Citi Trends Inc

Previous wording

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions; impact of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; 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; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in our markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; risks related to cybersecurity, data privacy and intellectual property; temporary

Current wording

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions; impact of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and

Previous wording

changes in demand due to weather patterns; seasonality of the Company’s business; the results of pending or threatened litigation; delays associated with building, opening, remodeling 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, 2025 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.

Current wording

distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; 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; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in our markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; risks related to cybersecurity, data privacy and intellectual property; temporary changes in demand due to weather patterns; seasonality of the Company’s business; the results of pending or threatened litigation; delays associated with building, opening, remodeling 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, 2025 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.

Previous wording

As of August 2, 2025, we operated 590 stores in urban, suburban and rural markets in 33 states.

Current wording

As of November 1, 2025, we operated 593 stores in urban, suburban and rural markets in 33 states.

Previous wording

We expect that our operations in the short-term will continue to be influenced by general economic conditions, including on-going inflationary pressures, new tariff programs and changes in consumer sentiment. We continue to monitor the impacts on our business of unemployment levels, wage inflation, interest rates, inflation rates, housing costs, energy costs, consumer confidence, consumer perception of economic conditions, costs to source our merchandise and supply chain disruptions.

Current wording

We are monitoring trends in general economic conditions including inflation, tariffs, and changes in consumer sentiment. We also regularly monitor the impacts on our business of unemployment levels, wage inflation, interest rates, inflation rates, housing costs, energy costs, consumer confidence, consumer perception of economic conditions, costs to source our merchandise and supply chain disruptions.

Previous wording

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full

Current wording

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. 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 the seasonality of our business, and the current economic uncertainty.

Previous wording

*Net Sales.*Net sales increased $14.2 million, or 8.0%, to $190.8 million in the second quarter of 2025 from $176.6 million in the second quarter of 2024. Comparable store sales increased 9.2%, resulting in an increase of $16.0 million in sales. Net store opening and closing activity resulted in a net decrease of $1.9 million in sales.

Current wording

*Net Sales.*Net sales increased $18.0 million, or 10.1%, to $197.1 million in the third quarter of 2025 from $179.1 million in the third quarter of 2024. Comparable store sales increased 10.8%, resulting in an increase of $19.1 million in sales. Net store opening and closing activity resulted in a net decrease of $1.1 million in sales.

Previous wording

*Cost of Sales (exclusive of depreciation).*Cost of sales (exclusive of depreciation) decreased $7.1 million, or 5.8%, to $114.5 million in the second quarter of 2025 from $121.6 million in the second quarter of 2024. Cost of sales as a percentage of sales decreased to 60.0% in the second quarter of 2025 from 68.9% in the second quarter of 2024. The 890 basis-point decrease was primarily driven by a 580 basis points decrease in markdowns, a 190 basis points decrease in shrink, and a 120 basis points decrease in other cost of sales.

Current wording

*Cost of Sales (exclusive of depreciation).*Cost of sales (exclusive of depreciation) increased $12.7 million, or 11.7%, to $120.5 million in the third quarter of 2025 from $107.8 million in the third quarter of 2024. Cost of sales as a percentage of sales was 61.1% in the third quarter of 2025 and 60.2% in the third quarter of 2024. The 90 basis-point increase was primarily driven by a 50 basis points increase in markdowns, a 20 basis points increase in shrink, and a 20 basis points increase in other cost of sales. Cost of sales as a percentage of sales in the third quarter of 2024 was positively impacted by low markdowns and shrink following the second quarter of 2024 strategic inventory reset.

Previous wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses increased $5.1 million, or 6.9%, to $78.9 million in the second quarter of 2025 from $73.8 million in the second quarter of 2024. The increase was driven by corporate expense (primarily payroll and incremental incentive compensation) of $3.9 million and occupancy expense of $1.0 million. As a percentage of sales, Selling, general and administrative expenses decreased to 41.4% in the second quarter of 2025 from 41.8% in the second quarter of 2024, primarily driven by the aforementioned items.

