Citi Trends Inc. stock is falling over 6 percent to this morning to $15 after the off-price retailer reported that its comparable sales dropped 2.7 percent in the first quarter.
The net income for the quarter was $8.72 million, or 60 cents a diluted share, a drop from $11.2 million, or 74 cents, a year ago. The FactSet estimate was for earnings of 76 cents per share.
Total sales for the quarter ending April 30 fell 0.6 percent to $193.7 million from last year’s $194.9 million and missing FactSet’s estimate for $198 million in sales. “Our apparel merchandise offering was not as compelling as it should have been,” said chief executive officer Jason Mazzola on the earnings call. “In ladies’ and kid’s, we did not have the right balance of fashion in core product and our values were not as exciting as they should have. These are both correctable issues with our flexible off-price buying model.”
Comparable sales fell 6 percent in February, then down 2 percent in March and finally rising 1 percent in April. The company said it was affected by the delay of tax refunds. “Comp-store sales for the first 10 days of the quarter dropped 35% as meaningful tax refunds didn’t start until February 10. This decrease proved to be too much to make up during the quarter,” said Mazzola.
Mazzola also added that inventories were in good shape heading into the second quarter. Total inventories are up 6 percent, in line with the strategy of increasing inventories by 4 to 7 percent.
The company opened five stores during the quarter with an additional four stores planned for the second quarter.
Looking ahead, Mazzola said that sandals look good for spring with interest in flip-flop and gladiator styles. Lace and crochet has also been popular and the company said it wished it had been more aggressive in buying these styles. he said, “We are working hard on these changes during the second quarter and coupled with an improved transition strategy from spring to fall. We believe we will deliver better results moving forward into the second and the third quarters.”