CTRN 10-Q
Citi Trends Inc (CTRN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☐ | Non-Accelerated Filer ☐ |
Smaller Reporting Company | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 17, 2020 the registrant had
CITI TRENDS, INC.
FORM 10-Q
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | |
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Citi Trends, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
| August 1, |
| February 1, |
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| 2020 |
| 2020 |
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Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | | $ | | ||||
Short-term investment securities |
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Inventory |
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Prepaid and other current assets |
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Income tax receivable |
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Total current assets |
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Property and equipment, net of accumulated depreciation of $ |
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Operating lease right of use assets | | | ||||||
Long-term investment securities |
| — |
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Deferred income taxes |
| |
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Other assets |
| |
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Total assets | $ | | $ | |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | | $ | | ||||
Operating lease liabilities | | | ||||||
Accrued expenses |
| |
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Accrued compensation |
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Layaway deposits |
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Total current liabilities |
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Noncurrent operating lease liabilities |
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Revolving credit facility | | — | ||||||
Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: | ||||||||
Common stock, $ |
| |
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Paid in capital |
| |
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Retained earnings |
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Treasury stock, at cost; |
| ( |
| ( | ||||
Total stockholders’ equity |
| |
| | ||||
Commitments and contingencies (note 8) | ||||||||
Total liabilities and stockholders’ equity | $ | | $ | | ||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
3
Citi Trends, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
Twenty-Six Weeks Ended | ||||||
August 1, | August 3, | |||||
| 2020 |
| 2019 | |||
$ | | $ | | |||
Cost of sales (exclusive of depreciation) | ( | ( | ||||
Selling, general and administrative expenses | ( | ( | ||||
Depreciation | ( | ( | ||||
Asset impairment | ( | ( | ||||
(Loss) income from operations | ( | | ||||
Interest income | | | ||||
Interest expense | ( | ( | ||||
(Loss) income before income taxes | ( | | ||||
Income tax benefit (provision) | | ( | ||||
Net (loss) income | $ | ( | $ | | ||
Basic net (loss) income per common share | $ | ( | $ | | ||
Diluted net (loss) income per common share | $ | ( | $ | | ||
Weighted average number of shares outstanding | ||||||
Basic | | | ||||
Diluted | | | ||||
Citi Trends, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
Thirteen Weeks Ended | |||||||
August 1, | August 3, | ||||||
| 2020 |
| 2019 |
| |||
$ | | $ | | ||||
Cost of sales (exclusive of depreciation) | ( | ( | |||||
Selling, general and administrative expenses | ( | ( | |||||
Depreciation | ( | ( | |||||
Asset impairment | — | ( | |||||
Income from operations | | | |||||
Interest income | | | |||||
Interest expense | ( | ( | |||||
Income before income taxes | | | |||||
Income tax provision | ( | ( | |||||
Net income | $ | | $ | | |||
Basic net income per common share | $ | | $ | | |||
Diluted net income per common share | $ | | $ | | |||
Weighted average number of shares outstanding | |||||||
Basic | | | |||||
Diluted | | | |||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
4
Citi Trends, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Twenty-Six Weeks Ended | |||||||
August 1, | August 3, | ||||||
| 2020 |
| 2019 |
| |||
Operating activities: | |||||||
Net (loss) income | $ | ( | $ | | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Depreciation | | | |||||
Non-cash operating lease costs | | | |||||
Asset impairment | | | |||||
Loss on disposal of property and equipment | | | |||||
Deferred income taxes | ( | | |||||
Insurance proceeds related to operating activities | — | | |||||
Non-cash stock-based compensation expense | | | |||||
Changes in assets and liabilities: | |||||||
Inventory | | | |||||
Prepaid and other current assets | ( | ( | |||||
Other assets | ( | ( | |||||
Accounts payable | ( | ( | |||||
Accrued expenses and other long-term liabilities | ( | ( | |||||
Accrued compensation | | ( | |||||
Income tax receivable/payable | | ( | |||||
Layaway deposits | | | |||||
Net cash provided by operating activities | | | |||||
Investing activities: | |||||||
Sales/redemptions of investment securities | | | |||||
Purchases of investment securities | ( | ( | |||||
Purchases of property and equipment | ( | ( | |||||
Insurance proceeds related to investing activities | — | | |||||
Net cash provided by (used in) investing activities | | ( | |||||
Financing activities: | |||||||
Borrowings under revolving credit facility | | — | |||||
Repayments of revolving credit facility | ( | — | |||||
Cash used to settle withholding taxes on the vesting of nonvested restricted stock | ( | ( | |||||
Dividends paid to stockholders | ( | ( | |||||
Repurchases of common stock | ( | ( | |||||
Net cash provided by (used in) financing activities | | ( | |||||
Net increase in cash and cash equivalents | | | |||||
Cash and cash equivalents: | |||||||
Beginning of period | | | |||||
End of period | $ | | $ | | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | | $ | | |||
Cash payments of income taxes | $ | | $ | | |||
Supplemental disclosures of non-cash investing activities: | |||||||
Accrual for purchases of property and equipment | $ | | $ | | |||
See accompanying notes to the condensed consolidated financial statements (unaudited).
