Citi Trends Inc 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTA RY DATA ​ Citi Trends, Inc. Index to Consolidated Financial Statements ​ ​ ​ Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP - PCAOB ID: 34 ) ​ 31 ​ ​ ​ Consolidated Balance Sheets ​ 33 ​ ​ ​ Consolidated Statements of Operations ​ 34 ​ ​ ​ Consolidated Statements of Cash Flows ​ 35 ​ ​ ​ Consolidated Statements of Stockholders’ Equity ​ 36 ​ ​ ​ Notes to Consolidated Financial Statements ​ 37 ​ ​ ​ 30 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Citi Trends, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Citi Trends, Inc. and subsidiary (the "Company") as of January 31, 2026 and February 1, 2025, the related consolidated statements of operations, cash flows, and stockholders’ equity, for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 15, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventory – Retail Inventory Method – Refer to Note 2 to the consolidated financial statements Critical Audit Matter Description Inventory is stated at the lower of cost or net realizable value as determined by the retail inventory method for store inventory. Under the retail inventory method, the cost of inventory is determined by calculating a cost-to-retail ratio and applying it to the retail value of inventory. Inherent in the retail inventory calculation are certain management judgments and estimates, including, among others, merchandise markdowns, which impact the ending inventory valuation at cost as well as resulting cost of sales. Merchandise markdowns are reflected in the inventory valuation when the price of an item is lowered in the stores. Given the valuation of inventory under the retail inventory method requires management to make judgments and estimates, performing audit procedures to evaluate the reasonableness of the judgments and estimates related to the timing of markdowns used in the valuation of inventory required an elevated degree of auditor judgment. 31 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures to evaluate the reasonableness of the judgments and estimates related to the timing of markdowns used in the valuation of inventory included the following, among others: ● We tested the effectiveness of controls over the measurement of inventory under the retail inventory method, including merchandise markdowns. ● We tested the timing of markdowns by: o Making a selection of markdowns recorded throughout the year and after year-end to test the accuracy and timeliness of the markdowns recorded. o Making a selection of purchases made throughout the year; determining if those purchases were subsequently marked down; and, if marked down, that the markdown was recorded timely. ​ /s/ Deloitte & Touche LLP Atlanta, Georgia April 15, 2026 We have served as the Company's auditor since 2021. ​ 32 Table of Contents Citi Trends, Inc. Consolidated Balance Sheets (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 31, ​ ​ ​ February 1, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 66,092 ​ $ 61,085 ​ ​ Inventory ​ 113,515 ​ 122,640 ​ ​ Prepaid and other current assets ​ 12,254 ​ 10,216 ​ ​ Income tax receivable ​ 1,187 ​ 3,119 ​ ​ Total current assets ​ 193,048 ​ 197,060 ​ ​ Property and equipment, net of accumulated depreciation of $ 301,921 and $ 297,396 as of January 31, 2026 and February 1, 2025, respectively. ​ 54,384 ​ 50,715 ​ ​ Operating lease right of use assets ​ ​ 221,775 ​ ​ 214,148 ​ ​ Other assets ​ 1,964 ​ 846 ​ ​ Total assets ​ $ 471,171 ​ $ 462,769 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 100,693 ​ $ 102,456 ​ ​ Operating lease liabilities ​ ​ 44,397 ​ ​ 47,724 ​ ​ Accrued expenses ​ 15,134 ​ 16,647 ​ ​ Accrued compensation ​ 12,800 ​ 7,176 ​ ​ Layaway deposits ​ 383 ​ 388 ​ ​ Total current liabilities ​ 173,407 ​ 174,391 ​ ​ Noncurrent operating lease liabilities ​ 178,921 ​ 172,675 ​ ​ Deferred Tax Liability ​ ​ 245 ​ ​ 142 ​ ​ Other long-term liabilities ​ 2,278 ​ 2,385 ​ ​ Total liabilities ​ 354,851 ​ 349,593 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ Common stock, $ 0.01 par value. Authorized 32,000,000 shares; 16,545,723 shares issued as of January 31, 2026 and 16,497,092 shares issued as of February 1, 2025; 8,345,917 shares outstanding as of January 31, 2026 and 8,547,841 shares outstanding as of February 1, 2025 ​ 163 ​ 162 ​ ​ Paid in capital ​ 112,352 ​ 108,101 ​ ​ Retained earnings ​ 281,108 ​ 275,901 ​ ​ Treasury stock, at cost; 8,199,806 shares held as of January 31, 2026 and 7,949,251 shares held as of February 1, 2025 ​ ( 277,303 ) ​ ( 270,988 ) ​ ​ Total stockholders’ equity ​ 116,320 ​ 113,176 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 7) ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 471,171 ​ $ 462,769 ​ ​ ​ See accompanying notes to consolidated financial statements . 