CITI TRENDS, INC._November 2, 2024

美國

證券交易委員會

華盛頓特區 20549

表單10-Q

(標記一個)



☒	根據1934年證券交易法第13或15(d)節的季度報告

截至季度期 2024年11月2日

或



☐	根據1934年《證券交易法》第13或15(d)節的過渡報告

委託文件號碼 000-41886

Citi Trends, Inc.

(註冊人名稱如章程中所列)



特拉華州		52-2150697
(州或其他管轄區的		(美國國稅局僱主
公司註冊或組織)		識別號)

104 科爾曼大道
薩凡納, 喬治亞		31408
(主要執行辦公室地址)		(Zip Code)

註冊人’電話號碼，包括區號（912) 236-1561

根據法案第12(b)節註冊的證券：


每個類別的標題	交易標的	註冊的每個交易所的名稱
普通股，每股面值$0.01	Citi Trends	納斯達克股票市場

請勾選註冊人是否（1）在過去12個月內（或註冊人被要求提交此類報告的較短期間內）提交了根據1934年證券交易法第13節或15(d)節要求提交的所有報告，以及（2）在過去90天內是否一直受此提交要求的約束。是 ☒ 沒有 ☐

請勾選註冊者在過去的12個月內（或在註冊者被要求提交此類文件的更短期間內）是否電子提交了根據S-t規則第405條（本章第232.405條）要求提交的每個互動數據文件。是 ☒ 沒有 ☐

請用勾號標明註冊者是大加速申報人、加速申報人、非加速申報人、較小報告公司還是新興成長公司。請參見相關定義， “大加速申報人，” “加速報告人，” “小型報告公司” 和 “新興成長公司” 在《交易所法規》第120億.2條中。


大型加速報告人 ☐ 加速申報者 ☒	非加速披露者 ☐

小型報告公司 ☐	新興成長公司 ☐

如果是新興成長型企業，請勾選複選標記，表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 ☐

請勾選註冊人是否爲空殼公司（根據《交易所法》第120億.2條的定義）。是 ☐ 沒有 ☒

截至2024年11月29日，註冊人有 8,710,024 流通在外的普通股，面值每股0.01美元.

CITI TRENDS, INC.

FORM 10-Q

目錄的內容


		頁面
		號碼
第一部分	基本報表信息

項目1	基本報表 (未經審計)

	簡明合併資產負債表	3

	濃縮合並運營報表	4

	壓縮合並現金流量表	5

	簡化合並股東基本報表’ 權益	6

	簡明綜合財務報表附註	7

項目2	管理層’關於財務狀況和經營成果的討論與分析	11

項目3	關於市場風險的定量和定性披露	16

項目4	控制項和程序	16

第二部分	其他信息

項目1	法律程序	17

項目1A	風險因素	17

項目2	未註冊的股權證券銷售及資金用途	17

項目3	高級證券的默認情況	17

項目4	礦山安全披露	17

項目 5	其他資訊	17

項目 6	展品	18

	簽名	19

第一部分 - 財務信息

項目1.基本報表。

Citi Trends, Inc.

簡明合併資產負債表

(未經審計)

(以千爲單位，除非另有說明)


	11月2日		2月3日，
	2024		2024
資產
流動資產：
現金及現金等價物	$	38,872	$	79,706
庫存		127,514		130,432
預付賬款及其他流動資產		13,145		10,838
應收所得稅		3,581		4,123
總流動資產		183,112		225,099
物業及設備，扣除累積折舊後， $294,363 和 $276,446 截至2024年11月2日和2024年2月3日，各自的情況		48,878		56,231
經營租賃使用權資產		218,899		231,281
遞延所得稅		15,301		5,105
其他資產		886		1,005
總資產	$	467,076	$	518,721

負債和股東’ 權益
流動負債：
應付賬款	$	82,791	$	100,366
經營租賃負債		49,390		45,842
應付費用		16,106		16,466
應計補償		9,731		6,846
分期付款按金		1,548		384
總流動負債		159,566		169,904
非流動經營租賃負債		175,767		188,810
其他長期負債		1,473		2,301
總負債		336,806		361,015

股東’ 產權：
普通股， $0.01 面值。授權 32,000,000 股； 16,434,037 截至2024年11月2日已發行的股份， 16,354,714 截至2024年2月3日已發行的股份； 8,630,024 截至2024年11月2日流通中的股份， 8,550,701 截至2024年2月3日流通中的股份		162		160
實收資本		107,239		105,686
滾存收益		290,080		319,071
庫藏股，成本； 7,804,013 截至2024年11月2日和2024年2月3日持有的股份		(267,211)		(267,211)
總股東’ 權益		130,270		157,706

承諾和或有事項（注7）
總負債和股東’ 股權	$	467,076	$	518,721

請參見附帶的未經審計的簡明合併基本報表的說明。

Citi Trends, Inc.

