Citi Trends Q2 Earnings Exceed Expectations with 8% Revenue Growth and 9.2% Comparable Store Sales Increase.

Citi Trends (CTRN) Q2 earnings beat expectations with an 8% revenue increase, surpassing estimates by $2.55 million. Comparable store sales rose 9.2% due to increased customer traffic. Analysts project a potential 13.14% increase in stock price with a consensus rating of "Outperform". The company has adjusted its fiscal 2025 outlook, projecting mid to high-single-digit sales growth with significant improvements in EBITDA.

Citi Trends (CTRN) has reported a robust second-quarter performance, with revenue increasing by 8% to $190.8 million, surpassing analysts' estimates by $2.55 million. The company's comparable store sales rose 9.2% due to higher customer traffic, marking the fourth consecutive quarter of growth in this key metric [1]. This performance is attributed to improved product alignment with consumer preferences and increased traffic [2].

Citi Trends also achieved a significant improvement in gross margin, reaching 40.0% for the quarter, up 8.9 percentage points from the previous year. This was driven by reduced markdowns, better inventory management, and increased full-price sales [2]. Despite a rise in selling, general, and administrative (SG&A) expenses to $78.9 million, the company reported a net income of $3.8 million for the quarter, compared to a loss of $18.4 million in the same period last year [1]. Earnings per share (EPS) came in at $0.46, far above the forecasted loss of $0.92 per share [3].

Based on its strong Q2 performance, Citi Trends has raised its full-year fiscal 2025 guidance. The updated outlook now anticipates mid to high-single-digit growth in comparable store sales for the full year, up from the previous mid-single-digit forecast [1]. The company also expects a gross margin expansion of approximately 210 to 230 basis points compared to 2024, supported by improved inventory management and supply chain efficiencies [2]. SG&A expenses are forecast to leverage by 60 to 90 basis points, reflecting better-than-expected business performance and optimized incentive compensation [2].

Citi Trends has also revised its EBITDA outlook, projecting full-year EBITDA between $7 million and $11 million, a $21 million to $25 million improvement over 2024 [2]. As part of its capital allocation strategy, the company plans to open three new stores, remodel approximately 60 locations, and close three underperforming stores. Capital expenditures are expected to range between $22 million and $25 million, underscoring the company’s commitment to long-term growth and operational efficiency [2].

The earnings report and guidance revision were well-received by investors, with shares of Citi Trends rising more than 2% following the release [3]. The stock’s positive reaction reflects growing confidence in the company’s ability to execute on its strategic initiatives, including store remodels, product assortment improvements, and digital integration [1]. Analysts have highlighted that Citi Trends’ ability to deliver both top-line and margin growth is a strong differentiator in a challenging retail environment [5].

Overall, the Q2 results and updated guidance reinforce Citi Trends’ strategic direction and its potential to create long-term value for shareholders. With continued momentum in comparable store sales and margin expansion, the company is positioned to benefit from its ongoing transformation and evolving consumer trends in the retail sector [5].

References:
[1] Citi Trends (CTRN) Reports Strong Q2 Results, Raises Fiscal Guidance (https://tokenist.com/citi-trends-ctrn-reports-strong-q2-results-raises-fiscal-guidance/)
[2] Citi Trends Posts 9.2% Comp Gain in Q2 (https://www.mitrade.com/insights/news/live-news/article-8-1069818-20250826)
[3] Citi Trends rises over 2% as Q2 earnings beat, raises full-year outlook (https://www.investing.com/news/earnings/citi-trends-rises-over-2-as-q2-earnings-beat-raises-fullyear-outlook-93CH-4210726)
[5] Citi Trends Swings To Net Profit In Q2; Boosts FY25 Outlook (https://www.rttnews.com/3569079/citi-trends-swings-to-net-profit-in-q2-boosts-fy25-outlook.aspx)