Citi Trends Still Underperforms - Analyst Blog
14 12월 2011 - 7:00PM
Zacks
We are maintaining our long-term
Underperform recommendation on Citi Trends Inc.
(CTRN) based on the company's disappointing third-quarter 2011
results.
Citi Trends' falling comparable
store sales, coupled with rising input costs and operating
expenses, battered the third-quarter 2011 results. The company
witnessed a quarterly loss of 38 cents per share that widened over
12 folds from the prior-period loss of 3 cents. The Zacks Consensus
Estimate for the quarter was a loss of 37 cents per share.
Moreover, due to uncertainty
hovering around sales, the company rolled back its earnings
guidance range of $1.25 to $1.35 per share for fiscal 2011. The
company decided not to provide any guidelines unless it finds any
near-term catalysts to drive sales.
Further, Citi Trends' business is
seasonal in nature and typically generates stronger sales during
fiscal first and fourth quarters, characterized by the spring and
holiday seasons. Therefore, the company is exposed to significant
risks if the seasons fail to deliver expected operating
performance.
Additionally, the company sources a
substantial portion of its merchandise from countries outside the
U.S, such as China and other countries in the Far East.
Accordingly, Citi Trends is vulnerable to political, social and
economic risks related to sourcing from these developing
countries.
Besides, the company operates in a
highly fragmented specialty retail sector and faces intense
competition from larger off-price rivals, such as The 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 operating performance.
Citi Trends is a leading
value-priced retailer of urban fashion apparel and accessories
including nationally recognized brands, private-label products and
a limited assortment of home décor items. The company primarily
targets fashion conscious African-American customers, offering
branded merchandise at a discount of 30% to 70% compared to the
regular prices of department and specialty stores.
Citi Trends currently has a Zacks
#5 Rank, implying a short-term Strong Sell rating on the stock.
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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