簡化合並基本報表 業務

(未經審計)

(以千爲單位，除每股金額外)


	截至十三週
	11月2日		10月28日
	2024		2023
淨銷售額	$	179,066	$	179,520

銷售成本（不包括折舊）		(107,833)		(110,942)
銷售、一般和管理費用		(74,730)		(69,654)
折舊		(4,755)		(4,749)
資產減值		(574)		(178)
運營損失		(8,826)		(6,003)
利息收入		482		894
利息支出		(79)		(76)
稅前虧損		(8,423)		(5,185)
所得稅優惠		1,271		1,322
淨損失	$	(7,152)	$	(3,863)

每股普通股基本淨虧損	$	(0.86)	$	(0.47)
每股稀釋淨虧損	$	(0.86)	$	(0.47)

加權平均在外流通股份數
基本		8,356		8,238
稀釋		8,356		8,238

Citi Trends, Inc.

簡化合並基本報表 業務

(未經審計)

(以千爲單位，除每股金額外)


	截止第三十九周
	11月2日		10月28日
	2024		2023
淨銷售額	$	541,907	$	532,762

銷售成本（不包括折舊）		(343,710)		(331,827)
銷售、一般和管理費用		(222,721)		(210,004)
折舊		(14,331)		(14,138)
資產減值		(1,835)		(178)
運營損失		(40,690)		(23,385)
利息收入		1,942		2,804
利息支出		(238)		(228)
稅前虧損		(38,986)		(20,809)
所得稅優惠		9,995		5,279
淨損失	$	(28,991)	$	(15,530)

每股普通股基本淨虧損	$	(3.49)	$	(1.89)
每股稀釋淨虧損	$	(3.49)	$	(1.89)

加權平均在外流通股份數
基本		8,315		8,215
稀釋		8,315		8,215

請參見附帶的未經審計的簡明合併基本報表的說明。

Citi Trends, Inc.

簡明合併現金流量表

(未經審計)

(以千爲單位)


	截止第三十九周
	11月2日		10月28日
	2024		2023
經營活動：
淨損失	$	(28,991)	$	(15,530)
調整淨虧損與經營活動使用的現金的折算：
折舊		14,331		14,138
資產減值		1,835		178
非現金運營租賃成本		36,708		38,494
固定資產處置損失		24		23
遞延所得稅		(10,197)		(4,304)
與經營活動相關的保險賠償		—		3,482
非現金股票薪酬費用		2,434		3,002
與經營活動相關的保險收益		—		(3,482)
資產和負債的變動:
庫存		2,918		(23,933)
預付賬款及其他流動資產		(2,307)		1,711
其他資產		120		133
應付賬款		(17,898)		2,322
應計費用及其他長期負債		(35,916)		(45,515)
應計補償		2,885		(1,821)
應收/應付所得稅		542		(2,691)
分期付款按金		1,164		925
淨現金流出活動		(32,348)		(32,868)
投資活動：
購置物業和設備		(7,606)		(11,568)
與投資活動相關的保險收益		—		1,518
投資活動中使用的淨現金		(7,606)		(10,050)
融資活動：
用於支付未歸屬限制性股票歸屬時的預扣稅款的現金		(880)		(851)
融資活動所使用的淨現金		(880)		(851)
現金及現金等價物淨減少		(40,834)		(43,769)
現金及現金等價物：
期初		79,706		103,495
期末	$	38,872	$	59,726

現金流信息的補充披露：
支付的利息	$	125	$	119
現金（退款）支付所得稅	$	(340)	$	1,545
非現金投資活動的補充披露：
對採購物業和設備的應計	$	374	$	841