5
Citi Trends, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)
Common Stock | Paid in | Retained | Treasury Stock | ||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Total | |||||||||||||
Balances — February 1, 2020 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
Vesting of nonvested restricted stock units | — | | — | — | — | — | | ||||||||||||
Issuance of nonvested shares under incentive plan |
| | — | — | — | — | — | — | |||||||||||
Forfeiture of nonvested shares |
| ( | — | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | — | | ||||||||||||
Net share settlement of nonvested shares and restricted stock units |
| ( | — | ( | — | — | — | ( | |||||||||||
Repurchase of common stock | — | — | — | — | | ( | ( | ||||||||||||
Dividends paid to stockholders ($ | — | — | — | ( | — | — | ( | ||||||||||||
Net loss | — | — | — | ( | — | — | ( | ||||||||||||
Balances — May 2, 2020 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
Issuance of nonvested shares under incentive plan |
| | — | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | — | | ||||||||||||
Net share settlement of nonvested shares and restricted stock units |
| ( | — | ( | — | — | — | ( | |||||||||||
Net income | — | — | — | | — | — | | ||||||||||||
Balances — August 1, 2020 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
Common Stock | Paid in | Retained | Treasury Stock | ||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Total | |||||||||||||
Balances — February 2, 2019 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
Adoption of lease accounting standard | — | — | — | ( | — | — | ( | ||||||||||||
Vesting of nonvested restricted stock units | — | | — | — | — | — | | ||||||||||||
Issuance of nonvested shares under incentive plan |
| | — | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | — | | ||||||||||||
Net share settlement of nonvested shares and restricted stock units |
| ( | ( | ( | — | — | — | ( | |||||||||||
Repurchase of common stock | — | — | — | — | | ( | ( | ||||||||||||
Dividends paid to stockholders ($ | — | — | — | ( | — | — | ( | ||||||||||||
Net income | — | — | — | | — | — | | ||||||||||||
Balances — May 4, 2019 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
Issuance of nonvested shares under incentive plan |
| | — | — | — | — | — | — | |||||||||||
Forfeiture of nonvested shares |
| ( | — | — | — | ||||||||||||||
Stock-based compensation expense | — | — | | — | — | — | | ||||||||||||
Net share settlement of nonvested shares and restricted stock units |
| ( | — | ( | — | — | — | ( | |||||||||||
Repurchase of common stock | — | — | — | — | | ( | ( | ||||||||||||
Dividends paid to stockholders ($ | — | — | — | ( | — | — | ( | ||||||||||||
Net income | — | — | — | | — | — | | ||||||||||||
Balances — August 3, 2019 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | |||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
6
Citi Trends, Inc.
Notes to the Condensed Consolidated Financial Statements (unaudited)
August 1, 2020
1. Significant Accounting Policies
Basis of Presentation
Citi Trends, Inc. (collectively referred to herein with its wholly owned subsidiary as the “Company”) is a value-priced retailer of fashion apparel, accessories and home goods for the entire family. As of August 1, 2020, the Company operated
The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of February 1, 2020 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended (the “2019 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2019 Form 10-K. Operating results for the twenty-six weeks ended August 1, 2020 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business and changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from the novel coronavirus (“COVID-19”) pandemic.
Fiscal Year
The following contains references to fiscal years 2020 and 2019, which represent fiscal years ending or ended on January 30, 2021 and February 1, 2020, respectively. Fiscal 2020 and 2019 both have 52-week accounting periods.
Recently Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduced an expected credit loss model for the impairment of financial assets measured at amortized costs. The model replaces the incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized cost. The Company adopted ASU No. 2016-13 on February 2, 2020. The adoption of the new standard did not have a material impact to the Company’s consolidated financial position, results of operations or cash flows.
2. Impact of the COVID-19 Pandemic
In December 2019, COVID-19 emerged and spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. After closely monitoring and taking into consideration the guidance from federal, state and local governments, the Company temporarily closed all of its retail store locations and distribution centers effective March 20, 2020. Beginning April 24, 2020, the Company started to reopen stores in select states in accordance with state and local government guidelines. As of July 18, 2020, the Company safely reopened all of its stores and distribution centers.
