Citi Trends Tops Q3 Sales but Misses EPS, Raises Full-Year Outlook

In its third-quarter fiscal 2025 report, Citi Trends, Inc. (NASDAQ: CTRN) showcased strong sales performance, surpassing revenue expectations but falling short on earnings per share (EPS). The company also provided an optimistic outlook for the remainder of the fiscal year.

Sales Surge 10% as EPS Falls Short of Forecasts

Citi Trends reported total sales of $197.1 million for the third quarter of fiscal 2025, a 10.1% increase from the same period in 2024. This figure exceeded the expected revenue of $187.33 million, marking a significant achievement for the company. Comparable store sales grew by 10.8%, contributing to a two-year stack growth of 16.5%. This growth was driven primarily by increased customer traffic and a positive response to the company’s product offerings, including children’s, men’s, and basic apparel divisions.

Despite the impressive sales figures, Citi Trends reported an EPS of $-0.86, which fell short of the anticipated $-0.79. The company’s net loss for the quarter was $6.9 million, slightly better than the previous year’s loss of $7.2 million. This shortfall in EPS can be attributed to increased selling, general, and administrative (SG&A) expenses, which rose to $79.3 million from $74.7 million in the prior year. The increase in SG&A expenses was due to higher sales processing costs and incremental incentive compensation.

The company’s gross margin stood at 38.9%, a slight decline of 90 basis points compared to the third quarter of 2024. This decrease was primarily due to the pull-forward of freight expenses from the fourth quarter, aimed at balancing the holiday workload in distribution centers. Despite these challenges, Citi Trends managed to maintain its gross margin in line with its internal operating plan.

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Raised 2025 Outlook Signals Confidence in Turnaround Strategy

Looking ahead, Citi Trends has raised its fiscal 2025 guidance, reflecting confidence in its ongoing business transformation and market position. The company now expects full-year comparable store sales to rise by high-single digits, reaching the upper end of its previous outlook. Additionally, the gross margin is anticipated to expand by approximately 230 basis points compared to 2024, also hitting the high end of earlier projections.

Citi Trends aims to achieve full-year EBITDA between $10 million and $12 million, a substantial improvement of $24 million to $26 million over 2024. This optimistic outlook is supported by the company’s strategic initiatives to enhance operational processes and capture growth opportunities. The company is also planning to open three new stores and remodel 62 existing locations by the end of the fiscal year, demonstrating its commitment to expanding its footprint.

For the fourth quarter, Citi Trends expects comparable store sales to increase by high-single digits, with a gross margin ranging from 40% to 41%. SG&A expenses are projected to be approximately $82 million, while the fourth-quarter EBITDA is anticipated to be between $10 million and $12 million. These projections indicate a continued focus on driving sales growth and improving operational efficiency as the company navigates the competitive retail landscape.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.