Specialty value retailer Citi Trends announced significant sales gains in the holiday selling period and provided a growth outlook moderated somewhat by January sales slowed by the COVID-19 surge, according to the company.
Total sales for the nine weeks ended January 1 increased 20.1% from the period in 2019, to $204.8 million as comparable sales increased 14.8% versus the 2019 period .
Based on the recent disruptions brought on by the surge in COVID-19 cases, Citi Trends stated that it now expects full year 2021 total sales to be in the range of $990 million to $995 million, which, at the midpoint of that range, would represent a 26.7% increase over fiscal 2020 and a 26.9% increase over fiscal 2019. The company anticipates diluted earnings per share to come in at a range of $6.70 to $6.85 versus the $2.32 it posted in fiscal 2020 and $1.41 it posted in fiscal 2019.
Citi Trends updated guidance on the execution of its strategic initiatives and three-year plan, pointing to:
- Comparable sales growth in the low-single digits per year
- Growing the fleet at a CAGR of 8 to 10%, reflecting 2021 to 2024, with a total potential of over 1,000 stores
- Remodeling at least 150 stores by the end of fiscal 2024
- Investmenting in infrastructure improvements with an emphasis on merchandising and supply chain
- Posting an EBITDA margin in the low double-digits by the end of fiscal 2024
- Generating a diluted earnings per share CAGR of at least 20%
David Makuen, Citi Trends CEO, said, “We are very pleased with our holiday sales results that included a strong comparable store sales increase of 14.8% compared to 2019. In addition, we continued to expand our gross margin, driven primarily by higher full-price selling and lower markdowns. Our performance was led by our enhanced shopping experience and on-trend assortment associated with our “Give. Get. Gather.” holiday campaign that included amazing gifts and stocking stuffers across our six merchandise Citis or categories.”
Still, Makuen continued, “Following a strong holiday selling period, we have experienced a decline in traffic attributed to macro trends, primarily driven by the increase in COVID-19 cases impacting the broader consumer landscape. Despite the recent decline in traffic, which we believe is transitory in nature, we are experiencing strong conversion rates, indicating that our customers continue to find our assortment compelling. Looking ahead, we remain confident in the long-term trajectory of the business. For fiscal 2022, we plan to open approximately 45 new stores, coupled with remodeling approximately 45 stores, all reflecting our new CTx format. We are planning the business to deliver low-to-mid single digit total sales growth coupled with at least low double-digit EPS growth in fiscal 2022.”
