Savannah, Georgia: Citi Trends, a 597-store specialty retailer of affordable clothing and home goods, is conducting a “reset” of its inventory in an effort to resume profitable expansion.
During the second quarter, the corporation achieved progress by getting rid of millions of dollars’ worth of outdated and slow-selling goods. The objective is to provide its primary clientele, which are mostly African American multicultural families, with a more up-to-date selection of good, better, and greatest products.
The top line benefited from the markdowns. Sales increased to $176.6 million, or 1.7%. According to Citi Trends, back-to-school children’s categories started off strongly, while home and impulsive categories had double-digit comps. But overall comp fell by 1.7%.
The interim CEO, Ken Seipel, stated, “We achieved traffic growth in the quarter, which is significant and shows our core consumer is still highly engaged with the Citi Trends brand and our unique store experience.”
Citi Trends aims to take advantage of two opportunities: increasing the penetration of opening price point merchandise and improving the “treasure hunt” experience by obtaining branded goods at excellent values.
Furthermore, according to Seipel, “we have identified specific opportunities to improve our preseason assortment planning process, shrinkage controls, and product allocation process, all of which will improve our operational efficiency and execution.”
Margin was reduced by both $4.0 million of physical inventory shrinkage and $9.4 million in markdowns taken during the quarter. The gross margin decreased to 31.1% from 38.2% in the same quarter the previous year.
Throughout the quarter, Citi Trends remodelled fifteen stores, closed three, and launched one new location. The corporation may close a few locations, but it has finally finished its annual store opening program. By year’s end, it hopes to have about 590 stores.
According to Citi Trend, its cash balance at year’s end is anticipated to be between $60 million and $70 million.
- Comparable store sales for the second half of 2023 are likely to be flat to slightly higher than those of the previous year; overall sales are predicted to decline by mid-single digits as a result of store closures and the 53rd week of last year.
- Gross margin for the second half is anticipated to be roughly 39%.
- EBITDA* is anticipated to be positive in the second half, with a range of $0.5 million to $2.5 million. This would represent a notable increase over the first half’s performance.
