Citi Trends, Inc. reported unaudited sales results for the fourth quarter and fiscal year ended February 2, 2013.
The Company’s 2012 fiscal year contained 53 weeks compared with the traditional 52 weeks in fiscal 2011. Accordingly, comparisons of total sales for the fourth quarter and full year of fiscal 2012 to the same periods in 2011 are affected by an extra week of sales in 2012. However, for comparable store sales, the Company is reporting on a comparable weeks basis (e.g. the 14 weeks ended February 2, 2013 compared to the 14 weeks ended February 4, 2012).
Total sales in the 14-week quarter ended February 2, 2013 decreased 1.5% to $175.7 million compared with $178.4 million in the 13-week quarter ended January 28, 2012. The extra week contributed $8.8 million to total sales in fiscal 2012.
For the year, total sales in the 53 weeks ended February 2, 2013 increased 2.2% to $654.7 million compared with $640.8 million in the 52 weeks ended January 28, 2012.
Ed Anderson, Chairman and Chief Executive Officer, commented, “While the sales results for the fourth quarter are disappointing, we continue to make very good progress in our turnaround efforts. There are several reasons for the disappointing sales in the fourth quarter and following is a fairly detailed explanation.”
Impact from Delayed Tax Refunds
Fourth quarter comparable store sales decreased 11.8%, comparing the 14 weeks ended February 2, 2013 to the 14 weeks ended February 4, 2012. The largest impact on the Company’s comparable store sales for the fourth quarter was the delay by the Internal Revenue Service of 2012 tax refunds.
The IRS moved back the date it would accept tax returns from January 13 a year ago to January 30 this year. As a result, all tax refund driven sales this year were pushed into fiscal 2013. In the last two weeks of fiscal January, sales dropped by over $16 million, most of which, we believe, was due to the delay in tax refunds. This alone impacted the fourth quarter comparable store sales by 7.5%. Sales for the first 12 weeks of the 14-week fourth quarter (November, December and the first three weeks of the five-week January) decreased 4.3%.
Although the year-end closing process is not complete, we expect to report a net loss of approximately $0.07 per diluted share for the fourth quarter, with the aforementioned $16 million decrease in sales during the last two weeks of January adversely impacting net loss per diluted share by approximately $0.35.
Mr. Anderson added, “Last week, we finally saw the beginnings of tax refund driven sales activity. Although we can’t quantify the impact, we are hopeful that this activity will help produce a successful first quarter of fiscal 2013.”
Fourth Quarter Comparable Sales by Month
Comparable store sales in November increased 1%, continuing the slight positive trend that we began in the third quarter.
Comparable store sales in December decreased 10%. We mentioned on the third quarter earnings call that we expected a drag on fourth quarter sales from lower layaways. The drag impacted the December month by more than 3% and the quarter by about 2%.
Additionally, we cautioned about the potential difficulty of comparing to last year’s promotional environment. Last year’s promotional environment was felt most in the ladies’ business in December. Sales in December were also impacted at the end of the month by a shift in sales around the first of January into the January fiscal month.
Comparable store sales in January dropped 28%. January comparable sales were actually up 10% for the first three weeks of the five-week month, benefiting from the calendar change mentioned above regarding December. But as mentioned, sales the last two weeks dropped over $16 million due primarily to the timing of tax refund driven sales.
About Citi Trends
Citi Trends, Inc. is a value-priced retailer of urban fashion apparel and accessories for the entire family. The Company operates 513 stores located in 29 states.