The temporary closure of the Company’s stores has had, and may continue to have, an adverse impact on the Company’s financial condition, results of operations and liquidity. In the first quarter of 2020, the Company took several steps to increase its cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, including (i) the drawdown of $
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. The provisions include technical corrections to tax depreciation methods for qualified improvement property which allow for accelerated depreciation, an employee retention tax credit and the deferral of the employer portion of social security deposits. Under the CARES Act, the Company deferred payment of approximately $
7
3. Cash and Cash Equivalents/Concentration of Credit Risk
For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits.
4. Earnings per Share
Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive.
The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. The Company includes as assumed proceeds the amount of compensation cost attributed to future services and not yet recognized. For the twenty-six weeks ended August 1, 2020 and August 3, 2019, there were
The following table provides a reconciliation of the weighted average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share:
Twenty-Six Weeks Ended | ||||
| August 1, 2020 |
| August 3, 2019 | |
Weighted average number of common shares outstanding | | | ||
Incremental shares from assumed vesting of nonvested restricted stock | — | | ||
Weighted average number of common shares and common stock equivalents outstanding | | | ||
Thirteen Weeks Ended | ||||
| August 1, 2020 |
| August 3, 2019 | |
Weighted average number of common shares outstanding | | | ||
Incremental shares from assumed vesting of nonvested restricted stock | | — | ||
Weighted average number of common shares and common stock equivalents outstanding | | | ||
5. Impairment of Assets
If facts and circumstances indicate that a long-lived asset or operating lease right-of-use asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value. Non-cash impairment expenses consisted of the following (in thousands):
Twenty-Six Weeks Ended | Thirteen Weeks Ended | ||||||||||
August 1, 2020 |
| August 3, 2019 |
| August 1, 2020 |
| August 3, 2019 | |||||
Operating lease right-of-use asset impairment | $ | $ | $ | — | $ | ||||||
Store asset impairment | — | ||||||||||
Total asset impairment | $ | $ | $ | — | $ | ||||||
8
6. Revolving Credit Facility
On October 27, 2011, the Company entered into a
7. Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
For the twenty-six weeks ended August 1, 2020 and August 3, 2019, the Company utilized the discrete effective tax rate method to determine its tax expense based upon interim period results. The Company concluded that the use of the discrete method was more appropriate than the annual effective tax rate method because the full-year tax rate is not reliably predictable.
The effective income tax rate was
On March 27, 2020, the CARES Act was enacted into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses (“NOLs”) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the prior tax years, reduce the business interest limitation under section 163(j), and fix the qualified improvement property regulations in the 2017 Tax Cuts and Jobs Act. As a result of the CARES Act, to the extent that there are taxable losses at the end of fiscal 2020, the Company believes that it will be able to obtain a tax refund from the carryback of federal NOLs.
8. Commitments and Contingencies
The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, landlords, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.
9. Stock Repurchase Program and Cash Dividends
Repurchases of Common Stock
In November 2018, the Company’s board of directors approved a program that authorized the repurchase of up to $
9
In November 2019, the Company’s board of directors approved a new program that authorized the repurchase of up to $
On March 13, 2020, the Company’s board of directors approved another new program that authorized the repurchase of up to $
Dividends
On February 18, 2020, the Company’s board of directors declared a dividend of $
10. Revenue
Revenue Recognition
The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise.
Sales Returns
The Company allows customers to return merchandise for up to
Disaggregation of Revenue
The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers.
In the following table, the Company’s revenue from contracts with customers is disaggregated by major product line. The percentage of net sales related to each classification of its merchandise assortment was approximately:
Twenty-Six Weeks Ended | Thirteen Weeks Ended | |||||||||||
August 1, |
| August 3, |
| August 1, |
| August 3, |
| |||||
2020 |
| 2019 |
| 2020 |
| 2019 |
| |||||
Accessories | % | % | % | % | ||||||||
Ladies' | % | % | % | % | ||||||||
Children's | % | % | % | % | ||||||||
Men's | % | % | % | % | ||||||||
Home | % | % | % | % | ||||||||
11. Leases
The Company leases its retail store locations and certain office space and equipment. Leases for store locations are typically for a term of
10
Total lease cost is comprised of operating lease costs, short-term lease costs and variable lease costs, which include rent paid as a percentage of sales, common area maintenance, real estate taxes and insurance for the Company’s real estate leases.
