US retailer Citi Trends posts net sales of $179.5 mn in Q3 FY23

The retailer's gross margin for the quarter stood at 38.2 per cent, a slight decrease from 39.8 per cent in Q3 FY22, but remained flat compared to the second quarter of FY23. Notably, Citi Trends experienced an operating loss of $6.0 million, or an adjusted loss of $7.0 million, a significant shift from the operating income of $31.6 million, or $2.4 million as adjusted, in the third quarter of FY22, the company said in a media release.

Net loss per share was reported at $0.47, or an adjusted net loss per share of $0.56. This contrasts starkly with the net earnings per share of $3.02, or $0.24 as adjusted, in the same quarter the previous year.

Additionally, the company noted a 0.9 per cent increase in quarter-end total dollar inventory compared to the third quarter of FY22. During Q3 FY23, Citi Trends closed 5 stores and remodelled 7, bringing the total number of remodels to 15 for the year, ending the quarter with 606 stores.

The first nine months of FY23 also saw challenges, with total sales of $532.8 million, a 9 per cent decrease from the same period in FY22. Comparable store sales decreased by 8.7 per cent. The gross margin for this period was 37.7 per cent, or 37.8 per cent as adjusted, compared to 39.0 per cent in FY22.

Operating loss for the first nine months reached $23.4 million, or a loss of $22.7 million as adjusted, compared to an operating income of $67.9 million in 2022. Net loss stood at $15.5 million, or $15.0 million as adjusted, a downturn from the net income of $52.3 million in 2022. Adjusted EBITDA was reported at a negative $8.5 million, compared to $19.6 million in FY22.

Net loss per share for the first nine months was $1.89, or an adjusted net loss per share of $1.83, a significant decrease from the diluted earnings per share of $6.34 in 2022, or $0.35 as adjusted.

“In the third quarter, our team continued to advance our strategic initiatives while navigating a very challenging selling environment and controlling the controllables like we always do. We successfully managed the middle of the P&L as we registered a strong gross margin of 38.2 per cent and kept operating expense dollars essentially flat compared to the prior year. That said, our third quarter topline performance did not meet our expectations, with sales held back more than we expected by the ongoing challenging macroeconomic backdrop,” said David Makuen, chief executive officer.

Fibre2Fashion News Desk (DP)