Current wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses increased $4.6 million, or 6.2%, to $79.3 million in the third quarter of 2025 from $74.7 million in the third quarter of 2024. The increase was driven by corporate expenses (primarily incremental incentive compensation) of $2.9 million and store expenses of $1.7 million. As a percentage of sales, Selling, general and administrative expenses decreased to 40.3% in the third quarter of 2025 from 41.7% in the third quarter of 2024, primarily driven by the aforementioned items.

Previous wording

*Depreciation.*Depreciation expense decreased $0.2 million, or 4.9%, to $4.5 million in the second quarter of 2025 from $4.8 million in the second quarter of 2024 due to the sale of our corporate office building.

Current wording

*Depreciation.*Depreciation expense decreased $0.2 million, or 2.7%, to $4.6 million in the third quarter of 2025 from $4.8 million in the third quarter of 2024.

Previous wording

*Impairment.*Non-cash impairment expense related to underperforming stores totaled $0.2 million in the second quarter of 2025, comprised of leasehold improvements and fixtures and equipment. Non-cash impairment expense related to underperforming stores totaled $1.3 million in the second quarter of 2024, comprised of $0.7 million for leasehold improvements and fixtures and equipment, and $0.6 million for operating lease right of use assets.

Current wording

*Impairment.*We did not incur any non-cash impairment expense in the third quarter of 2025. Non-cash impairment expense related to underperforming stores totaled $0.6 million in the third quarter of 2024, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.3 million for operating lease right of use assets.

Previous wording

*Income Tax Benefit.*There was no income tax benefit in the second quarter of 2025 compared to a benefit of $6.0 million in the second quarter of 2024. For the second quarter of 2025 and the second quarter of 2024, we used the annual effective tax rate to determine income tax benefit based upon interim period results.

Current wording

*Income Tax Benefit.*There was no income tax benefit in the third quarter of 2025 compared to a benefit of $1.3 million in the third quarter of 2024. For the third quarter of 2025 and the third quarter of 2024, we used the annual effective tax rate to determine income tax benefit based upon interim period results.

Previous wording

*Net Income (Loss).*Net income was $3.8 million in the second quarter of 2025 compared to net loss of $18.4 million in the second quarter of 2024 due to the factors discussed above.

Current wording

*Net Income (Loss).*Net loss was $6.9 million in the third quarter of 2025 compared to net loss of $7.2 million in the third quarter of 2024 due to the factors discussed above.

Previous wording

*Net Sales.*Net sales increased $29.6 million, or 8.2%, to $392.5 million in the first twenty-six weeks of 2025 from $362.8 million in the same period of 2024. Comparable store sales increased 9.6%, resulting in an increase of $34.1 million in sales. Net store opening and closing activity resulted in a net decrease of $4.6 million in sales.

Current wording

*Net Sales.*Net sales increased $47.7 million, or 8.8%, to $589.6 million in the first thirty-nine weeks of 2025 from $541.9 million in the same period of 2024. Comparable store sales increased 10.0%, resulting in an increase of $53.2 million in sales. Net store opening and closing activity resulted in a net decrease of $5.5 million in sales.

Previous wording

*Cost of Sales (exclusive of depreciation).*Cost of sales (exclusive of depreciation) increased $0.5 million, or 0.2%, to $236.4 million in the first twenty-six weeks of 2025 from $235.9 million in the same period of 2024. Cost of sales as a percentage of sales decreased to 60.2% in the first twenty-six weeks of 2025 from 65.0% in the same period of 2024. The 480 basis-point decrease was driven by a 250 basis points decrease in markdowns, a 130 basis points decrease in shrink, and a 100 basis points decrease in other cost of sales.

Current wording

*Cost of Sales (exclusive of depreciation).*Cost of sales (exclusive of depreciation) increased $13.2 million, or 3.8%, to $356.9 million in the first thirty-nine weeks of 2025 from $343.7 million in the same period of 2024. Cost of sales as a percentage of sales decreased to 60.5% in the first thirty-nine weeks of 2025 from 63.4% in the same period of 2024. The 290 basis-point decrease was driven by a 150 basis points decrease in markdowns, an 80 basis points decrease in shrink, and a 60 basis points decrease in other cost of sales.