| Twenty-Six Weeks Ended | |||||
August 1, 2020 | August 3, 2019 | |||||
Operating lease cost |
| $ | | $ | | |
Variable lease cost |
| |
| | ||
Short term lease cost |
| |
| | ||
Total lease cost | $ | | $ | | ||
In response to the impact of the COVID-19 pandemic on the Company’s operations, the Company suspended certain lease payments under its existing lease agreements. During the suspension of payments, the Company continued to recognize expenses and liabilities for lease obligations and corresponding right-of-use assets on the balance sheet in accordance with the applicable accounting guidance. The Company is engaging in ongoing discussions with landlords regarding the potential restructuring of lease payments and rent concessions. As of August 1, 2020, the Company negotiated contractual rent concessions on certain leases in the form of early renewals, rent deferrals and rent abatements. The Company has elected to account for qualifying COVID-19 related rent concessions as if they were part of the enforceable rights and obligations under the existing lease agreements, as permitted by the updated guidance provided by the FASB in April 2020. As a result of this election, the Company recognized rent abatement credits of approximately $
Future minimum lease payments as of August 1, 2020 are as follows (in thousands):
Fiscal Year |
| Lease Costs |
| |
Remainder of 2020 |
| $ | | |
2021 | | |||
2022 |
| | ||
2023 |
| | ||
2024 |
| | ||
Thereafter |
| | ||
Total future minimum lease payments | | |||
Less: imputed interest | ( | (1) | ||
Total present value of lease liabilities | $ | | (2) | |
Certain operating leases provide for fixed monthly rents, while others provide for contingent rents computed as a percentage of net sales and others provide for a combination of both fixed monthly rents and contingent rents computed as a percentage of net sales.
Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts):
| Twenty-Six Weeks Ended | |||||
August 1, 2020 | August 3, 2019 | |||||
Cash paid for operating leases |
| $ | | $ | | |
Right of use assets obtained in exchange for new operating lease liabilities | $ | | $ | | ||
|
| |||||
Weighted average remaining lease term (years) - operating leases |
|
| ||||
Weighted average discount rate - operating leases | ||||||
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, capital allocation expectations or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “could,” “will likely result,” or “will continue” and similar words and expressions generally identify forward-looking statements, although not all forward-looking statements contain such language. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.
The factors that may result in actual results differing from such forward-looking information include, but are not limited to: the ongoing COVID-19 pandemic and associated containment and remediation efforts; the potential negative impacts of COVID-19 on the global economy and foreign sourcing; the impacts of COVID-19 on the Company’s financial condition, business operation and liquidity, including the potential closure of any of the Company’s retail stores and distribution centers; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Company’s ability to gauge fashion trends and changing consumer preferences; changes in consumer spending on apparel; changes in product mix; interruptions in suppliers’ businesses; a deterioration in general economic conditions, whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory), or other factors; the results of pending or threatened litigation; temporary changes in demand due to weather patterns; seasonality of the Company’s business; delays associated with building, opening and operating new stores; delays associated with building, opening or expanding new or existing distribution centers; and other factors described in the section titled “Item 1A. Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended, and in Part II, “Item 1A. Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.
Overview
We are a value-priced retailer of fashion apparel, accessories and home goods for the entire family. Our merchandise offerings are designed to appeal to the fashion preferences of value-conscious consumers, particularly African-Americans. We operated 579 stores in both urban and rural markets in 33 states as of August 1, 2020.
COVID-19 Pandemic
In December 2019, a novel coronavirus (“COVID-19”) emerged and spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. After closely monitoring and taking into consideration the guidance from federal, state and local governments, we temporarily closed all of our retail store locations and distribution centers effective March 20, 2020. Beginning April 24, 2020, we started to reopen stores in select states in accordance with state and local government guidelines. As of July 18, 2020, we safely reopened all of our stores. As we reopened our stores, we took numerous measures to protect the health of our associates, customers and communities we serve. Such measures include implementing occupancy limits, providing personal protective equipment for our associates and customers, encouraging social distancing, adjusting our processes for merchandise returns and implementing new cleaning procedures. We have incurred, and expect we will continue to incur, incremental costs for personal protective equipment, including masks, gloves and hand sanitizer for our associates and customers, as well as additional cleaning supplies.
