On Mar 20, 2015, Zacks Investment Research upgraded Citi Trends Inc. CTRN to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Our optimistic view on Citi Trends is based on the company’s robust fourth-quarter and fiscal 2014 results and a favorable fiscal 2015 outlook, released on Mar 13. The company’s sales improved nearly 15% year over year to $181.1 million and came in line with the Zacks Consensus Estimate. Sales gained from strong performance in all five business segments and benefits from tax refund-driven sales in January instead of February.
Comps in the quarter rose 13.9% from the year-ago quarter driven by an increase in the number of transactions to over 13%, a 1% pick up in average unit sales and flat average number of items per transaction.
Citi Trends’ adjusted earnings per share of 31 cents marked a significant improvement from 10 cents reported in the prior-year quarter. Moreover, quarterly earnings were ahead of the Zacks Consensus Estimate of 24 cents.
We believe that the company’s strategic initiatives, such as better utilization of floor area, improvisation of merchandise margins and efficient inventory management, aided this significant turnaround.
Going into fiscal 2015, the company expects to retain its ongoing comps-growth trend as all of its businesses remain strong. Additionally, management intends to open 10–15 stores, relocate or expand 7–10 stores and renovate 20–25 stores in the current fiscal year.
Other Stocks to Consider
Investors interested in the apparel-shoe industry may also consider Express Inc. EXPR, American Eagle Outfitters Inc. AEO and DSW Inc. DSW. While Express sports a Zacks Rank #1, American Eagle and DSW have a Zacks Rank #2 (Buy).
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