33 Table of Contents Citi Trends, Inc. Consolidated Statements of Operations (in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ 2024 ​ 2023 ​ Net sales ​ $ 819,962 ​ $ 753,079 ​ $ 747,941 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales (exclusive of depreciation shown separately below) ​ ( 495,320 ) ​ ( 471,036 ) ​ ( 462,824 ) ​ Selling, general and administrative expenses ​ ( 313,171 ) ​ ( 300,173 ) ​ ( 284,530 ) ​ Depreciation ​ ( 18,482 ) ​ ( 18,822 ) ​ ( 18,990 ) ​ Asset impairment ​ ​ ( 579 ) ​ ( 2,536 ) ​ ( 1,051 ) ​ Gain on sale of building ​ 10,960 ​ — ​ — ​ Gain on insurance ​ ​ 482 ​ ​ — ​ ​ — ​ Income (loss) from operations ​ 3,852 ​ ( 39,488 ) ​ ( 19,454 ) ​ Interest income ​ 1,993 ​ 2,473 ​ 3,874 ​ Interest expense ​ ( 342 ) ​ ( 319 ) ​ ( 306 ) ​ Income (loss) before income taxes ​ 5,503 ​ ( 37,334 ) ​ ( 15,886 ) ​ Income tax (expense) benefit ​ ( 296 ) ​ ( 5,836 ) ​ 3,907 ​ Net income (loss) ​ $ 5,207 ​ $ ( 43,170 ) ​ $ ( 11,979 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic net income (loss) per common share ​ $ 0.65 ​ $ ( 5.19 ) ​ $ ( 1.46 ) ​ Diluted net income (loss) per common share ​ $ 0.63 ​ $ ( 5.19 ) ​ $ ( 1.46 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 8,057 ​ 8,315 ​ 8,221 ​ Diluted ​ 8,300 ​ 8,315 ​ 8,221 ​ ​ See accompanying notes to consolidated financial statements. 34 Table of Contents Citi Trends, Inc. Consolidated Statements of Cash Flows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ Operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 5,207 ​ $ ( 43,170 ) ​ $ ( 11,979 ) ​ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation ​ 18,482 ​ 18,822 ​ 18,990 ​ Non-cash operating lease costs ​ ​ 47,733 ​ ​ 48,863 ​ ​ 50,462 ​ Asset impairment ​ 579 ​ 2,536 ​ 1,051 ​ (Gain) Loss on disposal of property and equipment ​ ( 602 ) ​ 27 ​ 238 ​ Deferred income taxes ​ 102 ​ 5,247 ​ ( 2,211 ) ​ Insurance proceeds related to operating activities ​ 339 ​ — ​ 3,483 ​ Non-cash stock-based compensation expense ​ 5,389 ​ 3,302 ​ 4,095 ​ Gain on sale of assets ​ ( 10,960 ) ​ — ​ — ​ Gain on insurance related activities ​ ​ ( 339 ) ​ ​ — ​ ​ ( 3,483 ) ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory ​ 9,125 ​ 7,792 ​ ( 24,638 ) ​ Prepaid and other current assets ​ ( 2,038 ) ​ 622 ​ 2,139 ​ Other assets ​ ( 1,118 ) ​ 160 ​ 178 ​ Accounts payable ​ ( 3,305 ) ​ 101 ​ 17,861 ​ Accrued expenses and other long-term liabilities ​ ( 55,191 ) ​ ( 49,489 ) ​ ( 58,318 ) ​ Accrued compensation ​ 5,624 ​ 330 ​ ( 3,977 ) ​ Income tax payable/receivable ​ 1,932 ​ 1,004 ​ ( 3,508 ) ​ Layaway deposits ​ ( 5 ) ​ 4 ​ 40 ​ Net cash provided by (used in) operating activities ​ 20,954 ​ ( 3,849 ) ​ ( 9,577 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ( 20,330 ) ​ ( 10,108 ) ​ ( 14,875 ) ​ Insurance proceeds related to investing activities ​ ​ 630 ​ ​ — ​ ​ 1,517 ​ Proceeds from sale of building ​ 11,206 ​ — ​ — ​ Net cash used in investing activities ​ ( 8,494 ) ​ ( 10,108 ) ​ ( 13,358 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash used to settle withholding taxes on vested restricted stock ​ ( 1,138 ) ​ ( 887 ) ​ ( 854 ) ​ Repurchase of common stock ​ ​ ( 6,315 ) ​ ​ ( 3,777 ) ​ ​ — ​ Net cash used in financing activities ​ ( 7,453 ) ​ ( 4,664 ) ​ ( 854 ) ​ Net increase (decrease) in cash and cash equivalents ​ 5,007 ​ ( 18,621 ) ​ ( 23,789 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of year ​ 61,085 ​ 79,706 ​ 103,495 ​ End of year ​ $ 66,092 ​ $ 61,085 ​ $ 79,706 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 210 ​ $ 168 ​ $ 159 ​ Cash (receipts) payments of income taxes ​ $ ( 1,699 ) ​ $ ( 415 ) ​ $ 1,813 ​ Supplemental disclosures of non-cash investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual for purchases of property and equipment ​ $ 2,399 ​ $ 4,446 ​ $ 2,936 ​ ​ See accompanying notes to consolidated financial statements. 35 Table of Contents Citi Trends, Inc. Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid in ​ Retained ​ Treasury Stock ​ ​ ​ ​ ​ ​ Shares ​ Amount ​ Capital ​ Earnings ​ Shares ​ Amount ​ Total Balances — January 28, 2023 16,158,494 ​ $ 160 ​ $ 102,445 ​ $ 331,050 7,804,013 ​ $ ( 267,211 ) ​ $ 166,444 ​ Grant of restricted shares ​ 272,426 ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Forfeiture of restricted shares ( 39,321 ) ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Stock-based compensation expense ​ — ​ ​ — ​ ​ 4,095 ​ ​ — ​ — ​ ​ — ​ ​ 4,095 ​ Shares withheld for settlement of employee taxes on vesting ( 36,885 ) ​ ​ — ​ ​ ( 854 ) ​ ​ — ​ — ​ ​ — ​ ​ ( 854 ) ​ Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 11,979 ) ​ — ​ ​ — ​ ​ ( 11,979 ) ​ Balances — February 3, 2024 16,354,714 ​ $ 160 ​ $ 105,686 ​ $ 319,071 7,804,013 ​ $ ( 267,211 ) ​ $ 157,706 ​ Vesting of restricted shares ​ — ​ ​ 2 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2 ​ Grant of restricted shares ​ 230,852 ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Forfeiture of restricted shares ( 51,450 ) ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Stock-based