The temporary closure of our stores has had, and may continue to have, an adverse impact on our financial condition, results of operations and liquidity as described in more detail below. In the first quarter of 2020, we took several steps to increase our cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, including (i) the drawdown
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of $43.7 million in principal amount under the revolving credit facility on March 20, 2020 and an amendment to the revolving credit facility to extend the term to August 2021; (ii) temporary furloughs of substantially all store and distribution center personnel and a significant portion of the corporate staff, with employee benefits for eligible employees continued through the temporary furloughs; (iii) temporary tiered salary reductions for management level corporate employees and a reduction to the cash portion of non-employee director fees; and (iv) extensions of payment terms with vendors and suppliers. Other measures taken by the Company to mitigate the impact of the pandemic that began in the first quarter of 2020 and are continuing include (i) negotiating rent concessions with landlords; (ii) executing substantial reductions in operating expenses, store occupancy costs, capital expenditures and other costs; and (iii) temporarily suspending share repurchases and dividend payments.
We continue to navigate through macro changes in the consumer landscape, including unpredictable and non-traditional back-to-school timing and learning methods and the ongoing uncertainties stemming from the COVID-19 pandemic. As a result, in the first several weeks following the end of the second quarter, our customer traffic as measured via comparable store transactions has been soft. However, we are encouraged by the stability of our non-back-to-school related businesses and the increase in average basket size relative to the same weeks of the prior year. We believe that once we are beyond the traditional back-to-school selling season that customer traffic trends will normalize. We will continue to monitor and evaluate the COVID-19 pandemic and work to respond appropriately to the impacts on our business, including those on our customers, vendors and the communities we serve.
Accounting Periods
The following discussion contains references to fiscal years 2020 and 2019, which represent fiscal years ending or ended on January 30, 2021 and February 1, 2020, respectively. Fiscal 2020 and fiscal 2019 both have 52-week accounting periods. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto contained in Part 1, Item 1 of this report.
Results of Operations
The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. The nature of the Company’s business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year, as a result of changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from the COVID-19 pandemic. Furthermore, as a result of the closure of our stores due to the COVID-19 pandemic for at least five weeks beginning on March 20, 2020, comparisons of expense ratios and year-over-year trends are not a meaningful way to evaluate our operating results for the twenty-six and thirteen weeks ended August 1, 2020.
Key Operating Statistics
We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. We define a comparable store as a store that has been opened for an entire fiscal year. Therefore, a store will not be considered a comparable store until its 13th month of operation at the earliest or until its 24th month at the latest. As an example, stores opened in fiscal 2019 and fiscal 2020 are not considered comparable stores in fiscal 2020. Relocated and expanded stores are included in the comparable store sales results. We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability. In addition to sales, we measure cost of sales as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate overall performance of each individual store. Finally, we monitor corporate expenses against budgeted amounts.
Twenty-Six Weeks Ended August 1, 2020 and August 3, 2019
Net Sales. Net sales decreased $55.6 million, or 14.3%, to $332.3 million in the twenty-six weeks ended August 1, 2020 from $387.9 million in the twenty-six weeks ended August 3, 2019. The decrease in sales was due to closing all 574 of our stores as a result of the COVID-19 pandemic from March 20 until April 23, at which point we began to gradually reopen certain stores, with all stores safely reopened as of July 18, 2020. In the first quarter of 2020, net sales decreased $88.9 million, or 43.4%. Prior to the onset of the COVID-19 pandemic, comparable store sales increased 3.1% from the beginning of the first quarter through March 7, 2020. In the second quarter of 2020, net sales increased $33.4 million, or 18.2%, with an increase in comparable store sales of 32.2% for reopened stores from their respective opening dates.
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Cost of Sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) decreased $31.4 million, or 12.9%, to $211.5 million in the twenty-six weeks ended August 1, 2020 from $242.9 million in the twenty-six weeks ended August 3, 2019. Cost of sales as a percentage of sales increased to 63.7% in the first twenty-six weeks of fiscal 2020 from 62.6% in the same period of fiscal 2019 due primarily to an increase of 250 basis points in merchandise markdowns, as more markdowns were taken in the first quarter of 2020 due to our store closures related to the COVID-19 pandemic. The increase in markdowns was partially offset by an improvement of 130 basis points in the initial mark-up, combined with slight improvements in freight costs and shrinkage.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $14.7 million, or 11.7%, to $111.7 million in the twenty-six weeks ended August 1, 2020 from $126.4 million in the twenty-six weeks ended August 3, 2019 due primarily to a $13.3 million decrease in payroll expenses as a result of associate furloughs and government credits under the CARES Act, as well as decreases in variable costs related to the temporary closures of our stores and distribution centers. These decreases were partially offset by $1.2 million of incremental supplies costs related to COVID-19 for personal protective equipment and cleaning supplies, as well as the impact on expenses of opening 20 new stores since the second quarter of last year. As a percentage of sales, selling, general and administrative expenses increased to 33.6% in the first twenty-six weeks of fiscal 2020 from 32.6% in the first twenty-six weeks of fiscal 2019.