Previous wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses increased $5.8 million, or 3.9%, to $153.8 million in the first twenty-six weeks of 2025 from $148.0 million in the same period of 2024. The increase was primarily driven by stores selling and advertising expenses of $2.2 million, distribution center costs of $2.2 million, and corporate expenses (primarily incentive compensation) of $1.4 million. As a percentage of sales, Selling, general and administrative expenses decreased to 39.2% in the first twenty-six weeks of 2025 from 40.8% in the first twenty-six weeks of 2024, due to the aforementioned items.

Current wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses increased $10.4 million, or 4.7%, to $233.1 million in the first thirty-nine weeks of 2025 from $222.7 million in the same period of 2024. The increase was primarily driven by store expenses of $3.8 million, distribution center costs of $2.7 million, and corporate expenses (primarily incentive compensation) of $3.9 million. As a percentage of sales, Selling, general and administrative expenses decreased to 39.5% in the first thirty-nine weeks of 2025 from 41.1% in the first thirty-nine weeks of 2024, due to the aforementioned items.

Previous wording

*Depreciation.*Depreciation expense decreased $0.7 million, or 6.9%, to $8.9 million in the first twenty-six weeks of 2025 from $9.6 million in the same period last year due to the sale of the corporate office building.

Current wording

*Depreciation.*Depreciation expense decreased $0.8 million, or 5.5%, to $13.5 million in the first thirty-nine weeks of 2025 from $14.3 million in the same period last year primarily due to the sale of the corporate office building.

Previous wording

Impairment. Non-cash impairment expense related to underperforming stores totaled $0.3 million in the first twenty-six weeks of 2025, comprised of $0.2 million for leasehold improvements and fixtures and equipment, and $0.1 million for operating lease right of use assets. Non-cash impairment expense related to underperforming stores totaled $1.3 million in the first twenty-six weeks of 2024, comprised of $0.7 million for leasehold improvements and fixtures and equipment, and $0.6 million for operating lease right of use assets.

Current wording

Impairment. Non-cash impairment expense related to underperforming stores totaled $0.3 million in the first thirty-nine weeks of 2025, comprised of $0.2 million for leasehold improvements and fixtures and equipment, and $0.1 million for operating lease right of use assets. Non-cash impairment expense related to underperforming stores totaled $1.8 million in the first thirty-nine weeks of 2024, comprised of $0.9 million for leasehold improvements and fixtures and equipment, and $0.9 million for operating lease right of use assets.

Previous wording

Gain on sale of building. Gain on sale of the corporate office building was $11.0 million in the first twenty-six weeks of 2025.

Current wording

Gain on sale of building. Gain on sale of the corporate office building was $11.0 million in the first thirty-nine weeks of 2025.

Previous wording

*Income Tax Benefit.*There was no income tax benefit in the first twenty-six weeks of 2025 compared to $8.7 million in the first twenty-six weeks of 2024. For the second half of 2025 and the second half of 2024, we used the annual effective tax rate to determine income tax benefit based upon interim period results.

Current wording

*Income Tax Benefit.*There was no income tax benefit in the first thirty-nine weeks of 2025 compared to $10.0 million in the first thirty-nine weeks of 2024. We used the annual effective tax rate to determine income tax benefit based upon interim period results.

Previous wording

*Net Income (Loss).*Net income was $4.7 million in the first twenty-six weeks of 2025 compared to net loss of $21.8 million in the same period of 2024 due to the factors discussed above.

Current wording

*Net Income (Loss).*Net loss was $2.2 million in the first thirty-nine weeks of 2025 compared to net loss of $29.0 million in the same period of 2024 due to the factors discussed above.

