Inventory controls and improving sales grew fourth-quarter net income at Citi Trends Inc. 11.9 percent, leapfrogging the urban-inspired retailer ahead of analysts’ expectations.
The company also issued full-year guidance that beat Wall Street’s estimates, helping to send its shares up 2.7 percent to $30.75 at the end of trading Friday.
The Savannah, Ga.-based firm said that for the three months ended Jan. 30, it recorded a profit of $11.3 million, or 78 cents a diluted share, compared with income of $10.1 million, or 69 cents a share, in the year-ago quarter. Revenue during the quarter expanded 15.8 percent to $169.8 million from $146.6 million. Wall Street anticipated earnings of 75 cents a share on sales of $169.4 million, Yahoo said.
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Comparable-store sales were up 1.2 percent, as quarterly gross margin, which benefited from a reduction in inventory, totaled 38.6 percent of sales, versus 38.1 percent last year.
On a conference call, R. David Alexander, president and chief executive officer, said that while he was “pleased to have ended 2009 with strong financial results and to have begun 2010 with a strong sales performance,” the company kicked off the new year with some “disappointing results.”
January comps fell 8 percent, which the retailer attributed to a continuation of last year’s trend towards income tax refunds being “received by its customers later due to a move away from refund-anticipated loans.” Weather also was a factor in weak sales, but the company assured analysts and investors that February, when comps were up 10 percent, was robust due to a “transfer of business” from the previous month. Double-digit increases have continued into March, but the company said it anticipates negative comps in April due to the shift to an earlier Easter.
For the year, Citi Trends posted a 13.4 percent increase in profit, or $1.36 a share, versus a year-ago profit of $17.4 million, or $1.20 a share. Sales ascended 13 percent to $551.9 million, from $488.2 million in 2008.
Citi Trends estimated EPS in 2010 of $1.60 to $1.65 a share, well above analysts’ earlier estimates of $1.33, as comps expand 3 percent to 4 percent. The company expects to open 19 stores during the first quarter, and roughly 55 during the year. It currently operates 409 stores in 24 states.