Depreciation. Depreciation expense increased $0.7 million, or 7.1%, to $9.9 million in the first twenty-six weeks of fiscal 2020 from $9.2 million in the first twenty-six weeks of fiscal 2019.
Asset Impairment. Impairment charges related to an underperforming store totaled $0.3 million in the first twenty-six weeks of fiscal 2020, comprised of $0.2 million for an operating lease right-of-use asset and $0.1 million for leasehold improvements and fixtures and equipment. In the first twenty-six weeks of fiscal 2019, impairment charges related to underperforming stores totaled $0.5 million, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.2 million for an operating lease right-of-use asset.
Income Tax Benefit/Expense. Income tax benefit was $0.4 million in the first twenty-six weeks of fiscal 2020 compared to income tax expense of $1.4 million in the first twenty-six weeks of fiscal 2019, as a result of a pretax loss in the first twenty-six weeks of fiscal 2020. For the first twenty-six weeks of 2020, we utilized the discrete effective tax rate method to determine tax expense based upon interim period results, as the full-year tax rate is not reliably predictable.
Net Loss/Income. Net loss was $1.0 million in the first twenty-six weeks of fiscal 2020 compared to net income of $8.2 million in the first twenty-six weeks of fiscal 2019 due to the factors discussed above.
Thirteen Weeks Ended August 1, 2020 and August 3, 2019
Net Sales. Net sales increased $33.4 million, or 18.2%, to $216.2 million in the second quarter of 2020 from $182.8 million in the second quarter of 2019. The increase in sales was due primarily to strong comparable store sales performance upon reopening our stores that were temporarily closed due to COVID-19 and the opening of 20 new stores since the second quarter of last year. Comparable store sales for reopened stores from their respective opening dates increased 32.2% in the second quarter of 2020 relative to the same dates of last year.
Cost of sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) increased $12.5 million, or 10.9%, to $127.1 million in the second quarter of 2020 from $114.6 million in the second quarter of 2019. Cost of sales as a percentage of sales decreased to 58.8% in the second quarter of 2020 from 62.7% in the second quarter of last year due to an improvement of 290 basis points in the core merchandise margin (initial mark-up, net of markdowns) and an improvement of 100 basis points in freight costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $5.4 million, or 8.5%, to $57.6 million in the second quarter of 2020 from $63.0 million in last year’s second quarter. The decrease was due primarily to a $5.3 million decrease in payroll expenses as a result of associate furloughs and government credits under the CARES Act as well as decreases in variable costs related to the temporary closures of our stores and distribution centers. These decreases were partially offset by $1.2 million of incremental supplies costs related to COVID-19 for personal protective equipment and cleaning supplies and the impact on expenses of opening 20 new stores since the second quarter of last year.
Depreciation. Depreciation expense increased $0.3 million, or 7.1%, to $4.9 million in the second quarter of 2020 from $4.6 million in the second quarter of 2019.
Asset Impairment. There were no impairment charges in the second quarter of 2020. In the second quarter of 2019, impairment charges related to underperforming stores totaled $0.5 million, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.2 million for an operating lease right-of-use asset.
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Income Tax Expense. Income tax expense was $6.2 million in the second quarter of 2020 compared to $0.1 million in the second quarter of 2019 due to an increase in pretax income. For the second quarter of 2020, we utilized the discrete effective tax rate method to determine tax expense based upon interim period results, as the full-year tax rate is not reliably predictable.
Net Income. Net income increased $19.5 million to $19.9 million in the second quarter of 2020 from $0.4 million in the second quarter of 2019 due to the factors discussed above.
Liquidity and Capital Resources
Our cash requirements are primarily for working capital and capital expenditures for stores, distribution infrastructure and information systems. We also use cash to repurchase stock under our stock repurchase program and to pay dividends. Historically, we have met these cash requirements using cash flow from operations and short-term trade credit. As further noted below, due to the COVID-19 pandemic and related economic disruptions, on March 20, 2020, we drew down $43.7 million on our revolving credit facility. During the second quarter of 2020, we repaid $2.1 million of the borrowings. We expect to be able to meet future cash requirements for at least the next 12 months with cash flow from operations, short-term trade credit, existing balances of cash and cash equivalents, and borrowings under our revolving credit facility. We intend to carefully monitor and manage our cash position in light of ongoing conditions and results of operations.
