Citi Trends announces second quarter results
Citi Trends, Inc. reported results for the second quarter of fiscal 2009.
Financial Highlights - Second quarter ended August 1, 2009
Total sales in the second quarter ended August 1, 2009 decreased 3.5% to $111.6 million compared with $115.7 million in the second quarter ended August 2, 2008. Comparable store sales decreased 12.4% in the second quarter. A net loss of $69,000 was recognized in this year's second quarter compared with net income of $2.8 million in the second quarter of 2008. Loss per diluted share was $(0.00) in the second quarter of 2009 compared with earnings per diluted share of $0.20 in the second quarter of 2008.
Sales and earnings in this year's second quarter were adversely affected by a difficult comparison to the second quarter of 2008 when our customers' spending increased due to the government stimulus checks. As is typical when comparable store sales are negative, gross margin was lower in this year's second quarter due to higher merchandise markdowns; however, the overall decline in gross margin was limited to 60 basis points due to continued improvement in inventory shrinkage results. Selling, general and administrative expenses were managed tightly, increasing only 5.7%, even with a 13% increase in store selling square footage since last year's second quarter.
Store activity in the second quarter of 2009 included eight new openings, one expansion and three closings, resulting in a total store count of 370 at the end of the quarter.
Financial Highlights - First half ended August 1, 2009
Total sales in the first half of fiscal 2009 increased 7.6% to $254.7 million compared with $236.7 million in the first half of fiscal 2008. Comparable store sales decreased 2.2% in the first half of this year. Net income was $7.9 million compared with $8.0 million in last year's first half. Earnings per diluted share were $0.54 in the first half of 2009 compared with $0.56 in 2008's first half.
Fiscal 2009 Outlook
The Company estimates that 2009 earnings will be in a range of $1.28 to $1.33 per diluted share which includes an anticipated 2009 comparable store sales increase of approximately 1%. For the year, the Company expects to increase selling square footage by at least 15%. The effective tax rate for 2009 is estimated to be in a range of 34% to 35%. An unrealized pretax loss on investments of $728,000 recorded in the first quarter of 2009 was almost entirely reversed in the second quarter through an unrealized pretax gain of $671,000 due to an improvement in the credit spreads and liquidity in the auction rate securities market. Accordingly, the outlook for the full year includes only an insignificant unrealized loss.
The Company reminds investors of the complexity of accurately assessing future results given the difficulty in predicting fashion trends, consumer preferences and general economic conditions and the impact of other business variables. See "Forward-Looking Statements" below for more information regarding these uncertainties.