Citi Trends Inc. CTRN, an urban fashion apparel and accessories retailer, is slated to report fourth-quarter fiscal 2014 results on Feb 13. In the last quarter, it had posted a negative surprise of 14.3%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Citi Trends’ strategies such as better utilization of floor area, improvisation of merchandise margins and efficient inventory management have been helping the company to turn around its operating performance. The company appears to be optimistic about its future performance, given its solid comparable-store sales (comps), prospective benefits from its online business and efficient inventory management which is expected to augment gross margin. Also, management anticipates its accessories and home divisions to continue being the major contributors to its comps.
However, we believe a competitive retail environment and seasonal nature of the company’s business along with sluggish store growth plan may weigh on its performance in the upcoming quarter.
Earnings Whispers?
Our proven model does not conclusively show that Citi Trends is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Citi Trends is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 23 cents.
Zacks Rank: Citi Trends carries a Zacks Rank #1 (Strong Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
The Men’s Wearhouse Inc. MW has an Earnings ESP of +57.14% and a Zacks Rank #2 (Buy).
Genesco Inc. GCO has an Earnings ESP of +0.42% and a Zacks Rank #3 (Hold).
Nike Inc. NKE has an Earnings ESP of +1.18% and a Zacks Rank #3.
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