請參見附帶的未經審計的簡明合併基本報表的說明。

Table of Contents

Citi Trends, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Common Stock			Paid in		Retained		Treasury Stock
	Shares	Amount		Capital		Earnings		Shares	Amount		Total
Balances — February 3, 2024	16,354,714	$	160	$	105,686	$	319,071	7,804,013	$	(267,211)	$	157,706
Vesting of nonvested shares	—		1		—		—	—		—		1
Issuance of nonvested shares	2,811		—		—		—	—		—		—
Forfeiture of nonvested shares	(5,178)		—		—		—	—		—		—
Stock-based compensation expense	—		—		884		—	—		—		884
Net share settlement of nonvested shares	(11,618)		—		(333)		—	—		—		(333)
Net loss	—		—		—		(3,426)	—		—		(3,426)
Balances — May 4, 2024	16,340,729	$	161	$	106,237	$	315,645	7,804,013	$	(267,211)	$	154,832
Vesting of nonvested shares	—		1		—		—	—		—		1
Issuance of nonvested shares	110,870		—		—		—	—		—		—
Issuance of vested shares	16,373		—		—		—	—		—		—
Forfeiture of nonvested shares	(24,845)		—		—		—	—		—		—
Stock-based compensation expense	—		—		694		—	—		—		694
Net share settlement of nonvested shares	(23,771)		—		(524)		—	—		—		(524)
Net loss	—		—		—		(18,413)	—		—		(18,413)
Balances — August 3, 2024	16,419,356	$	162	$	106,407	$	297,232	7,804,013	$	(267,211)	$	136,590
Issuance of nonvested shares under incentive plan	19,698		—		—		—	—		—		—
Forfeiture of nonvested shares	(3,757)		—		—		—	—		—		—
Stock-based compensation expense	—		—		856		—	—		—		856
Net share settlement of nonvested shares	(1,260)		—		(24)		—	—		—		(24)
Net loss	—		—		—		(7,152)	—		—		(7,152)
Balances — November 2, 2024	16,434,037	$	162	$	107,239	$	290,080	7,804,013	$	(267,211)	$	130,270


	Common Stock			Paid in		Retained		Treasury Stock
	Shares	Amount		Capital		Earnings		Shares	Amount		Total
Balances — January 28, 2023	16,158,494	$	160	$	102,445	$	331,050	7,804,013	$	(267,211)	$	166,444
Vesting of nonvested shares	—		1		—		—	—		—		1
Issuance of nonvested shares	1,500		—		—		—	—		—		—
Forfeiture of nonvested shares	(9,647)		—		—		—	—		—		—
Stock-based compensation expense	—		—		935		—	—		—		935
Net share settlement of nonvested shares	(33,432)		(1)		(782)		—	—		—		(783)
Net income	—		—		—		(6,635)	—		—		(6,635)
Balances — April 29, 2023	16,116,915	$	160	$	102,598	$	324,415	7,804,013	$	(267,211)	$	159,962
Issuance of nonvested shares	259,136		—		—		—	—		—		—
Forfeiture of nonvested shares	(6,581)		—		—			—		—		—
Stock-based compensation expense	—		—		1,049		—	—		—		1,049
Net share settlement of nonvested shares	(1,400)		—		(26)		—	—		—		(26)
Net loss	—		—		—		(5,032)	—		—		(5,032)
Balances — July 29, 2023	16,368,070	$	160	$	103,621	$	319,383	7,804,013	$	(267,211)	$	155,953
Forfeiture of nonvested shares	(17,787)		—		—		—	—		—		—
Stock-based compensation expense	—		—		1,018		—	—		—		1,018
Net share settlement of nonvested shares	(1,925)		—		(42)		—	—		—		(42)
Net income	—		—		—		(3,863)	—		—		(3,863)
Balances — October 28, 2023	16,348,358	$	160	$	104,597	$	315,520	7,804,013	$	(267,211)	$	153,066

See accompanying notes to the condensed consolidated financial statements (unaudited).

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Citi Trends, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

November 2, 2024

1. Significant Accounting Policies

Basis of Presentation

Citi Trends, Inc. and its subsidiary (the “Company”) is a leading specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families. As of November 2, 2024, the Company operated 593 stores in urban, suburban and rural markets in 33 states.

The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of February 3, 2024 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (the “2023 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2023 Form 10-K. Results of a period shorter than a full year may not be indicative of results expected for the entire year as a result of the seasonality of our business, among other things.

Fiscal Year

The following contains references to fiscal years 2024 and 2023, which represent fiscal years ending or ended on February 1, 2025 and February 3, 2024, respectively. Fiscal 2024 has a 52-week accounting period, and fiscal 2023 had a 53-week accounting period.

2. Cash and Cash Equivalents/Concentration of Credit Risk

For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits.

3. Earnings per Share

Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding because the inclusion of common stock equivalents would be antidilutive.

