Citi Trends, Inc. reported third‑quarter fiscal 2025 results that included $197.1 million in revenue, a 10.1% year‑over‑year increase and 10.8% growth in comparable‑store sales. The company operated 593 neighborhood‑based stores, marking the fifth consecutive quarter of comparable‑store growth and a two‑year comparable‑store growth of 16.5%.
Gross margin for the quarter fell 90 basis points to 38.9% from 39.9% a year earlier. The decline was largely attributable to a freight‑timing shift that moved a portion of freight expense from the fourth quarter into the third, coupled with a stronger prior‑year margin that benefited from an inventory reset and unusually low markdowns.
Adjusted EBITDA loss narrowed to $2.9 million from $3.3 million YoY, driven by lower freight costs and improved inventory efficiency. The company’s focus on inventory optimization and tighter freight management helped reduce the loss, while the continued investment in store remodels and AI‑driven inventory allocation added a modest cost component.
Segment performance highlighted a robust back‑to‑school season, with children’s, men’s, and basic apparel categories contributing the most to sales growth. The company’s core African‑American customer base continued to drive demand, and the expansion of its e‑commerce platform helped capture additional traffic during the peak season.
Full‑year guidance was raised to a high‑single‑digit range for comparable‑store sales growth, a 230‑basis‑point expansion in gross margin, and an adjusted EBITDA range of $10 million to $12 million—an improvement of $24 million to $26 million over 2024. The guidance reflects management’s confidence in sustaining momentum through the holiday season and the effectiveness of its transformation initiatives.
CEO Ken Seipel emphasized disciplined execution, noting that the company delivered “another quarter of strong results” and that the back‑to‑school season was “fuelled by continued momentum in our Children’s, Mens and Basic apparel divisions.” He also reiterated the company’s target of $45 million in EBITDA by fiscal 2027, a $60 million improvement from 2024, underscoring the long‑term trajectory of the turnaround plan.
Investors reacted positively to the earnings release, citing the revenue beat and the raised full‑year guidance as key drivers of the market’s favorable response. The company’s ability to exceed revenue expectations while tightening costs reinforced confidence in its strategic direction.
Headwinds for the quarter included the freight‑timing‑related margin compression and a $3.2 million increase in SG&A tied to incentive compensation. Tailwinds remained strong, with the back‑to‑school season, broad‑based momentum across store volume groups, and the continued rollout of AI‑enabled inventory management contributing to the company’s resilience.
Looking ahead, Citi Trends is focused on completing store remodels, expanding its AI inventory platform, and deepening its connection with its core customer base. The company’s 2027 EBITDA target and the ongoing transformation strategy signal a clear path to sustained profitability and market share growth.
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