Citi Trends’ Profit Rises

Citi Trends Inc. (CTRN - Analyst Report), a value-priced retailer of urban fashion apparel and accessories, has reported strong fiscal 2009 third quarter results with a net income of $0.6 million or 4 cents per share compared to a net loss of $0.7 million or 5 cents in the year-earlier quarter. 

The earnings were primarily driven by a 21.4% increase in total sales during the quarter to $127.4 million from $104.9 million in the year-ago quarter. Same-store sales also increased 6.3% year-over-year, benefiting from the back-to-school season and improved discretionary spending outlook of customers amid early signs of an economic recovery. 

The improvement in sales was also driven by prudent inventory management, merchandise selection in accordance with the sales trends, and solid execution at the store level. Year-to-date gross margin was up 40 basis points to 38.6% from 38.2% in the previous year, including 50 basis points improvement resulting from lower shrinkage. 

During the quarter, Citi Trends opened 22 new stores and expanded 5 existing stores, bringing its total store count to 392 at quarter-end. The company anticipates having 403 stores at year end 2009, with its square footage growth marginally exceeding the earlier target of 15%. For 2010, the company also plans to target 15% square footage growth with approximately 55 new store openings and 10 to 12 relocations or expansions. 

Moving forward, Citi Trends anticipates 2009 earnings per share in a range of $1.30 to $1.35, with a comparable store sales increase of 1% to 3% in the fourth quarter.

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