Previous wording

Our capital allocation strategy is to maintain adequate liquidity to prioritize investments in opportunities to profitably grow our business and maintain current operations, then to return excess cash to stockholders through our repurchase programs. Our quarter-end cash and cash equivalents balance was$50.4 million compared to cash and cash equivalents of $59.3 million at the end of the second quarter last year. Until required for other purposes, we maintain cash and cash equivalents in deposit or money market accounts.

Current wording

Our capital allocation strategy is to maintain adequate liquidity to prioritize investments in opportunities to profitably grow our business and maintain current operations, then to return excess cash to stockholders through our repurchase programs. Our quarter-end cash and cash equivalents balance was$51.1 million compared to cash and cash equivalents of $38.9 million at the end of the third quarter last year. Until required for other purposes, we maintain cash and cash equivalents in deposit or money market accounts.

Previous wording

Our quarter-end inventory balance was $117.6 million, down 12.9% compared to $135.0 million at the end of the second quarter last year.

Current wording

Our quarter-end inventory balance was $123.5 million, down 3.1% compared to $127.5 million at the end of the third quarter last year.

Previous wording

Capital expenditures in the first twenty-six weeks of 2025 were $7.7 million, an increase of $2.1 million over the first twenty-six weeks of 2024, as we increased our investments in new stores and remodels. We anticipate capital expenditures in fiscal 2025 to be in the range of $22 million to $25 million, primarily for the opening of three new stores and remodeling existing stores, combined with ongoing investments in our systems.

Current wording

Capital expenditures in the first thirty-nine weeks of 2025 were $15.5 million, an increase of $7.9 million over the first thirty-nine weeks of 2024, as we increased our investments in new stores and remodels. We anticipate capital expenditures in fiscal 2025 to be approximately 23 million, primarily for the opening of three new stores and remodeling existing stores, combined with ongoing investments in our systems.

Previous wording

In the first half of fiscal 2025, we returned $6.3 million to stockholders through share repurchases. See Part II, Item 2 of this Report and Note 8 to the Financial Statements for more information.

Current wording

In the first thirty-nine weeks of fiscal 2025, we returned $6.3 million to stockholders through share repurchases. See Part II, Item 2 of this Report and Note 8 to the Financial Statements for more information.

Previous wording

We have a revolving credit facility that matures in April 2030 and provides a $75 million credit commitment and a $25 million uncommitted“accordion” feature. Additional details of the credit facility are in Note 4 to the Financial Statements. At the end of the second quarter of 2025, we had no borrowings under the credit facility and $2.2 million in letters of credit outstanding.

Current wording

We have a revolving credit facility that matures in April 2030 and provides a $75 million credit commitment and a $25 million uncommitted“accordion” feature. Additional details of the credit facility are in Note 4 to the Financial Statements. At the end of the third quarter of 2025, we had no borrowings under the credit facility and $2.2 million in letters of credit outstanding.

Previous wording

Cash Flows From Operating Activities. Net cash used in operating activities was $7.1 million in the first twenty-six weeks of 2025 compared to $14.0 million in the same period of 2024. Significant sources of cash for the first twenty-six weeks of 2025 included net income adjusted for non-cash items totaling $29.9 million (compared to net loss adjusted for non-cash items of $6.6 million in the first twenty-six weeks of 2024) and a decrease in inventory of $5.1 million in the first twenty-six weeks of 2025 (compared to an increase of $4.6 million in the first twenty-six weeks of 2024).

Current wording

Cash Flows From Operating Activities. Net cash provided by operating activities was $1.5 million in the first thirty-nine weeks of 2025 compared to net cash used in operating activities of $32.3 million in the same period of 2024. Significant sources of cash for the first thirty-nine weeks of 2025 included net loss adjusted for non-cash items totaling $40.4 million (compared to net loss adjusted for non-cash items of $16.1 million in the first thirty-nine weeks of 2024) and an increase in accrued compensation of $7.5 million in the first thirty-nine weeks of 2025 (compared to an increase of $2.9 million in the first thirty-nine weeks of 2024).