compensation expense ​ — ​ ​ — ​ ​ 3,302 ​ ​ — ​ — ​ ​ — ​ ​ 3,302 ​ Shares withheld for settlement of employee taxes on vesting ( 37,024 ) ​ ​ — ​ ​ ( 887 ) ​ ​ — ​ — ​ ​ — ​ ​ ( 887 ) ​ Repurchase of common stock ​ — ​ ​ — ​ ​ — ​ ​ — ​ 145,238 ​ ​ ( 3,777 ) ​ ​ ( 3,777 ) ​ Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 43,170 ) ​ — ​ ​ — ​ ​ ( 43,170 ) ​ Balances — February 1, 2025 16,497,092 ​ $ 162 ​ $ 108,101 ​ $ 275,901 7,949,251 ​ $ ( 270,988 ) ​ $ 113,176 ​ Vesting of restricted shares ​ 52,244 ​ ​ 1 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1 ​ Grant of restricted shares ​ 64,468 ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Forfeiture of restricted shares ( 26,464 ) ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ Stock-based compensation expense ​ — ​ ​ — ​ ​ 5,389 ​ ​ — ​ — ​ ​ — ​ ​ 5,389 ​ Shares withheld for settlement of employee taxes on vesting ( 41,617 ) ​ ​ — ​ ​ ( 1,138 ) ​ ​ — ​ — ​ ​ — ​ ​ ( 1,138 ) ​ Repurchase of common stock ​ — ​ ​ — ​ ​ — ​ ​ — ​ 250,555 ​ ​ ( 6,315 ) ​ ​ ( 6,315 ) ​ Net income ​ — ​ ​ — ​ ​ — ​ ​ 5,207 ​ — ​ ​ — ​ ​ 5,207 ​ Balances — January 31, 2026 16,545,723 ​ $ 163 ​ $ 112,352 ​ $ 281,108 8,199,806 ​ $ ( 277,303 ) ​ $ 116,320 ​ ​ ​ See accompanying notes to consolidated financial statements. ​ 36 Table of Contents Citi Trends, Inc. Notes to Consolidated Financial Statements 1. Organization and Business Citi Trends, Inc. and its subsidiary (the “Company”) is the leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States. As of January 31, 2026, the Company operated 590 stores in urban, suburban and rural markets in 33 states. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Fiscal Year The Company’s fiscal year ends on the Saturday closest to January 31 of each year. The years ended January 31, 2026, February 1, 2025 and February 3, 2024 are referred to as fiscal 2025, fiscal 2024 and fiscal 2023, respectively, in the accompanying consolidated financial statements. Fiscal years 2025 and 2024 have a 52 -week accounting period, and fiscal year 2023 is comprised of 53 weeks. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and apply judgments that affect the reported amounts. Actual results could differ from those estimates. The most significant estimates include those used in the valuation of inventory, property and equipment, self-insurance liabilities, leases and income taxes. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively. Cash and Cash Equivalents/Concentration of Credit Risk For purposes of the consolidated balance sheets and 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. Inventory Inventory is stated at the lower of cost (first-in, first-out basis) or net realizable value as determined by the retail inventory method for store inventory and the average cost method for distribution center inventory. Under the retail inventory method, the cost of inventory is determined by calculating a cost-to-retail ratio and applying it to the retail value of inventory. Merchandise markdowns are reflected in the inventory valuation when the retail price of an item is lowered in the stores. Inventory is recorded net of an allowance for shrink based on the most recent physical inventory counts and other assumptions for shrink activity. Property and Equipment, net Property and equipment, net are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the lesser of the estimated useful lives (primarily three to five years for computer equipment and furniture, fixtures and equipment, seven years for major purchased software systems, ten years for leasehold improvements and fifteen to twenty years for buildings and building improvements) of the related assets or the relevant lease term. 37 Table of Contents Impairment of Long-Lived Assets If facts and circumstances indicate that a long-lived asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset group will not be recovered as determined based on projected undiscounted cash flows expected to be generated by that asset, the carrying value of the asset is reduced to its estimated fair value. There was non-cash impairment expense in fiscal 2025 of $ 0.6 million consisting of $ 0.3 million for leasehold improvements and fixtures and equipment at underperforming stores, and $ 0.3 million for right of use assets. There was non-cash impairment expense in fiscal year 2024 of $ 2.5 million consisting of $ 1.2 million for leasehold improvements and fixtures and equipment at an underperforming store, and $ 1.3 million for a right of use asset. Insurance Liabilities The Company is largely self-insured for workers’ compensation costs, general liability claims. The Company’s self-insured retention or deductible, as applicable, for each claim involving workers’ compensation and general liability is limited to $ 250,000 and $ 250,000 respectively. Self-insurance liabilities are based on the total estimated costs of claims