Citi Trends (CTRN) Q2 2025 earnings summary

Executive summary

• Total sales increased 1.7% year-over-year to $176.6 million in Q2 2024, with a calendar shift contributing $7.9 million to revenue, while comparable store sales declined 1.7%.

• Net loss widened to $18.4 million, or $16.2 million as adjusted, compared to $5.0 million in the prior year period.

• Strategic inventory reset and shrink mitigation actions were executed, resulting in $13.4 million in transition expenses.

• Expanded branded product offerings and opened relationships with over 20 national brands, with new products expected in Q4 and 2025.

• The company operated 597 stores in 33 states as of August 3, 2024, with ongoing fleet optimization and plans to close 10–15 underperforming stores in 2024.

Financial highlights

• Gross margin declined to 31.1% in Q2 2024, impacted by $9.4 million in markdowns and $4.0 million in shrink, versus 38.2% in Q2 2023.

• Adjusted EBITDA loss was $17.2 million, including $13.4 million in transition expenses.

• Adjusted SG&A expenses rose by $2.7 million, mainly from merit increases, higher advertising, and $1.4 million in CEO transition costs.

• Ended Q2 with $59.3 million in cash, no debt, and $134 million in liquidity.

• Inventory dollars were flat year-over-year at $135.0 million; packaway buys up 20%, now 23% of inventory.

Outlook and guidance

• Second half 2024 comparable store sales expected to be flat to up low single digits; total sales projected to decline mid-single digits due to last year's 53rd week and store closures.

• Second half gross margin expected at approximately 39%; EBITDA forecasted positive at $0.5–$2.5 million.

• Year-end cash expected at $60–$70 million, with capital expenditures of $13 million, down 35% from previous outlook.

• Management anticipates continued pressure on low-income families due to inflation and macroeconomic conditions.

• Store count expected to end fiscal 2024 at approximately 590 after 10–15 closures and 35 remodels.