Previous wording

Significant uses of cash from operating activities in the first twenty-six weeks of 2025 included (1) a $29.6 million decrease in accrued expenses and other long-term liabilities (compared to a $21.9 million decrease in the first twenty-six weeks of 2024) due primarily to payments of operating lease liabilities; (2) a $9.4 million increase in prepaid and other current assets (compared to a $6.1 million dollar increase in the first twenty-six weeks of 2024); and (3) a $7.1 million decrease in accounts payable (compared to a $10.0 million increase in the same period last year).

Current wording

Significant uses of cash from operating activities in the first thirty-nine weeks of 2025 included (1) a $37.0 million decrease in accrued expenses and other long-term liabilities (compared to a $35.9 million decrease in the first thirty-nine weeks of 2024) due primarily to payments of operating lease liabilities; (2) a $5.9 million increase in prepaid and other current assets (compared to a $2.3 million dollar increase in the first thirty-nine weeks of 2024); and (3) a $5.1 million decrease in accounts payable (compared to a $17.9 million increase in the same period last year).

Previous wording

Cash Flows From Investing Activities. Cash provided by investing activities was $3.5 million in the first twenty-six weeks of 2025 compared to cash used of $5.6 million in the same period last year. Sources of cash of $11.2 million in the first 26 weeks of 2025 was from the sale of a building. Cash used of $7.7 million in the first twenty-six weeks of fiscal 2025 and $5.6 million in the first twenty-six weeks of fiscal 2024 consisted of purchases of property and equipment.

Current wording

Cash Flows From Investing Activities. Cash used in investing activities was $4.3 million in the first thirty-nine weeks of 2025 compared to $7.6 million in the same period last year. Source of cash of $11.2 million in the first thirty-nine weeks of 2025 was from the sale of a building. Cash used of $15.5 million in the first thirty-nine weeks of fiscal 2025 and $7.6 million in the first thirty-nine weeks of fiscal 2024 consisted of purchases of property and equipment.

Previous wording

Cash Flows From Financing Activities. Cash used in financing activities was $7.1 million in the first twenty-six weeks of 2025 compared to $0.9 million in the same period last year. Cash used in the first twenty-six weeks of fiscal 2025 was $0.8 million to settle withholding taxes on the vesting of restricted stock and $6.3 million for share repurchases, compared to $0.9 million used in the first twenty-six weeks of fiscal 2024 to settle withholding taxes on the vesting of restricted stock.

Current wording

Cash Flows From Financing Activities. Cash used in financing activities was $7.1 million in the first thirty-nine weeks of 2025 compared to $0.9 million in the same period last year. Cash used in the first thirty-nine weeks of fiscal 2025 was $0.8 million to settle withholding taxes on the vesting of restricted stock and $6.3 million for share repurchases, compared to $0.9 million used in the first thirty-nine weeks of fiscal 2024 to settle withholding taxes on the vesting of restricted stock.

Previous wording

Our principal cash requirements consist of (1) inventory purchases; (2) capital expenditures to invest in our infrastructure; and (3) operational needs, including salaries, occupancy costs, taxes and other operating costs. We may also use cash to fund any share repurchases, make any required debt payments and satisfy other contractual obligations. Historically, we have met these cash requirements using cash flow from operations and short-term trade credit. As of August 2, 2025, our contractual commitments for operating leases totaled $217.5 million (with $36.2 million due within 12 months). See Note 11 to the Financial Statements for more information regarding lease commitments.

Current wording

Our principal cash requirements consist of (1) inventory purchases; (2) capital expenditures to invest in our infrastructure; and (3) operational needs, including salaries, occupancy costs, taxes and other operating costs. We may also use cash to fund any share repurchases, make any required debt payments and satisfy other contractual obligations. Historically, we have met these cash requirements using cash flow from operations and short-term trade credit. As of November 1, 2025, our contractual commitments for operating leases totaled $218.0 million (with $64.1 million due within 12 months). See Note 11 to the Financial Statements for more information regarding lease commitments.