deal, and and you can bring it in, type of closeout.

Kenneth Seipel
CEO & Director at Citi Trends

Then the other side of this, which has been where we have been focusing in addition to, is adding what I call what I've tabbed extreme value product. And that is a little different in as much as it quite often is either current or just past season product, but the qualification on this is a little bit different. It has to have a high brand cachet, meaning well known brand, and we have to buy it at a significantly discounted rate. The goal here would be to have a brand that's offered at least 50% off, and in many cases, in the 70% off the manufacturer suggested retail. It's a little different discipline to buy.

Kenneth Seipel
CEO & Director at Citi Trends

These deals sometimes are a little bit messy. They're oftentimes you have to require a lot of levels of negotiation to get to, and the processing is a little bit more difficult. But the markup, the value, and the resonation with consumer is very strong. So that portion, is what I would say we're trying to bring a renewed emphasis on in city trends. And I think I've stated, perhaps in, one of my I think actually the in January, I rolled this out.

Kenneth Seipel
CEO & Director at Citi Trends

But long term, our goal would be to make this extreme value portion of the off price segment incremental about 10% top line. And that's going take us a little bit of time to grow into that. We're not quite there yet. We're still testing and learning as we go. But as I as we go forward, I see incremental 10% relative to that particular portion of the business.

Kenneth Seipel
CEO & Director at Citi Trends

And we will continue to do end of season closeouts. We still are actually, and and that's a key part of what our merchants do on a regular basis. So I hope that helps dimensionalize, what's in the in our core of of history versus where we're headed in terms of the future.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

Yes, sure. It absolutely does. If I could ask, I suppose, a related follow-up. All seems like it's going well. I suppose it's maybe an obvious question and the answer is probably just being conservative.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

But you just comped up 9.9%. Current quarter, at least a month through is mid to upper single digits. Your full year guidance is below that. Is that tougher comparisons, just being conservative? Or is there something else that we should know about as to why comp trends would decelerate so much in the back half of the year implicit in that outlook?

Kenneth Seipel
CEO & Director at Citi Trends

Yeah. A couple of things happening there, Mike. Thank you again for that question. We are, as you know, in the back half of the year, we had a 5.3%, I it was in Q3, and a little over a six percent in Q4. So we are going up against more difficult compares in the back half.

Kenneth Seipel
CEO & Director at Citi Trends

We're looking at our business, probably more collectively on a two year stack comp basis. And we're coming off of a very strong thirteen, two year stack. We have a double digit stack planned for Q2. And then we're bringing that two year stack down to upper single digits as we go into the back half. So, I don't know if it's conservative or not, but as I mentioned earlier, there's there's enough uncertainty in the macro, world right now around product flow and things of that nature.

Kenneth Seipel
CEO & Director at Citi Trends

So we wanted to make sure that we don't get our forecasting, too aggressive to the point where, you know, we invest too much expenses or anything in the business. So maybe there's a slight amount of conservatism in it, but I think the better way to look at our comp base going forward would be on a two year stack basis, and that's how we're thinking about it.

Michael Baker
Managing Director, Senior Research Analyst at D.A. Davidson

Perfect. Fair enough. I'll turn it over to someone else.

Kenneth Seipel
CEO & Director at Citi Trends

Thanks, Mike.

Operator

Thank you. Our next question comes from the line of Jeremy Hamblin with Craig Hallum Capital Group. Please proceed with your question.

Will Forsberg
Associate Analyst at Craig-Hallum Capital Group LLC

Hey, this is Will on for Jeremy. Congrats on the strong results and thanks for taking my question. Just wanted to follow-up here on sales trends. Maybe specifically if you could share any more color on specific category performance and maybe what you're seeing quarter to date. Sounds like plus size and footwear were strong.

Will Forsberg
Associate Analyst at Craig-Hallum Capital Group LLC

I guess are you seeing these trends continue in q two? Then maybe which categories you'd like to see the most improvement?

Kenneth Seipel
CEO & Director at Citi Trends

Yeah. I'm happy to comment on that, and and certainly Heather can add some additional detail if I if I miss. Yeah. As I said in my remarks, and it absolutely is true, literally every single category had a tremendous Q1, really across the board. We had many of them into mid single, upper single digits.

Kenneth Seipel
CEO & Director at Citi Trends

We had, five or six categories that got into low double digit growth. So very strong, and and it's hard to kinda distinguish if there was one category that that drove the business. It was really a combination of of of all of our categories working well together, which is why we didn't really talk about it. But in in our market basket, we saw our consumers actually adding to the units per transaction, which just means they're finding a better selection to shop. Right?

