Citi Trends, Inc. (NASDAQ: CTRN) today announced that it expects to report a net loss in a range of $0.60 to $0.70 per diluted share for the second quarter ending July 30, 2011.
Citi Trends’ sales have continued to be much lower than expected. Comparable store sales were down 12% in both May and June and are expected to be down approximately 11% for the full second quarter. Additionally, the weakness in sales has necessitated higher clearance markdowns, further contributing to the quarterly loss. In light of the existing uncertain sales environment, the Company will not undertake to estimate results for the full fiscal 2011 year at this time.
Commenting on the announcement, David Alexander, Citi Trends’ President and Chief Executive Officer, said, “To respond to the current economic challenges faced by our customers, we have undertaken a number of tactical changes in merchandising to attempt to drive sales. In particular, we analyzed entry price points, price/value relationships and the number of price points for every major category in every apparel division. From this analysis, we have already taken steps to lower our entry price points for a number of very significant, very visible items such as ladies, girls and boys long denim. In addition, we are reducing the number of price points in many categories which will allow for much more impactful price point signage in our stores. For the Holiday period, we have created a plan for a significant increase in our gift offering and for the first time we will participate in the Friday after Thanksgiving in a meaningful way. In addition to these steps, we should benefit from the fact that the comparisons in the third and fourth quarters are less challenging.”
“Despite the difficult environment that we are currently in, we continue to be very optimistic about the Company’s future. We have a great niche, a great customer relationship and a very strong balance sheet with approximately $80 million of cash and investments and no debt. We do believe, however, that our current sales trend dictates a more conservative approach to operating costs and capital expenditures. As a result, for the remainder of 2011 we plan to only open the new stores for which we have already committed, reducing our projection from approximately 65 to 70 new stores to 55 to 60 new stores,” Mr. Alexander concluded.
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