filed and estimates of claims incurred but not reported, less amounts paid against such claims. Current and historical claims data, together with information from actuarial studies, are used in developing the estimates. The insurance liabilities that are recorded are primarily influenced by the frequency and severity of claims and the Company’s growth. If the underlying facts and circumstances related to the claims change, then the Company may be required to record more or less expense which could be material in relation to results of operations. Stock-Based Compensation The Company recognizes compensation expense associated with all nonvested restricted stock and performance-based restricted stock units based on the grant-date fair value of each award. The fair value of the awards is calculated based on the stock price on the grant date, incorporating an analysis of the performance measure where applicable. Compensation expense is recognized ratably over the requisite service period. See Note 6 for additional information on the Company’s stock-based compensation plans. Revenue Recognition The Company’s primary source of revenue is derived from the sale of apparel, accessories and home goods to its customers with the Company’s performance obligations satisfied at the point of sale 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. Breakage on gift cards is minimal as the cards are generally subject to escheat regulations of the state in which the gift card subsidiary is located. Sales Returns The Company allows customers to return merchandise for up to thirty days after the date of sale. Expected refunds to customers are recorded based on estimated margin using historical return information. The refund liability for merchandise returns is recorded in accrued expenses on the consolidated balance sheet and totaled $ 0.1 million and $ 0.2 million as of January 31, 2026 and February 1, 2025, respectively. The corresponding asset for the recoverable cost of expected refunds is included in prepaid and other current assets and totaled $ 0.1 million as of both January 31, 2026 and February 1, 2025. Disaggregation of Revenue In the following table, the Company’s revenue is disaggregated by Division or major product category. The following table provides the percentage of net sales for each Division within the merchandise assortment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Divisions ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Women's ​ 27 % 27 % 27 % Children's ​ 23 % 23 % 23 % Men's ​ 17 % 17 % 17 % Accessories & Beauty ​ 16 % 17 % 17 % Home & Lifestyle ​ 10 % 10 % 9 % Footwear ​ 7 % 6 % 7 % ​ 38 Table of Contents Cost of Sales Cost of sales includes the cost of inventory sold during the period and transportation costs, including inbound freight related to inventory sold, freight from the distribution centers to the stores and freight from vendors to stores, net of discounts and allowances. Distribution center costs, store occupancy expenses and marketing expenses are not considered components of cost of sales and are included as part of selling, general and administrative expenses. Depreciation is also not considered a component of cost of sales and is included as a separate line item in the consolidated statements of operations. Distribution center costs (exclusive of depreciation) for fiscal 2025, 2024 and 2023 were $ 32.7 million, $ 32.1 million and $ 31.0 million, respectively. 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 following table provides a reconciliation of the number of average 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ Weighted average number of common shares outstanding (basic) 8,057,405 8,314,825 8,221,450 ​ Incremental shares from assumed vesting of nonvested restricted stock 242,685 — — ​ Average number of common shares and common stock equivalents outstanding 8,300,090 8,314,825 8,221,450 ​ ​ 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 costs attributed to future services and not yet recognized. For fiscal 2025, 2024 and 2023, respectively, there were 0 , 248,000 , and 273,000 shares of nonvested restricted stock excluded from the calculation of diluted earnings per share because of antidilution. Marketing The Company expenses marketing as incurred. Marketing expense for fiscal 2025, 2024 and 2023 was $ 1.3 million, $ 2.3 million and $ 1.6 million, respectively. Operating Leases The Company leases all of its retail store locations, its distribution centers and certain office space and equipment. All leases are classified as operating leases. The Company records right-of-use assets and lease liabilities based on the present value of future minimum lease payments using an incremental borrowing rate. The incremental borrowing rate is determined based on rates and terms from the Company’s existing borrowing facility with adjustments to bridge for differences in collateral, terms and payments. Lease costs are recognized over the estimated term of the lease, which includes any reasonably certain lease periods associated with available renewal periods. