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Citi Trends Q4 net income up
14
Mar '11
Citi Trends Inc reported results for the fourth quarter and fiscal year ended January 29, 2011.

Financial Highlights – Fourth quarter ended January 29, 2011
Total sales in the fourth quarter ended January 29, 2011 increased 1.3% to $172.0 million compared with $169.8 million in the quarter ended January 30, 2010. Comparable store sales decreased 11.4% in the fourth quarter.

Sales were particularly weak in December due largely to a delay in the government's distribution of extended unemployment benefits until just before Christmas, a significant shortfall in sales of long denim, and a heavy promotional environment that included going-out-of-business sale events by a major competitor. Sales in January were negatively impacted by a later income tax refund season due to a lack of refund anticipation loan availability for the Company's customers.

Net income in the fourth quarter of 2010 was $9.4 million compared with $11.3 million in last year's fourth quarter. Earnings per diluted share decreased to $0.64 in the fourth quarter of 2010 compared with $0.78 in the fourth quarter of 2009. Financial results for the fourth quarter of 2010 included an immaterial correction of an error related to an accounting policy.

Prior to the fourth quarter, the Company's policy was to expense the cost of inbound freight associated with the delivery of inventory to the Company's distribution centers in the period incurred, rather than capitalizing such costs as a component of inventory and expensing them as the related inventory was sold. In the fourth quarter of 2010, the Company began to capitalize freight costs as a component of the cost of inventory. The impact of this adjustment in the fourth quarter was a non-recurring reduction in cost of sales of $2.7 million and a resulting increase in net income of $1.8 million, or $0.12 per diluted share.

The Company opened 3 stores in the fourth quarter of 2010, reaching a total store count of 461 at the end of the year. In addition, the Company converted 15 of its stores to its new Citi Lights prototype format in January 2011, and now has a total of 25 stores operating under the new format.

Financial Highlights – Fiscal year ended January 29, 2011
Total sales in the fiscal year ended January 29, 2011 increased 12.8% to $622.5 million compared with $551.9 million in the fiscal year ended January 30, 2010. Comparable store sales decreased 1.8% for the full year.

Net income was $20.9 million in 2010 compared with $19.7 million in the prior year. Earnings per diluted share increased to $1.44 in 2010 compared to $1.36 in 2009, with 2010 including the aforementioned benefit related to capitalized freight.

The Company opened 60 stores, relocated or expanded 13 others, and closed 2 stores in 2010.

Fiscal 2011 Outlook – Fiscal year ending January 28, 2012
The Company estimates fiscal 2011 earnings of approximately $1.40 to $1.50 per diluted share, including an anticipated comparable store sales increase of approximately 2% and an increase in selling square footage of at least 15%. Through the first five-plus weeks of the new fiscal year, comparable store sales are down 2%, versus an 11% increase during the same period of time last year.

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.

Citi Trends Inc

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