The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. The Company includes as assumed proceeds the amount of compensation cost attributed to future services and not yet recognized. For the third quarter of 2024 and 2023, there were 258,000 and 318,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution. For the thirty-nine weeks ended November 2, 2024 and October 28, 2023, there were 242,000 and 259,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

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The following table provides a reconciliation of the weighted average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share:


	Thirteen Weeks Ended
	November 2, 2024	October 28, 2023
Weighted average number of common shares outstanding (basic)	8,356,085	8,237,729
Incremental shares from assumed vesting of nonvested restricted stock	—	—
Weighted average number of common shares and common stock equivalents outstanding (diluted)	8,356,085	8,237,729


	Thirty-Nine Weeks Ended
	November 2, 2024	October 28, 2023
Weighted average number of common shares outstanding (basic)	8,315,090	8,214,907
Incremental shares from assumed vesting of nonvested restricted stock	—	—
Weighted average number of common shares and common stock equivalents outstanding (diluted)	8,315,090	8,214,907

4. Revolving Credit Facility

In October 2011, the Company entered into a five-year, $50 million credit facility with Bank of America. The facility was amended in August 2015 and May 2020 to extend the maturity dates. The facility was further amended in April 2021 to modify terms and extend the maturity date to April 15, 2026. In May 2023, the facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”). The amended facility provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature that under certain circumstances could allow the Company to increase the size of the facility to $100 million. The facility is secured by the Company’s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of 0.20% and permits the payment of cash dividends subject to certain limitations. Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10% plus either 1.25%, 1.50% or 1.75%, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5% or (iii) the Eurodollar Rate plus 1.0%, plus, in each case either 0.25%, 0.50% or 0.75%, based in any such case on the average daily availability for borrowings under the facility.

As of November 2, 2024, the Company had no borrowings under the credit facility and $1.4 million of letters of credit outstanding.

5. Impairment of Assets

If facts and circumstances indicate that a long-lived asset or operating lease right-of-use asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value. In the third quarter of 2024, non-cash impairment expense related to underperforming stores totaled $0.6 million, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.3 million for operating lease right of use assets. In the third quarter of 2023, non-cash impairment expense related to underperforming stores totaled $0.2 million, primarily for leasehold improvements and fixtures and equipment.

6. Income Taxes

The provision for income taxes for the interim period in 2024 is based on an estimate of the annual effective tax rate adjusted to reflect the impact of discrete items. Management judgment is required in projecting ordinary income to estimate the Company’s annual effective tax rate. For the first thirty-nine weeks of 2023 the Company used the discrete effective tax rate method to determine its tax expense based upon interim period results. The Company determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the annual effective tax rate method would not have provided a reliable estimate for the first thirty-nine weeks of 2023.

As of November 2, 2024, we had approximately $15.3 million in net deferred tax assets (DTA). At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. If we are not able to generate

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sufficient taxable income to realize these DTAs, a substantial valuation allowance to reduce our U.S. DTAs may be required, which would materially increase our expenses in the period the allowance is recognized and adversely affect our results of operations.

As of November 2, 2024, our net DTA includes approximately $9.3 million related to net operating loss (NOL) carryforwards that can be used to offset taxable income in future periods and reduce our income taxes payable in those future periods. NOL carryforwards may be subject to annual limitations under Internal Revenue Code Section 382 (Section 382) (or comparable provisions of foreign or state law) in the event that certain changes in ownership were to occur. In addition, tax credit carryforwards may be subject to annual limitations under Internal Revenue Code Section 383 (Section 383).

We are required to evaluate our NOL and tax credit carryforwards and whether certain changes in ownership have occurred as measured under Section 382 that would limit our ability to utilize a portion of our NOL and tax credit carryforwards. If it is determined that an ownership change has occurred, there may be annual limitations on the use of these NOL and tax credit carryforwards under Sections 382 and 383 (or comparable provisions of foreign or state law).

7. Commitments and Contingencies

The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, landlords, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, the Company establishes appropriate reserves.

While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.

8. Stock Repurchases

The Company periodically repurchases shares of its common stock under board-authorized repurchase programs. Such repurchases may be made in the open market, through block trades or through other negotiated transactions. There were no stock repurchases in the first thirty-nine weeks of 2024 or the first thirty-nine weeks of 2023.

At November 2, 2024, $50.0 million remained available under the Company’s stock repurchase authorization.

9. Revenue

Revenue Recognition

The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise.

Sales Returns

The Company allows customers to return merchandise for up to 30 days after the date of sale subject to certain conditions. Expected refunds to customers are recorded based on estimated margin using historical return information.

Disaggregation of Revenue

The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products and sell their products to similar classes of customers.

