Shares of Citi Trends Inc. picked up more than 4 percent in morning trading Wednesday after the value-oriented urban fashion retailer reported a combination of lower fourth-quarter sales and reduced inventories and markdowns.

For the three months ended Feb. 1, the Savannah, Ga.-based specialty chain reported that sales declined 10.5 percent, to $157.2 million from $175.7 million, with $12 million of prior-year amount attributable to the extra, 14th week of the 2012 calendar. Eliminating the extra week in 2012, comparable-store sales were down 3.5 percent.

The company said comps rose 0.4 percent in November before turning negative, with declines of 4.6 and 6.5 percent in December and January, respectively.

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Ed Anderson, chairman and chief executive officer, said, “We had expected more sales due to the positive momentum from the previous two quarters as well as a slight sales increase in November.”

The company was also caught shorthanded on seasonal merchandise. “Our strategy for cold weather product, particularly in ladies’ apparel, proved to be too conservative and we missed sales as a result,” Anderson added. “In addition, winter storms caused a large part of the January sales decrease.”

Better inventory management, however, allowed the company to reduce its clearance markdowns and lift margins. Cost of sales as a percentage of sales was down 400 basis points in the quarter, and inventory was down 10 percent at the end of the quarter despite the sales shortfall, Anderson noted, adding that the company is “positioned for a successful spring selling season.”

The inventory and margin insight helped lift shares of the stock 63 cents, or 4.1 percent, to $16.01 in morning trading Wednesday.

For the full year, sales declined 5 percent to $622.2 million from $654.7 million, with $21 million of the 2012 amount attributable to the extra week at the year’s start. Adjusted to eliminate the effect of the extra selling days in the earlier period, comps decreased 1.6 percent.

The company, which operates 505 stores in 29 states, will report fourth-quarter and full-year financial results on March 14.

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