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. In addition, certain leases provide for contingent rents that are not measurable at inception. These contingent rents are primarily based on a percentage of net sales that are in excess of a predetermined level. These amounts are excluded from minimum rent and included in the determination of total rent expense when it is probable that the expense has been incurred and the amount can be reasonably estimated. If an operating lease asset is impaired, the remaining operating lease asset will be amortized on a straight-line basis over the remaining lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. 39 Table of Contents 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. If realization of the deferred tax asset is not considered more likely than not, then a valuation allowance is recorded to reduce the deferred tax asset to its net realizable value. Business Operating Segment The Company is the leading off-price value retailer of fashion apparel, accessories and home goods for the entire family. The 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. All sales and assets are located within the United States. New Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, “Improvement to Income Tax Disclosures (Topic 740)”, which requires additional disclosures for income tax rate reconciliations, income taxes paid, and certain other tax disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Adoption is required for annual periods beginning after December 15, 2024. In fiscal 2025, the Company adopted the new accounting pronouncement ASU 2023-09 in the current period and retrospectively. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements as the requirements impact only annual income tax reporting disclosures in the Notes to the Company’s consolidated financial statements. Refer to “Note 5. Income Taxes” for additional information. In November 2024, the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires public entities to disclose additional information that disaggregates certain expense captions into specified categories in the Notes to the consolidated financial statements. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact the amended guidance will have on its disclosures. In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which amends the guidance in ASC 350 to revise the criteria for when an entity is required to start capitalizing software costs and requires an entity to consider whether there is significant uncertainty associated with the development activities of the software when evaluating the probable-to-complete recognition threshold. ASU 2025-06 is required to be adopted in the annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures. In November 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”), which amends the guidance in ASC 270 to clarify the applicability of interim disclosure requirements and enhance the navigability of the existing guidance. ASU 2025-11 provides a comprehensive list of required interim disclosures and establishes a new disclosure principle requiring entities to disclose events that occur after the end of the last annual reporting period. The new standard is effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures. 40 Table of Contents 3. Property and Equipment, net Property and equipment, net, consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 31, ​ ​ ​ February 1, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Buildings ​ $ — ​ $ 4,849 ​ Leasehold improvements ​ 146,979 ​ ​ 136,491 ​ Furniture, fixtures and equipment ​ 146,181 ​ ​ 144,321 ​ Computer equipment ​ 62,289 ​ ​ 59,993 ​ Construction in progress ​ 856 ​ ​ 2,457 ​ ​ ​ 356,305 ​ ​ 348,111 ​ Accumulated depreciation ​ ( 301,921 ) ​ ​ ( 297,396 ) ​ ​ ​ $ 54,384 ​ $ 50,715 ​ ​ ​ 4. Revolving Credit Facility In October 2011, the Company entered into a five-year , $ 50 million credit facility with Bank of America. The facility was amended in August 2015, May 2020 and April 2021 to modify terms and extend the maturity dates. The facility was further amended on April 10, 2025 to extend the maturity date to April 10, 2030. The amended facility provides a $ 75 million credit commitment and a $ 25 million uncommitted “accordion” feature that under certain circumstances could allow the Company to increase the size of the facility to $ 100 million. The facility is secured by the Company’s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of 0.25 % and permits the payment of cash dividends subject to certain limitations. Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10 % plus either 1.50 %, 1.75 % or 2.00 %, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5 % and (iii) the Terms SOFR Rate plus 1.0 %, plus, in each case either 0.50 %, 0.75 % or 1.00 %, based in any such case on the average daily availability for borrowings under the facility. As of January 31, 2026, the Company had no borrowings under the credit facility and $ 2.2 million of letters of credit outstanding. ​ 5. Income Taxes Income tax (expense) benefit consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ ( 160 ) ​ $ ( 275 ) ​ $ 2,025 ​ State ​ ( 34 ) ​ ( 420 ) ​ ( 329 ) ​ Total current ​ ( 194 ) ​ ( 695 ) ​ 1,696 ​ Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ ( 102 ) ​ ( 2,266 ) ​ 2,635 ​ State ​ — ​ ( 2,875 ) ​ ( 424 ) ​ Total deferred ​ ( 102 ) ​ ( 5,141 ) ​ 2,211 ​ Total income tax (expense) benefit ​ $ ( 296 ) ​ $ ( 5,836 ) ​ $ 3,907 ​ ​ ​ 41 Table of Contents Income tax (expense) benefit computed using the federal statutory rate is reconciled to the reported income tax (expense) benefit as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year ​ 2025 ​ 2024 ​ 2023 ​ Rate ​ ​ (Expense) / Benefit ​ Rate ​ ​ (Expense) / Benefit ​ Rate ​ ​ (Expense) / Benefit Statutory rate applied to income before income taxes 21 % ​ $ ( 1,165 ) ​ 21 % ​ $ 7,840 ​ 21 % ​ $ 3,337 State income taxes, net of federal benefit * 5 % ​ ​ ( 292 ) ​ 3 % ​ ​ 1,109 ​ 2 % ​ ​ 240 State tax credits, net of federal benefit 32 % ​ ​ ( 1,775 ) ​ ( 3 )% ​ ​ ( 1,001 ) ​ ( 1 )% ​ ​ ( 167 ) General business credits, net of nondeductible expenses ( 20 )% ​ ​ 1,130 ​ 3 % ​ ​ 1,235 ​ 11 % ​ ​ 1,840 Nondeductible compensation 6 % ​ ​ ( 364 ) ​ 0 % ​ ​ ( 46 ) ​ 0 % ​ ​ — Excess (deficit) tax benefits from stock-based compensation ( 4 )% ​ ​ 220 ​ 0 % ​ ​ ( 96 ) ​ ( 3 )% ​ ​ ( 519 ) Valuation Allowance ( 37 )% ​ ​ 2,028 ​ ( 39 )% ​ ​ ( 14,582 ) ​ ( 5 )% ​ ​ ( 774 ) Changes in tax rates 3 % ​ ​ ( 150 ) ​ 0 % ​ ​ 42 ​ 0 % ​ ​ — Nondeductible or nontaxable items 1 % ​ ​ ( 52 ) ​ 0 % ​ ​ ( 47 ) ​ 0 % ​ ​ — Changes in Unrecognized tax benefits 0 % ​ ​ ( 2 ) ​ 0 % ​ ​ — ​ 0 % ​ ​ — Other ( 2 )% ​ ​ 126 ​ ( 1 )% ​ ​ ( 290 ) ​ 0 % ​ ​ ( 50 ) Income tax (expense) benefit 5 % ​ $ ( 296 ) ​ ( 16 )% ​ $ ( 5,836 ) ​ 25 % ​ $ 3,907 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * The only state that contributes to the majority (greater than 50%) of the tax effect in this category is Louisiana. Deferred tax assets and deferred tax liabilities consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 31, ​ ​ ​ February 1, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ Inventory capitalization ​ $ 1,863 ​ $ 1,930 ​ Vacation liability ​ 24 ​ 395 ​ Operating lease liabilities ​ ​ 56,683 ​ ​ 55,247 ​ State tax credits ​ 767 ​ 1,597 ​ Federal tax credits ​ ​ 2,938 ​ ​ 1,518 ​ Stock compensation ​ 685 ​ 545 ​ Insurance liabilities ​ 554 ​ 366 ​ Research and development ​ ​ 150 ​ ​ 2,227 ​ Net operating loss and charitable contribution carryforwards ​ ​ 14,815 ​ ​ 10,097 ​ Other ​ 606 ​ 585 ​ Subtotal deferred tax assets ​ 79,085 ​ 74,507 ​ Less: Valuation allowance - net ​ ( 15,436 ) ​ ( 16,519 ) ​ Total deferred tax assets ​ 63,649 ​ 57,988 ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ ​ Right of use asset ​ ​ ( 55,072 ) ​ ​ ( 52,935 ) ​ Book and tax depreciation differences ​ ​ ( 8,398 ) ​ ​ ( 4,783 ) ​ Prepaid expenses ​ ( 424 ) ​ ( 412 ) ​ Total deferred tax liabilities ​ ( 63,894 ) ​ ( 58,130 ) ​ Net deferred tax (liability) asset ​ $ ( 245 ) ​ $ ( 142 ) ​ ​ 42 Table of Contents The following table summarizes (receipts) payments of income taxes in fiscal 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 Federal ​ $ ( 1,710 ) State ​ ​ North Carolina ​ 10 Georgia ​ 9 Kentucky ​ ​ 9 Other (net of refunds) ​ ​ ( 17 ) Total (receipts) payments of income taxes ​ $ ( 1,699 ) ​ The Company files income tax returns in U.S. federal and state jurisdictions where it does business and is subject to examinations by the Internal Revenue Service (“IRS”) and other taxing authorities. With a few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to fiscal 2021. The Company reviews and assesses uncertain tax positions, if any, with recognition and measurement of tax benefit based on a “more-likely-than-not” standard with respect to the ultimate outcome, regardless of whether this assessment is favorable or unfavorable. As of January 31, 2026, there were no material benefits taken on the Company’s income tax returns that do not qualify for financial statement recognition. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties and interest, a company is required to recognize an expense for the amount of the interest and penalty in the period in which the company claims or expects to claim the position on its tax return. For financial statement purposes, companies are allowed to elect whether to classify such charges as either income tax expense or another expense classification. Should such expense be incurred in the future, the Company will classify such interest as a component of interest expense and penalties as a component of income tax expense. At January 31, 2026, the Company had income tax net operating loss (“NOL”) carryforwards for federal purposes of $ 58.5 million (gross) and for state purposes of $ 2.5 million (tax effected), which are available to offset future state taxable income. The federal tax NOL carryforwards have an indefinite carryforward, but are limited to offsetting 80 % of taxable income in future years. State NOL rules vary by jurisdiction with respect to carryforward periods, utilization limits, and eligibility requirements. Depending on the state, carryforward periods generally range from 5 to 20 years , while certain states conform to federal rules and allow indefinite carryforwards for post-2017 NOLs. Utilization of these NOLs may be subject to annual limitations under Section 382 of the Internal Revenue Code (“IRC”) if the Company experiences an “ownership change,” as defined in the IRC. An ownership change generally occurs when the aggregate stock ownership of certain significant shareholders increases by more than 50 percentage points over a rolling three ‑ year period. The Company has performed an analysis under Section 382 and determined that prior ownership changes have resulted in certain annual limitations on the future use of its NOLs. These limitations may restrict the Company’s ability to offset future taxable income with pre ‑ change NOLs, potentially resulting in increased cash tax liabilities in future periods. Management will continue to monitor equity transactions and other events that could trigger additional ownership changes and further limit the Company’s ability to utilize its NOLs. 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes sufficient negative evidence exists to require a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized. In accordance with ASC 740 “Accounting for Income Taxes” (“ASC 740”), the Company evaluates deferred income tax assets quarterly to determine if valuation allowances are required or should be adjusted. ASC 740 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. The analysis that the Company prepared to determine the valuation allowance required significant judgment and assumptions regarding future market conditions, as well as forecasts for profits, taxable income, and taxable income by jurisdiction. Due to the sensitivity of the analysis, changes to the assumptions in subsequent periods could have a material effect on the valuation allowance. At January 31, 2026 and February 1, 2025, the Company had a full valuation allowance on its deferred tax assets. Based on an evaluation in accordance with the accounting standards, as of January 31, 2026, the valuation allowance established against the entire net deferred tax asset totaled $ 15.4 million. 43 Table of Contents The effective income tax rate for fiscal 2025, 2024 and 2023 included the recognition of benefits arising from various federal and state tax credits. Under current IRS and state income tax regulations, these credits may be carried back for one year or carried forward for periods up to 20 years . The income tax benefit included $ 0.0 million, $ 0.0 million, and $ 2.2 million related to such credits in each of fiscal 2025, 2024 and 2023, respectively. The credits generated for fiscal year 2025 and fiscal year 2024 were recorded with a full valuation allowance . 6 . Stockholders’ Equity Repurchases of common stock The Company periodically repurchases shares of its common stock under board-authorized repurchase programs. Such repurchases may be made in the open market, through block trades or through other negotiated transactions. Share repurchases are as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Total number of shares purchased ​ ​ 251 ​ ​ 145 ​ ​ — Average price paid per share (including commissions) ​ $ 25.21 ​ $ 25.99 ​ $ — Total investment ​ $ 6,315 ​ $ 3,777 ​ $ — ​ At January 31, 2026, $ 40.0 million remained available under the Company’s previously announced stock repurchase authorization. Stock-Based Compensation The Company maintains the Citi Trends, Inc. Incentive Plan (the “Plan”) which permits the grant of stock-based incentive awards to employees, officers, directors and consultants. The Plan provides for the grant of incentive and nonqualified options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other forms of stock-based and cash-settled equity compensation. At January 31, 2026, the Company had 694,570 shares reserved for future grants under the Plan. During fiscal 2025, 2024 and 2023, non-cash stock-based compensation expense recorded in selling and general and administrative expenses totaled $ 5.4 million, $ 3.3 million and $ 4.1 million, respectively. The income tax expense resulting from the fair market value of restricted stock at vesting versus the cumulative compensation cost of such stock is recorded as a component of income tax expense and was $ 0.2 million, $ 0.1 million and $ 0.5 million, respectively. The Company