Citi Trends, Inc. (NASDAQ:CTRN) traded 3.3% higher in premarket trading on Tuesday after reporting first-quarter results that comfortably surpassed Wall Street expectations, supported by continued progress in the retailer’s turnaround strategy.
The off-price apparel and accessories retailer delivered strong sales growth, improved profitability and robust customer demand, helping reinforce confidence in its outlook for fiscal 2026.
Earnings Far Exceed Analyst Forecasts
For the first quarter, Citi Trends reported adjusted earnings of $0.91 per share, significantly ahead of the consensus estimate of $0.24 per share.
Revenue reached $230.9 million, topping analyst expectations of $210.16 million and increasing 14.4% from $201.7 million in the same period a year earlier.
The results highlighted accelerating momentum across the business as the company continued to execute its strategic initiatives.
Comparable Sales Show Strong Growth
Comparable store sales rose 13.9% during the quarter, reflecting healthy consumer demand and improved store performance.
Management also noted that comparable sales increased 23.8% on a two-year stacked basis, demonstrating sustained growth over multiple periods.
The company attributed the performance to gains in both customer traffic and average basket size.
Profitability Improves Significantly
Net income climbed to $7.8 million during the quarter, compared with $0.9 million in the prior-year period.
On an adjusted basis, net income increased to $9.2 million from $2.4 million a year earlier.
Adjusted EBITDA more than doubled to $13.9 million, compared with $6.4 million in the first quarter of fiscal 2025.
The substantial improvement reflects stronger sales, improved merchandise performance and tighter expense management.
Management Highlights Turnaround Progress
Chief Executive Officer Ken Seipel said the company continues to build on the momentum established over the past year.
“We delivered an exceptional start to 2026, building on the momentum established last year,” said CEO Ken Seipel.
“Most importantly, our growth was driven by increased customer traffic and larger basket size, reinforcing that our customers are responding to our improved assortment, trend-right product, and compelling value.”
Management indicated that merchandise improvements and a stronger value proposition are helping attract shoppers and drive repeat business.
Full-Year Outlook Maintained
Following the strong first-quarter performance, Citi Trends reaffirmed its fiscal 2026 guidance.
The company continues to expect adjusted EBITDA of between $35 million and $40 million for the year.
The midpoint of the range, $37.5 million, would represent more than double the adjusted EBITDA generated during fiscal 2025.
Management also maintained its forecast for comparable store sales growth of 8% to 10% and total sales growth of 9% to 11%.
Margins and Balance Sheet Strengthen
Gross margin improved to 40.0%, representing an increase of 40 basis points compared with the prior year.
The company also achieved significant leverage on operating expenses, with adjusted selling, general and administrative expenses declining 250 basis points as a percentage of sales to 33.9%.
Citi Trends ended the quarter with a strong financial position, reporting $81.1 million in cash and no outstanding debt.
Investors Reward Strong Execution
The combination of better-than-expected earnings, double-digit comparable sales growth and reaffirmed full-year guidance was well received by investors.
With profitability improving, margins expanding and customer demand remaining healthy, Citi Trends appears to be making meaningful progress in its turnaround efforts while maintaining a strong balance sheet to support future growth initiatives.