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Citi Trends witnessed a decrease of 6.2% in comparable store sales in the fourth quarter of 2011. Month wise, comparable store sales decreased 10.7% in November, 2.3% in December and 11.2% in January.
However, amid this gloom, total sales increased 3.7% year over year to $178.4 million during the reported period compared with $172 million in the prior-year period. The analysts’ considered by Zacks expected the company to report total sales of $181 million in fourth-quarter 2011.
For the fiscal, total sales marked an increase of 2.9% to $640.8 million compared with $622.5 million in last fiscal. Moreover, comparable store sales also decreased 8.3% for fiscal 2011.
Battered by the sluggish fourth-quarter sales results, the company now expects to report adjusted net loss of approximately 20 cents per share in the fourth quarter, in line with the current Zacks Consensus Estimate.
However, on a reported basis, including one time items, the company expects to report a loss of 40 cents per share.
Moreover, the company expects gross margins to be significantly down compared with the last year quarter, reflecting higher markdowns to reduce excess quantities of branded merchandise and competitive pressures.
The company operates in a highly fragmented specialty retail sector and faces intense competition from larger off-price rivals, such as The TJX Companies Inc. ( TJX - Analyst Report ) and Ross Stores Inc. ( ROST - Snapshot Report ) , mass merchants including Wal-Mart Stores Inc. ( WMT - Analyst Report ) as well as smaller specialty retailers, such as Rainbow and Dots.
Moreover, Citi Trends' business is seasonal in nature, characterized by the spring and holiday seasons. Therefore, the company is exposed to significant risks if the seasons fail to deliver expected operating performance.
Consequently, Citi Trends currently has a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock.
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