Citi Trends Inc.(CTRN) recently reported an increase of 1.3% in total sales to $172.0 million for the thirteen-week period ended January 29, 2011 compared with $169.8 million in the thirteen-week period ended January 30, 2010, but failed to surpass the Zacks Consensus Estimate of $190.0 million.
However, comparable store sales plunged 11.4% during thirteen-week period. Month-wise, comparable store sales declined 2.6% in November, 10.7% in December and 23.5% in January. The decrease in comparable store sales in December 2010 is attributable to delay in government’s distribution of unemployment benefits, heavy competition with one of the company’s major competitors and a significant fall in sales of one of its products, long denim. During January 2011, the comparable store sales declined due to delay in tax refund to the company’s customers by Internal Revenue Service department.
For the full fiscal 2010, Citi reported an increase of 12.8% in its total sales to $622.5 million compared with $551.9 million in fiscal 2009, but failed to outshine the Zacks Consensus Estimate of $641.0 million. However, comparable store sales inched down 1.8% for full fiscal 2010.
Cato Corporation(CATO), a major competitor of Citi Trends, reported an increase of 1% in comparable store sales for fourth quarter ended January 29, 2011, while total sales inched up 3% to $224.3 million compared with $217.7 million in the prior-year quaretr. In fiscal 2010, Cato’s total sales climbed 5% to $913.9 million from $872.1 million in fiscal 2009. For fiscal 2009, comparable store sales surged 3%.
Citi Trends’ another competitor, Ross Stores Inc. (ROST), reported an increase of 8% in its sales to $2.145 billion for the fourth quarter of 2010 compared with $1.980 billion in the previous fiscal quarter. Comparable store sales accelerated 4% compared with an increase of 10% in the fourth quarter of fiscal 2009. In fiscal 2010, Ross’ total sales climbed 9% to $7.866 billion from $7.184 billion in fiscal 2009. For fiscal 2009, comparable store sales climbed 5%.
Citi Trends is expecting earnings of $1.30 per diluted share for fiscal 2010, which is in line with the Zacks Consensus Estimate. The full-year earnings anticipation is based on the negative fourth-quarter comparable store sales.
Citi Trends Inc. is one of the top value-priced retailers of urban fashion apparel and accessories including domestically familiar brands, private-label products and a limited collection of home decor items. The company principally targets fashion conscious African-American customers, offering branded merchandise at about 30% to 70% discount compared with the regular prices of department and specialty stores. The private label products are offered under brands, such as Diva Blue, Red Ape and Lil Miss Hollywood. Citi Trends merchandise, which includes fashion sportswear for men, women and children; accessories such as handbags, jewelry, footwear, belts, intimate apparel and sleepwear as well as products for newborns, infants, toddlers and kids.
Citi Trends Inc. maintains a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ rating. Our long-term recommendation on the stock remains ‘Neutral’.
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