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Citi Trends, Inc., a leading specialty value retailer catering primarily to African American and multicultural families, released its financial results for the second quarter of fiscal 2024, ending August 3, 2024. The company reported total sales of $176.6 million, reflecting a 1.7% increase from the same period in 2023. Despite the sales growth, comparable store sales decreased by 1.7% on a shifted 13-week basis. The company’s gross margin dropped to 31.1%, a decline from 38.2% in Q2 2023, primarily driven by $9.4 million in markdowns from a strategic inventory reset and $4.0 million in shrinkage from physical inventory results and accrual rate adjustments.
Citi Trends reported a net loss of $18.4 million, or $16.2 million on an adjusted basis, compared to a net loss of $5.0 million, or $4.9 million adjusted, in the same quarter last year. Adjusted EBITDA loss was $17.2 million, which included $13.4 million of transition expenses, compared to an adjusted EBITDA loss of $3.1 million in Q2 2023. The company maintained a healthy cash position, ending the quarter with $59.3 million in cash, no debt, and no borrowings under its $75 million credit facility.
The retailer opened one new store, closed three, and remodeled 15 during the quarter, ending Q2 with 597 locations. Notably, 23% of the stores are now in the CTx format. Citi Trends also implemented significant measures to reset its inventory composition, focusing on offering fresher, more balanced product assortments by marking down slow-selling and aged inventory.
In terms of shrink control, the company upgraded store talent, updated in-store theft prevention equipment, leveraged exception reporting, and established a third-party restitution program. Citi Trends also revised its return and associate discount policies to enhance control.
Looking ahead, Citi Trends expects flat to low-single-digit growth in comparable store sales for the second half of fiscal 2024. However, total sales are anticipated to decline mid-single digits due to the absence of a 53rd week and planned store closures. The company anticipates a second half gross margin of around 39% and expects positive EBITDA ranging from $0.5 million to $2.5 million. The year-end cash balance is expected to be between $60 million and $70 million, with full-year capital expenditures reduced by 35% from prior expectations to approximately $13 million.