Citi Trends Plans to Cut Jobs - Analyst Blog
29 9월 2011 - 2:36AM
Zacks
Citi Trends Inc. (CTRN), in its streak to
optimize its financial performance, recently announced string of
measures to boost its growth prospects by dipping investment in
sections of the company that no longer contributes significantly to
its growth.
As the quarterly loss per share in second-quarter 2011 widens 17
folds to 69 cents compared with the prior-period loss of 4 cents,
the company has decided to slash 40 jobs at its stores,
distribution centers and corporate office.
Citi Trends anticipates that staff reductions will result in an
annualized savings of $3.5 million, while incurring an expenditure
of approximately $800,000 against severance charges in
third-quarter 2011. Including 4,900 employees in its stores and 600
in distribution and corporate office, currently the company has a
total workforce of approximately 5,500.
Moreover, Citi Trends has also decided to open fewer stores than
it planned before. The company will now add a total of
approximately 55 new stores in fiscal 2011 and approximately 5
stores in fiscal 2012.
At the end of second-quarter 2011, the company was planning to
open new stores in the range of 55 to 60 during fiscal 2011. As of
July 30, 2011, Citi Trends had 482 stores.
Prior Story
Citi Trends recently reported a disappointing second-quarter
2011 results. Net loss per share came in at 69 cents versus 4 cents
in the year-ago quarter, primarily due to negative comparable store
sales. Moreover, net loss was higher than the Zacks Consensus
Estimate of 64 cents per share.
During the quarter, Citi Trends recorded a 0.9% year-over-year
growth in net sales to $130.2 million, missing the Zacks Consensus
Estimate of $131.0 million. Comparable store sales dropped 11.9% in
the second quarter of fiscal 2011.
Due to uncertainty hovering around sales, the company rolled
back its earlier earnings guidance range of $1.25 to $1.35 per
share for fiscal 2011. The company decided not to provide any
guidelines unless it receives any near-term catalysts to drive
sales.
Citi Trends operates in a highly fragmented specialty retail
sector and faces intense competition from larger off-price rivals,
such as TJX Companies Inc. (TJX) and Ross
Stores Inc. (ROST), mass merchants including
Wal-Mart Stores Inc. (WMT) as well as smaller
specialty retailers, such as Rainbow and Dots.
Additionally, the company also competes with local off-price
specialty stores, regional chains as well as traditional department
stores. Consequently, this may dent the company's future growth
prospects.
Citi Trends currently has a Zacks #5 Rank, implying a short-term
Strong Sell rating on the stock. Moreover, our long-term
recommendation on the stock is Underperform.
CITI TRENDS INC (CTRN): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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TJX Companies (NYSE:TJX)
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