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In the following table, the Company’s revenue from contracts with customers is disaggregated by “CITI” or major merchandise category. The percentage of net sales for each CITI with the merchandise assortment was approximately:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 2,		October 28,		November 2,		October 28,
	2024		2023		2024		2023
Ladies	27	%	26	%	28	%	27	%
Kids	24	%	24	%	23	%	22	%
Mens	17	%	17	%	16	%	17	%
Accessories & Beauty	16	%	17	%	16	%	18	%
Home & Lifestyle	10	%	7	%	10	%	8	%
Footwear	6	%	9	%	7	%	8	%

10. Leases

The Company leases its retail store locations, distribution centers, and certain office space and equipment. Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods.

The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized. Leases with an initial term of 12 months or less and leases with mutual termination clauses are not included on the condensed consolidated balance sheets. The lease liability is measured at the present value of future lease payments as of the lease commencement date.

Total lease cost is comprised of operating lease costs, short-term lease costs and variable lease costs, which include rent paid as a percentage of sales, common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Lease costs consisted of the following (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 2, 2024		October 28, 2023		November 2, 2024		October 28, 2023
Operating lease cost	$	16,441	$	15,521	$	46,232	$	46,930
Variable lease cost		1,997		2,628		8,160		8,406
Short term lease cost		250		393		1,344		1,171
Total lease cost	$	18,688	$	18,542	$	55,736	$	56,507

Future minimum lease payments as of November 2, 2024 are as follows (in thousands):


Fiscal Year	Lease Costs
Remainder of 2024	$	16,535
2025		58,464
2026		47,423
2027		36,204
2028		28,253
Thereafter		108,800
Total future minimum lease payments		295,679
Less: imputed interest		(70,522)	(1)
Total present value of lease liabilities	$	225,157	(2)

(1)

Calculated using the discount rate for each lease.

(2)

Includes short-term and long-term portions of operating lease liabilities.

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Certain operating leases provide for fixed monthly rents, while others provide for contingent rents computed as a percentage of net sales and others provide for a combination of both fixed monthly rents and contingent rents computed as a percentage of net sales.

Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts):


	Thirty-Nine Weeks Ended
	November 2, 2024		October 28, 2023
Cash paid for operating leases	$	46,735	$	52,734
Right of use assets obtained in exchange for new operating lease liabilities	$	25,182	$	22,322

Weighted average remaining lease term (years) - operating leases		7.31		7.60
Weighted average discount rate - operating leases		5.47%		4.90%

11. Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which expands reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosure of (i) significant segment expenses that are regularly provided to the CODM and included within the segment measure of profit or loss, (ii) an amount and description of its composition for other segment items to reconcile to segment profit or loss, and (iii) the title and position of the Company’s CODM. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard will be effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine the impact of the amended guidance.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). The amendments in ASU 2023-09 require public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. The new standard will be effective on a prospective basis for fiscal years beginning after December 15, 2024 and interim periods therein, with early adoption permitted. The Company is currently evaluating the ASU to determine the impact of the amended guidance.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, capital allocation expectations or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “could,” “will likely result,” or “will continue” and similar words and expressions generally identify forward-looking statements, although not all forward-looking statements contain such language. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; impacts of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; the Company’s ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Company’s ability to gauge fashion trends and changing consumer preferences; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in our markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; the impact of the cyber disruption we identified on January 14, 2023, including legal, reputational, financial and contractual

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risks resulting from the disruption, and other risks related to cybersecurity, data privacy and intellectual property; the results of pending or threatened litigation; temporary changes in demand due to weather patterns; seasonality of the Company’s business; changes in market interest rates and market level wages; delays associated with building, opening, remodeling and operating new stores; delays associated with building, opening or expanding new or existing distribution centers; and other factors described in the section titled “Item 1A. Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, and in Part II, “Item 1A. Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.

Executive Overview

We are a leading specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families. Our high-quality and trend-right merchandise offerings at everyday low prices are designed to appeal to the fashion and trend preferences of value-conscious customers. As of November 2, 2024, we operated 593 stores in urban, suburban and rural markets in 33 states.

Uncertainties and Challenges

General Economic Conditions

We expect that our operations in the short-term will continue to be influenced by general economic conditions, including on-going inflationary pressures, which are particularly impactful to the communities we serve. Given the macro-economic environment, we expect low-income families to remain under pressure and to tightly manage their discretionary spend through the remainder of fiscal 2024. In addition, we continue to monitor the impacts on our business of unemployment levels, wage inflation, interest rates, inflation rates, housing costs, energy costs, consumer confidence, consumer perception of economic conditions, costs to source our merchandise and supply chain disruptions.

Seasonality and Weather Patterns

The nature of our business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. In addition, sales of clothing are directly impacted by the timing of the seasons to which the clothing relates. While we have expanded our product offerings to include more non-apparel goods, traffic to our stores is still influenced by weather patterns to some extent.