Cash Flows From Operating Activities. Net cash provided by operating activities was $55.4 million in the twenty-six weeks ended August 1, 2020 compared to $20.1 million in the twenty-six weeks ended August 3, 2019. Sources of cash in the first half of 2020 included a net loss adjusted for non-cash expenses such as depreciation, non-cash operating lease costs, asset impairment, loss on disposal of property and equipment, insurance proceeds from operating activities, deferred income taxes and stock-based compensation expense, totaling $33.4 million (compared to $43.1 million in the first half of 2019). In addition, during the first half of 2020, inventory decreased $43.7 million (compared to a $7.4 million decrease in the first half of 2019).
Significant uses of cash from operating activities in the first half of 2020 were (1) a $13.2 million decrease in accrued expenses and other long-term liabilities (compared to a $22.6 million decrease in the first half of 2019) due primarily to payments of operating lease liabilities; and (2) a $2.2 million decrease in accounts payable (compared to a $2.2 million decrease in the first half of 2019) related to the inventory decrease discussed above.
Cash Flows From Investing Activities. Cash provided by investing activities was $37.4 million in the first half of 2020 compared to cash used of $3.3 million in the first half of 2019. Sales and redemptions of investment securities, net of purchases, provided cash of $43.3 million and $4.5 million in the first half of 2020 and 2019, respectively. Cash used for purchases of property and equipment totaled $5.8 million and $8.4 million in the first half of 2020 and 2019, respectively.
Cash Flows From Financing Activities. Cash provided by financing activities was $34.0 million in the first half of 2020 compared to cash used of $7.2 million in the first half of 2019. In the first half of 2020, net borrowings under the revolving credit facility provided cash of $41.6 million, while cash used for the repurchase of common stock and dividends paid to shareholders totaled $7.1 million. In the first half of 2019, cash used for the repurchase of common stock and dividends paid to shareholders totaled $6.5 million.
Cash Requirements
Our principal sources of liquidity consist of: (i) cash and cash equivalents (which equaled $146.7 million as of August 1, 2020); (ii) short-term trade credit; (iii) cash generated from operations on an ongoing basis as we sell our merchandise inventory; and (iv) a revolving credit facility with a $50.0 million credit commitment (with borrowings of $41.6 million as of August 1, 2020). Trade credit represents a significant source of financing for inventory purchases and arises from customary payment terms and trade practices with our vendors. Historically, our principal liquidity requirements have been for working capital and capital expenditure needs.
As part of the actions we have taken to increase our cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, as described above in “COVID-19 Pandemic,” on March 20, 2020, we borrowed $43.7 million in principal amount under our revolving credit facility. During the second quarter of 2020, we repaid $2.1 million of the borrowings. In addition, on May 12, 2020, we entered into an amendment to our revolving credit facility to, among other things, extend the maturity date to August 18, 2021. In addition to the drawdown on our credit facility, we have reduced our operating expenses, capital expenditure plans and inventory receipts, as appropriate. The Company previously announced a share repurchase program on March 13, 2020, but no repurchases have been made under such program as of the date of this filing. The Company has temporarily suspended any repurchases as of March 23, 2020 and plans to continue to monitor the situation based on business conditions and regard for its financial liquidity needs. The Company has also suspended the payment of quarterly dividends.
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Based on these actions and our current expectations regarding the impact of COVID-19, we believe that our existing sources of liquidity will be sufficient to fund our operations for at least the next 12 months. We will continue to monitor the situation and, if necessary, take further action to reduce our expenses and preserve our financial flexibility during these uncertain times.
Recent Accounting Pronouncements
See discussion of Recent Accounting Pronouncements in Note 1 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this report.
Critical Accounting Policies
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
There have been no other material changes to the Critical Accounting Policies outlined in the Company’s Annual Report on Form 10-K for the year ended February 1, 2020, as amended.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our market risk during the twenty-six weeks ended August 1, 2020 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended February 1, 2020, as amended.
Item 4. Controls and Procedures.
We have carried out an evaluation under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 1, 2020 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.
Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 1, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are from time to time involved in various legal proceedings incidental to the conduct of our business, including claims by customers, landlords, employees or former employees. Once it becomes probable that we will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, we establish appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, we are not aware of any legal proceedings pending or threatened against us that we expect to have a material adverse effect on our financial condition, results of operations or liquidity.
Item 1A. Risk Factors.
Other than as set forth below, there have been no material changes to the Risk Factors described under the section “ITEM 1A. RISK FACTORS” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended.
The ongoing COVID-19 pandemic has impacted our financial and operating performance and we are unable to predict the extent to which the pandemic and related effects will continue to impact our business.
