Zacks Investment Research downgraded shares of Citi Trends Inc. (CTRN) from OUTPERFORM to NEUTRAL on October 08, 2012, with a target price of $13.00.
Following lower-than-expected second-quarter 2012 results, we have downgraded our long-term recommendation on Citi Trends to Neutral. Citi Trends' loss of $0.54 per share fared worse than the Zacks Consensus Estimate loss of $0.44. Moreover, the company's net sales of $132.3 million marginally fell short of the Zacks Consensus Estimate of $133 million. We believe the ongoing sluggishness in the economy and rising commodity prices may act as an impediment. Besides, intense competition from other retailers, seasonal nature of business, and risks associated with sourcing merchandise from developing countries may further undermine the company's growth prospects. However, we believe Citi Trends' extensive focus on store expansion strategy may provide an impetus. Further, the company has taken prudent steps to reduce inventory shrinkages, which we believe, will help it improve operational performance.
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