Citi Trends Inc.(CTRN) recently reported sluggish fiscal 2010 fourth-quarter results. The company reported a net income of $9.4 million compared with $11.3 million in the year-ago quarter. Net income per share came in at 52 cents versus earnings per share of 78 cents in the year-ago quarter. However, earnings marginally beat the Zacks Consensus Estimate of 51 cents per share. Adjusted earnings for the quarter came in at 64 cents a share.
For fiscal 2010, the company reported earnings per share of $1.32 compared with $1.36 in 2009. Earnings beat the Zacks Consensus Estimate of $1.30 per share. Adjusted earnings for the quarter came in at $1.44 per share.
During the quarter, Citi Trends recorded a 1.3% year-over-year growth in net sales to $172.0 million, missing the Zacks Consensus Estimate of $202 million. Comparable store sales dropped 11.4% in the fourth quarter of fiscal 2010.
Citi Trends’ gross profit logged a growth of 2.0% year over year to $66.9 million, mainly due to higher sales. Gross margin came in at 38.9% compared with 38.6% in prior-year quarter. Selling, general and administrative expenses increased 7.0% year over year. Accordingly, the company posted a fall of 16.1% in operating income to $14.1 million compared with $16.8 million in the year-ago period.
Citi Trends ended the year with a debt-free balance sheet, and cash and cash equivalents of $69.2 million compared with $62.9 million in 2009. Shareholders’ equity at the end of the quarter was $204.8 million compared with $181.3 million in the year-ago period.
The company expects earnings in the range of $1.40 to $1.50 per share for fiscal 2011 on same-store sales increase of 2%.
Citi Trends is a value-priced retailer of urban fashion apparel and accessories including nationally recognized brands, private-label products and has a limited assortment of home décor items. The company currently operates 460 stores across 27 states in the Southeast, Mid-Atlantic and Midwest regions as well as in the states of Texas and California.
Citi Trends has a sound, zero-debt balance sheet with a robust cash horde. This offers the company the financial flexibility to drive future top-line expansion.
However, the company operates in a highly fragmented specialty retail sector and faces intense competition from larger off-price rivals, such as The TJX Companies Inc. (TJX) and Ross Stores Inc. (ROST), and mass merchants including Wal-Mart Stores Inc. (WMT) and Kmart.
We currently have a short-term Zacks #5 Rank (Strong Sell rating) and a long-term Neutral recommendation on the company.
CITI TRENDS INC (CTRN): Free Stock Analysis Report
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