Cyber Disruption (January 2023)

As previously disclosed, in January 2023, we experienced a disruption of our back office and distribution center IT systems, (the “January 2023 cyber disruption”). In the first thirty-nine weeks of fiscal 2023, we recognized $1.7 million of costs related to the cyber disruption in Selling, general and administrative expenses on our Statement of Operations.

Several putative class action lawsuits have been filed against the Company and several inquiries have been made to the Company with respect to the January 2023 cyber disruption. At November 2, 2024, we had an accrual of $0.7 million for estimated losses in connection with these matters recorded in Accrued expenses on our Balance Sheet. For additional information regarding these lawsuits, see Note 7 of the Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

Basis of Presentation

Net sales consist of store sales and layaway fees, net of returns by customers. Cost of sales consists of the cost of products we sell and associated freight costs. Depreciation is not considered a component of cost of sales and is included as a separate line item in the consolidated statements of operations. Selling, general and administrative expenses are comprised of store costs, including payroll and occupancy costs, corporate and distribution center costs and advertising costs.

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The following discussion contains references to fiscal years 2024 and 2023, which represent fiscal years ending or ended on February 1, 2025 and February 3, 2024, respectively. Fiscal 2024 has a 52-week accounting period and fiscal 2023 had a 53-week accounting period. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto contained in Part 1, Item 1 of this Report.

Results of Operations

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year as a result of the seasonality of our business, among other things.

Key Operating Statistics

We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. In fiscal years following those with 53 fiscal weeks, the prior year period is shifted by one week to compare similar retail calendar weeks. Additionally, for 2024, we updated our definition of a comparable store. We now define a comparable store as a store that has been open for at least 14 full consecutive months without closure for more than seven days within the same fiscal month. Remodeled or relocated stores are considered comparable stores if the selling square footage is not changed significantly, the store is not closed for more than five days in any fiscal month and the store remains in the same trade area. This change aligns more with industry standards in regard to measuring “comp store” sales performance. This change is effective for fiscal year 2024 and forward. For fiscal year 2024, the definition change results in six stores becoming comparable stores in 2024, which would not have become a comparable store until 2025 under the prior definition. The revised definition would result in no change to the full year 2023 comparable store sales results of 5.3%.

We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability. In addition to sales, we measure cost of sales as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate overall performance of each individual store. Finally, we monitor corporate and distribution center expenses against budgeted amounts.

Thirteen Weeks Ended November 2, 2024 and October 28, 2023

Net Sales. Sales comparisons for 2024 to the prior year are affected by the shift in the calendar caused by last year having 53 weeks. Net sales decreased $0.4 million, or 0.3%, to $179.1 million in the third quarter of 2024 from $179.5 million in the third quarter of 2023. The shift in the retail calendar contributed $7.0 million to revenue for the thirteen weeks ended November 2, 2024. Comparable store sales, on a comparable weeks basis, increased 5.7%, resulting in an increase of $9.6 million in sales. Net store opening and closing activity resulted in a net decrease of $2.8 million in sales.

Cost of Sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) decreased $3.1 million, or 2.7%, to $107.8 million in the third quarter of 2024 from $110.9 million in the third quarter of 2023. Cost of sales as a percentage of sales decreased to 60.2% in the third quarter of 2024 from 61.8% in the third quarter of 2023. The 160 basis points decrease was driven by a 40 basis points decrease in shrink (driven by physical inventory results), and a decrease of 120 basis points in other cost of sales.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $5.1 million, or 7.3%, to $74.7 million in the third quarter of 2024 from $69.7 million in the third quarter of 2023. The increase was driven by corporate expense (primarily payroll and professional fees) of $2.2 million, including $1.6 million of one-time expenses for strategic initiatives, occupancy expense of $1.0 million, and third quarter 2023 gain on insurance of $2.0 million. As a percentage of sales, Selling, general and administrative expenses increased to 41.7% in the third quarter of 2024 from 38.8% in the third quarter of 2023, primarily driven by the aforementioned items.

Depreciation. Depreciation expense increased $0.1 million, or 0.1%, to $4.8 million in the third quarter of 2024 from $4.7 million in the third quarter of 2023.

Impairment. Non-cash impairment expense related to underperforming stores totaled $0.6 million in the third quarter of 2024, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.3 million for operating lease right of use assets. Non-cash impairment expense related to underperforming stores totaled $0.2 million in the third quarter of 2023 primarily due to leasehold improvements and fixtures and equipment.