Kenneth Seipel
CEO & Director at Citi Trends

And so big credit to the merchant team across the board. And and I I mentioned, that our accessory business was a little bit off plan, but, you know, for them, they were still pretty much flat to o y and and performing okay. So, there's really no, standouts one way or the other. Truly, the the tide is rising when you think about category growth, And that kinda continues going forward. And I'm I'm quite pleased with that actually because, it just means that all of our teams are really working hard to to to deliver a better product value equation, and our customers are finding a much more balanced shopping experience inside of our stores, and we're not over reliant on one category or the other.

Kenneth Seipel
CEO & Director at Citi Trends

Now to your question about how we're emphasizing going forward, and also as I called out there, there are some categories that we believe we've underserved our customer, plus sizes and big men's are a couple that are obvious. And there's the assortments that need to be broadened a little bit more. We need to be more consistent with how we offer those assortments. So there's clearly an opportunity. As you know, the majority of our well, not the majority, but a large portion of our consumer, does need plus size and big men apparel.

Kenneth Seipel
CEO & Director at Citi Trends

So we see real opportunity there. And then the other thing I mentioned was also in trend, particularly in our young men's categories and our juniors. Again, both good businesses for us. This is about really fine tuning and taking it to the next level and being a little bit more trend relevant and really offering some of those trends that would really distinguish us in the marketplace. So, and then then beyond those categories, we're working to include, you know, grow our consumables business.

Kenneth Seipel
CEO & Director at Citi Trends

Our home business continues to do well, and we see opportunities there for them to be traffic, drivers and basket builders of our assortment. And I would be remiss if I didn't talk about kids. It just has a tremendous history, with company in those past year and continues to perform well. So, I guess in answering your question, I'm basically saying all of the above, but, we are quite pleased with how everything's working. Heather, would you want to further clarify my generic answer there?

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

No. Honestly, I would double down on it, Ken, and say, well, one of my favorite things of the many great stats of this quarter is the broad based improvement. So apparel was up significantly to last year. Non apparel was up significantly to last year. Our our store our stores were up across the board by region, by by volume, by the market in which they sit.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

I mean, was like all boats rise. And that, I think, is the strongest statement we can make about the quarter. It was broad based. So are there areas where we're leaning in? Yes.

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

Ken has walked you through that, right? Plus big men's, young men's, juniors, making sure our trend is right and that we're showing up in the sizes that our customer is looking for. But, it's working across the board. And that to me is the most exciting part.

Will Forsberg
Associate Analyst at Craig-Hallum Capital Group LLC

Great.

Kenneth Seipel
CEO & Director at Citi Trends

And if I may just add one additional thought to that too, because we're talking about categories, but it's also important to understand that across our store fleet, Heather made this comment in her remarks, literally every single region, every single zone is actually improving at about the same rate, regardless of demography. We are happy to see that this thing is really resonating across all lines and all customers and all markets right now.

Will Forsberg
Associate Analyst at Craig-Hallum Capital Group LLC

Great. That is, that's super helpful. And then I guess just to follow-up there, shifting over to the remodels. So thirty six year to date. I guess I'm wondering if you're able to quantify what you've seen in terms of performance uplift from the recently remodeled units?

Heather Plutino
Heather Plutino
CFO & Executive VP at Citi Trends

It's early. I mean, we did our first round of remodels in February, so we've only had a couple of months under our belt. But I will tell you that we're happy with the performance, and it's not inconsistent with prior classes of remodeled stores.

Will Forsberg
Associate Analyst at Craig-Hallum Capital Group LLC

Got it. Thank you, guys.

Kenneth Seipel
CEO & Director at Citi Trends

Thanks, Will.

Operator

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Seifle for any final comments.

Kenneth Seipel
CEO & Director at Citi Trends

All right. Well, again, thank you, everybody. We do appreciate your continued interest in our business, and we look forward to updating you on more results in our next call. Thank you very much.

Operator

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Executives
    • Heather Plutino
      Heather Plutino
      CFO & Executive VP
Analysts
    • Nitza McKee
      Senior Associate - IR at ICR
    • Kenneth Seipel
      CEO & Director at Citi Trends
    • Michael Baker
      Managing Director, Senior Research Analyst at D.A. Davidson
    • Will Forsberg
      Associate Analyst at Craig-Hallum Capital Group LLC
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