By  on November 25, 2009

Surprising analysts with a third-quarter profit, urban apparel specialist Citi Trends Inc. said it expects to maintain its positive same-store sales momentum during the holiday season.

For the three months ended Oct. 31, the Savannah, Ga.-based specialty retailer generated net income of $606,000, or 4 cents a diluted share, versus a year-ago loss of $687,000, or 5 cents. Sales rose 21.4 percent, to $127.4 million from $104.9 million, and increased 6.3 percent on a comparable-store basis. Comps were up 19 percent for accessories, 7 percent for men’s wear and 6 percent for women’s wear.

Analysts surveyed by Yahoo Finance, on average, expected Citi Trends to lose 1 cent a share on sales of $121 million.

On Tuesday, shares fell 27 cents, or 1 percent, to $27.72.

Gross margin improved to 37.4 percent of sales, from 36.9 percent in the year-ago quarter, as selling, general and administrative expenses grew more slowly than sales, expanding 20.4 percent to $79.7 million, and shrinkage declined.

The company attributed the increases to a strong back-to-school season and depressed year-ago results because of “abnormally high gasoline and food prices.”

During a conference call, David Alexander, chief executive officer, noted same-store sales were down 1 percent in November because of a slowdown in outerwear. If outerwear dollars had been flat, overall comps would be up 2 percent.

“Most of our markets have experienced a very warm November,” he said. “In the few areas that we have seen cold snaps, our outerwear selection has been very well-received. So we believe that this business will come around.”

The firm projected full-year earnings per share of between $1.30 and $1.35, implying fourth-quarter earnings of between 72 cents and 77 cents, based on its anticipated comp gain of 1 to 3 percent during the current quarter. However, analysts had estimated fourth-quarter earnings of 78 cents a diluted share.

For the nine months, net income expanded 15.5 percent to $8.5 million, or 58 cents, while sales added 11.8 percent, to $382.1 million.

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