Citi Trends Q1 2025: Unraveling Conflicting Messages on Off-Price Strategy, EBITDA Goals, and Sales Performance

Off-price strategy and sales contribution, EBITDA target and sales dependency, closeout strategy and merchandising focus, sales performance and guidance, and comps and sales performance are the key contradictions discussed in Citi Trends' latest 2025Q1 earnings call.



Sales Growth and Profitability:
- Citi Trends reported sales growth of $15.4 million, or 8.3%, over the prior year in Q1 2025.
- The company also saw an increase in adjusted EBITDA by $6.2 million, with a sales to profit flow through of 40%.
- This was driven by gross margin expansion of 90 basis points and meaningful operating expense leverage of 220 basis points.

Customer Store Performance:
- Citi Trends achieved a comparable store sales growth of 9.9% over the prior year in Q1 2025.
- This growth was supported by an increase in customer traffic and mid single-digit transaction count growth.
- The company credited its strategic product initiatives and enhanced value offerings for this performance.

Strategic Growth and Expansion:
- As part of its growth initiatives, Citi Trends completed 36 store refreshes year-to-date, showing solid returns.
- The company is using data-driven approaches and geolocation studies to guide its expansion strategy.
- These efforts are aimed at optimizing its fleet and backfilling existing markets, enhancing market share in existing locations.

Inventory and Cost Management:
- Citi Trends reduced its total inventory dollars by 7.6% compared to the previous year at quarter-end.
- This was achieved through disciplined inventory management, which included a significant reduction in aged inventory.
- The company's merchant team successfully managed product costs, holding them flat despite tariff uncertainties.