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Income Tax Benefit. Income tax benefit was $1.3 million in the third quarter of 2024 and in the third quarter of 2023. The effective tax rate for the third quarter of 2024 and 2023 was 15.1% and 25.5%, respectively. The difference is attributable to fluctuations in permanent items during the third quarter of 2024.

Net Loss. Net loss was $7.2 million in the third quarter of 2024 compared to net loss of $3.9 million in the third quarter of 2023 due to the factors discussed above.

Thirty-Nine Weeks Ended November 2, 2024 and October 28, 2023

Net Sales. Sales comparisons for 2024 to the prior year are affected by the shift in the retail calendar caused by last year having 53 weeks. Net sales increased $9.1 million, or 1.7%, to $541.9 million in the first thirty-nine weeks of 2024 from $532.8 million in the same period of 2023. The shift in the retail calendar contributed $3.1 million to revenue for the thirty-nine weeks ended November 2, 2024. Comparable store sales, on a comparable weeks basis, increased 2.3%, resulting in an increase of $3.2 million in sales. Net store opening and closing activity resulted in a net decrease of $6.2 million in sales.

Cost of Sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) increased $11.9 million, or 3.6%, to $343.7 million in the first thirty-nine weeks of 2024 from $331.8 million in the same period of 2023. Cost of sales as a percentage of sales increased to 63.4% in the first thirty-nine weeks of 2024 from 62.3% in the same period of 2023. The 110 basis points increase was driven by an increase of 120 basis points of markdowns and a 100 basis points increase in shrink, partially offset by a decrease of 50 basis points of freight and a decrease of 60 basis points in other cost of sales.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $12.7 million, or 6.1%, to $222.7 million in the first thirty-nine weeks of 2024 from $210.0 million in the same period of 2023. The increase was primarily driven by one-time CEO transition related expenses of $3.2 million, corporate expenses (primarily payroll, insurance and professional fees) of $6.5 million, stores selling and advertising expense of $4.7 million, and distribution center costs of $0.3 million, partially offset by lower incentive compensation expense of $2.0 million. As a percentage of sales, Selling, general and administrative expenses increased to 41.1% in the first thirty-nine weeks of 2024 from 39.4% in the first thirty-nine weeks of 2023, due to the aforementioned items.

Depreciation. Depreciation expense increased $0.2 million, or 1.4%, to $14.3 million in the first thirty-nine weeks of 2024 from $14.1 million in the same period last year.

Impairment. Non-cash impairment expense related to underperforming stores totaled $1.8 million in the first thirty-nine weeks of 2024, comprised of $0.9 million for leasehold improvements and fixtures and equipment, and $0.9 million for operating lease right of use assets. Non-cash impairment expense related to underperforming stores totaled $0.2 million in the first thirty-nine weeks of 2023, comprised primarily of leasehold improvements and fixtures and equipment.

Income Tax Benefit. Income tax benefit was $10.0 million in the first thirty-nine weeks of 2024 compared to $5.3 million in the first thirty-nine weeks of 2023. The effective tax rate for the thirty-nine weeks of 2024 and 2023 was 25.6% and 25.4%, respectively.

Net (Loss) Income. Net loss was $29.0 million in the first thirty-nine weeks of 2024 compared to net loss of $15.5 million in the same period of 2023 due to the factors discussed above.

Liquidity and Capital Resources

Capital Allocation

Our capital allocation strategy is to maintain adequate liquidity to prioritize investments in opportunities to profitably grow our business and maintain current operations, then to return excess cash to shareholders through our repurchase programs. Our quarter-end cash and cash equivalents balance was $38.9 million compared to cash and cash equivalents of $59.7 million at the end of the third quarter last year. Until required for other purposes, we maintain cash and cash equivalents in deposit or money market accounts.

Our principal sources of liquidity consist of: (i) cash and cash equivalents on hand; (ii) short-term trade credit arising from customary payment terms and trade practices with our vendors; (iii) cash generated from operations on an ongoing basis; and (iv) a revolving credit facility with a $75 million credit commitment.

Inventory

Our quarter-end inventory balance was $127.5 million, down 1.7% compared to $129.7 million at the end of the third quarter last year.

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Capital Expenditures

Capital expenditures in the first thirty-nine weeks of 2024 were $7.6 million, a decrease of $4.0 million over the first thirty-nine weeks of 2023, as we pared back our investments in new stores and remodels. We anticipate capital expenditures in fiscal 2024 to be in the range of $14 million to $18 million, primarily for the opening of one new store and remodeling existing stores, combined with ongoing investments in our systems.

Stock Repurchases

We did not repurchase any shares of our common stock in the first thirty-nine weeks of fiscal 2024 or fiscal 2023. See Part II of this Report and Note 8 to the Financial Statements for more information.

