US-based leading specialty value retailer Citi Trends, Inc has reported a decrease in total sales by 19.8 per cent to $795 million in fiscal 2022 (FY22) compared to the previous year, but an increase of 1.7 per cent compared to FY19. The company’s gross margin for FY22 was 39.1 per cent, lower than the 41.1 per cent in FY21, but higher than the 38 per cent reported in FY19.

Operating income for FY22 was $75.3 million, or $11.4 million as adjusted, compared to $79.5 million in FY21 and $18.5 million in FY19, or $20.6 million as adjusted. Meanwhile, net income was reported at $58.9 million, or $9.4 million as adjusted, compared to $62.2 million in FY21 and $16.5 million in FY19, or $18.2 million as adjusted, the company said in a press release.

Specialty value retailer Citi Trends reported a 19.8 per cent decline in total sales to $795 million for FY22 but a year-on-year increase of 1.7 per cent compared to FY19. For Q4 FY22, total sales decreased by 13.1 per cent compared to Q4 FY21. The company plans to open 5 to 10 new stores, with the goal of ending FY23 with approximately 600 stores.

Adjusted EBITDA for FY22 was $32 million, compared to $99.9 million in FY21 and $39.2 million in FY19. Diluted EPS was $7.17, or $1.14 as adjusted, compared to $6.91 in FY21 and $1.41 in FY19, or $1.56 as adjusted.

In FY22, Citi Trends opened 12 new stores, remodelled 35 stores, and closed 10 stores, ending the year with 611 locations. The year-end total dollar inventory decreased by 14.6 per cent compared to FY21.

For the fourth quarter (Q4) of FY22, the company reported a decrease in total sales by 13.1 per cent compared to Q4 FY21, and a decrease of 0.7 per cent compared to Q4 FY19, with comparable store sales declining by 14.4 per cent. Gross margin was reported at 39.5 per cent, while selling, general, and administrative expense declined by 11.3 per cent compared to Q4 FY21 and increased by 4.3 per cent compared to Q4 FY19.

Operating income for Q4 FY22 was $7.4 million, or $7.5 million as adjusted, compared to $12.6 million in Q4 FY21 and $11.3 million in Q4 FY19, or $11.8 million as adjusted. Net income was reported at $6.6 million, compared to $9.8 million in Q4 FY21 and $9.4 million in Q4 FY19, while adjusted EBITDA was $12.3 million, compared to $17.8 million in Q4 FY21 and $16.6 million in Q4 FY19. Diluted EPS was reported at $0.81, or $0.83 as adjusted, compared to $1.16 in Q4 FY21 and $0.84 in Q4 FY19, or $0.88 as adjusted.

Looking ahead to FY23, Citi Trends, Inc expects first-quarter total sales to decline by approximately low double digits to mid-teens compared to the first quarter of FY22, with an operating loss for the quarter.

Total sales in FY23 are expected to be in the range of negative low single-digits to positive low single-digits as compared to FY22. Gross margin is estimated to remain in the high thirties driven by continued inventory control and freight management. EBITDA in FY23 is expected to be in the range of $20 million to $30 million. The company plans to open 5 to 10 new stores, remodel 25 to 30 stores, and close 10 to 15 underperforming stores as part of its ongoing fleet optimisation, with the goal of ending FY23 with approximately 600 stores, the release added.

“I am pleased to report that we delivered on every aspect of our stated guidance for the fourth quarter and the second half of 2022. During a highly challenging economic environment, especially for low-income families, our annual sales were above 2019 levels at a healthy gross margin of 39.1 per cent, and we successfully reduced operating expenses by 9 per cent versus last year. Our teams leveraged our flexible operating model and executed our strategic priorities including optimising our product mix, enhancing our in-store experience and investing in our infrastructure,” said David Makuen, chief executive officer.

Fibre2Fashion News Desk (DP)