Beginning in the first quarter and continuing into the second quarter of 2020, there has been a widespread global impact from the COVID-19 pandemic, and our business has been, and will continue to be, impacted by the pandemic and any resulting economic consequences. In response to COVID-19, the Company temporarily closed all of its retail stores and distribution centers as of March 20, 2020 and temporarily closed its corporate and buying offices with associates working remotely where possible. As of July 18, 2020, the Company has safely reopened all of its stores and distribution centers. In reopening its stores, the Company is following all applicable state and local health protocols, including providing personal protective equipment to employees and implementing social distancing practices as required.
The temporary closure of all of our retail stores and distribution centers and other factors resulting from the pandemic have had an adverse impact on our financial condition, results of operations and liquidity in fiscal 2020. While the ultimate global and economic impact of the COVID-19 pandemic remains highly uncertain, we expect that it could continue to have an adverse impact on our results of operations and liquidity; the operations of our suppliers, vendors and customers; and on our employees as a result of quarantines, the re-closure of any or all of our stores and distribution centers, and travel and other restrictions for at least the remainder of 2020. The extent to which COVID-19 will impact our business operations, consolidated financial results and liquidity will depend on future developments which are highly uncertain and cannot be predicted, including the duration and scope of the pandemic; our ability to adjust our business strategies to mitigate the impact of the pandemic; the re-closure of any or all of our retail stores or distribution centers; the negative impact the pandemic has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; changes in consumer shopping patterns and the impact on traditionally strong sales periods, including back-to-school, Christmas and other holidays; the ability of our suppliers, vendors and customers to successfully address the impacts of the pandemic; actions taken by governments, businesses and individuals in response to the pandemic; and how quickly economies recover after the COVID-19 pandemic subsides. As a result of the current level of uncertainty over the economic and operational impacts stemming from the COVID-19 pandemic, the impact on our business cannot be reasonably estimated at this time.
Our sales could decline and our store operations could be disrupted as a result of general economic and other factors outside of our control, such as changes in consumer spending patterns and declines in employment levels.
Downturns, or the expectation of a downturn, in general economic conditions, including the effects of unemployment levels, salaries and wage rates, interest rates, levels of consumer debt, inflation in food and energy prices, taxation (including delays in the distribution of tax refunds), government stimulus, consumer confidence, and other macroeconomic factors, could adversely affect consumer spending patterns, our sales and our results of operations. Consumer confidence may also be affected by domestic and international political or social unrest (including related protests or disturbances), acts of war or terrorism, natural disasters, public health emergencies like the COVID-19 pandemic, or other significant events outside of our control. These and other social, political and economic factors that contribute to consumer unease or damage to our stores, may lead to a decrease in spending by consumers or disrupt our store operations, which may negatively impact our business, financial condition and results of operations. Also, because apparel generally is a discretionary purchase, declines in consumer spending patterns may have a more negative effect on apparel retailers than some other retailers. In addition, since many of our stores are located in the southeastern United States, our operations are more susceptible to regional factors than the operations of our more geographically diversified competitors. Therefore, any adverse economic conditions that have a disproportionate effect on the southeastern United States could have a greater negative effect on our sales and results of operations than on retailers with a more geographically diversified store base.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Information on Share Repurchases
On November 22, 2019, the Company’s board of directors approved a $25.0 million stock repurchase program. This repurchase program was completed in February 2020. On March 13, 2020, the Company announced that its board of directors approved a $30.0 million stock repurchase program. Due to the current economic uncertainty stemming from the COVID-19 pandemic, the Company has temporarily suspended any repurchases as of March 23, 2020 and plans to continue to monitor the situation based on business conditions and regard for its financial liquidity needs.
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Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
3.1 | ||
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101 | The following financial information from Citi Trends, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2020, formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of August 1, 2020 and February 1, 2020, (ii) the Condensed Consolidated Statements of Operations for the twenty-six and thirteen week periods ended August 1, 2020 and August 3, 2019, (iii) the Condensed Consolidated Statements of Cash Flows for the twenty-six week periods ended August 1, 2020 and August 3, 2019, and (iv) Notes to the Condensed Consolidated Financial Statements.* | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* |
* Included herewith.
† Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934 and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, and the undersigned also has signed this report in his capacity as the Registrant’s Vice President of Finance (Principal Financial and Accounting Officer).
CITI TRENDS, INC. | ||
Date: September 8, 2020 | ||
By: | /s/ Jason B. Moschner | |
Name: | Jason B. Moschner | |
Title: | Vice President of Finance | |
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