Revolving Credit Facility

We have a revolving credit facility that matures in April 2026 and provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature. Additional details of the credit facility are in Note 4 to the Financial Statements. At the end of the third quarter of 2024, we had no borrowings under the credit facility and $1.4 million in letters of credit outstanding.

Cash Flows

Cash Flows From Operating Activities. Net cash used in operating activities was $32.3 million in the first thirty-nine weeks of 2024 compared to $32.9 million in the same period of 2023. Sources of cash for the first thirty-nine weeks of 2024 included (1) net loss adjusted for non-cash items totaling $16.1 million (compared to net loss adjusted for non-cash items of $36.0 million in the first thirty-nine weeks of 2023); (2) a decrease in inventory of $2.9 million in the first thirty-nine weeks of 2024 (compared to an increase of $23.9 million in the first thirty-nine weeks of 2023); (3) a decrease in accrued compensation of $2.9 million (compared to an increase of $1.8 million in the first thirty-nine weeks of 2023); and (4) an increase in layaway deposits of $1.2 million in the first thirty-nine weeks of 2024 (compared to an increase of $0.9 million in the same period last year).

Significant uses of cash from operating activities in the first thirty-nine weeks of 2024 included (1) a $35.9 million decrease in accrued expenses and other long-term liabilities (compared to a $45.5 million decrease in the first thirty-nine weeks of 2023) due primarily to payments of operating lease liabilities; (2) a $17.9 million decrease in accounts payable (compared to a $2.3 million decrease in the first thirty-nine weeks of 2023); and (3) a $2.3 million increase in prepaid and other current assets (compared to a $1.7 million dollar decrease in the same period last year).

Cash Flows From Investing Activities. Cash used in investing activities was $7.6 million in the first thirty-nine weeks of 2024 compared to cash used of $10.1 million in the same period last year. Cash used in the first thirty-nine weeks of fiscal 2024 and fiscal 2023 consisted of purchases of property and equipment.

Cash Flows From Financing Activities. Cash used in financing activities was $0.9 million in the first thirty-nine weeks of 2024 compared to $0.9 million in the same period last year. Cash used in the first thirty-nine weeks of fiscal 2024 and fiscal 2023 consisted of payments to settle withholding taxes on restricted stock that vested.

Cash Requirements and Commitments

Our principal cash requirements consist of (1) inventory purchases; (2) capital expenditures to invest in our infrastructure; and (3) operational needs, including salaries, occupancy costs, taxes and other operating costs. We may also use cash to fund any share repurchases, make any required debt payments and satisfy other contractual obligations. Historically, we have met these cash requirements using cash flow from operations and short-term trade credit. As of November 2, 2024, our contractual commitments for operating leases totaled $225.2 million (with $49.4 million due within 12 months). See Note 10 to the Financial Statements for more information regarding lease commitments.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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There have been no material changes to the Critical Accounting Policies outlined in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risk during the thirty-nine weeks ended November 2, 2024 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

Item 4. Controls and Procedures.

We have carried out an evaluation under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 2, 2024 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.

Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended November 2, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We are from time to time involved in various legal proceedings incidental to the conduct of our business, including claims by customers, landlords, employees or former employees. Once it becomes probable that we will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, we establish appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, we are not aware of any legal proceedings pending or threatened against us that we expect to have a material adverse effect on our financial condition, results of operations or liquidity.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors described under the section “ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds.

Information on Share Repurchases

The Company did not repurchase any shares in the third quarter of 2024. At November 2, 2024, $50.0 million remained available under the Company’s stock repurchase authorization.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.


3.1		Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 7, 2018).

3.2		Certificate of Change of Registered Agent and/or Registered Office (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 31, 2022).

3.3		Fourth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 31, 2022).

3.4		Certificate of Elimination of the Series A Junior Participating Preferred Stock of Citi Trends, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2024).

10.1		Employment Non-Compete, Non-Solicit and Confidentiality Agreement, between Citi Trends, Inc. and Kyle Koenig dated as of March 24, 2018.+*

31.1		Certification of Principal Executive Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+

31.2		Certification of Principal Financial Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+

32.1		Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+†

101		Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.+

104		Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.+

+ Included herewith.

* Indicates management contract for compensatory plan or arrangement.

† Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934 and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, and the undersigned also has signed this report in her capacity as the Registrant’s Chief Financial Officer (Principal Financial Officer).


	CITI TRENDS, INC.

Date: December 11, 2024

	By:	/s/ Heather Plutino
	Name:	Heather Plutino
	Title:	Chief Financial Officer