issues shares of restricted stock to key team members and non-employee directors. Restricted stock granted to employees vests in equal installments over three years from the date of grant. Restricted stock granted to non-employee directors vests one year from the date of grant. The Company also issues performance-based restricted stock units (“PSUs”) to key team members that cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals. The number of units earned and vested is subject to scaling based on a pre-established performance matrix. On November 18, 2024, the Company granted a performance-based restricted stock award to the Chief Executive Officer. The total number of shares earned depends on the attainment of predefined average stock price targets measured over rolling 45 -trading-day periods during the performance period ending November 15, 2027. Earned shares vest annually over a period extending through November 15, 2028. The Company estimated the fair value of the awards using a Monte Carlo simulation including the following assumptions: ​ ​ ​ ​ Stock Price on grant date ​ $ 16.33 Risk-free interest rate ​ 4.21 % Expected volatility (annualized) ​ 62.90 % Dividend yield ​ 0 % ​ The risk-free interest rate was derived from the continuously compounded yield of zero-coupon U.S. Treasury STRIPS. The expected volatility is based on the Company’s historical daily stock price movements for a period equal to the simulation term. The dividend yield was based on the Company’s recent dividend history. The total grant date fair value of the award was $ 3.36 million, or $ 10.45 per share. The fair value associated with each tranche of the award will be recognized, straight-line, over the requisite service period for that tranche. Failure to meet the market conditions for an award does not result in reversal of previously recognized expense, so long as the required service period condition is met. The Company recognized $ 1.5 million and $ 0.3 million of expense related to the award in fiscal 2025 and fiscal 2024, respectively. 44 Table of Contents The following tables summarize activity related to nonvested restricted stock and PSUs and performance-based restricted stock during fiscal 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-Based Restricted Stock ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Nonvested ​ Grant Date ​ ​ ​ ​ Shares ​ ​ ​ Fair Value Outstanding as of February 1, 2025 334,083 ​ $ 20.15 Granted 64,468 ​ $ 25.62 Vested ( 151,716 ) ​ $ 21.21 Forfeited ( 26,464 ) ​ $ 19.66 Outstanding as of January 31, 2026 220,371 ​ $ 21.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance-Based Restricted Stock ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Nonvested ​ Grant Date ​ ​ ​ ​ Shares ​ ​ ​ Fair Value Outstanding as of February 1, 2025 321,502 ​ $ 10.45 Granted — ​ $ — Vested ( 52,244 ) ​ $ 10.45 Outstanding as of January 31, 2026 269,258 ​ $ 10.45 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance-Based Restricted Stock Units ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Nonvested ​ Grant Date ​ ​ ​ ​ Units ​ ​ ​ Fair Value Outstanding as of February 1, 2025 89,981 ​ $ 20.06 Granted 189,256 ​ $ 24.15 Vested — ​ $ — Forfeited ( 15,578 ) ​ $ 21.46 Outstanding as of January 31, 2026 263,659 ​ $ 22.91 ​ At January 31, 2026, there was $ 4.5 million of unrecognized compensation expense related to restricted stock, and $ 3.3 million of unrecognized compensation expense related to our PSUs. ​ ​ 45 Table of Contents 7. Commitments and Contingencies The Company is, from time to time, involved in legal proceedings arising in the ordinary course of business, including claims by customers, employees, or former employees and matters relating to real estate and contractual disputes. 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. In connection with the January 2023 cyber disruption previously disclosed in the Company’s Form 8-K filed on February 23, 2023, four putative class action lawsuits were filed against the Company in the United States District Court for the Southern District of Georgia (the “Court”). These matters, Matousek et al v. Citi Trends, Inc.; Sienna Thomas v. Citi Trends, Inc.; Yeimy Sambrano v. Citi Trends, Inc.; Sabrina Green-Fogg v. Citi Trends, Inc. were filed in the second half of 2023, and consolidated into one case by the Court on November 8, 2023. The plaintiffs allege harm in connection with the January 2023 cyber disruption and assert a variety of claims seeking unspecified monetary damages and other related relief. A consolidated class action complaint was filed on February 15, 2024, adding an additional plaintiff, Shykira Scott. The Company has successfully settled these class actions without any admission of liability. In addition, the Attorneys General of Alabama, Connecticut, Indiana and Texas sent inquiry letters to the Company regarding the January 2023 cyber disruption, which the Company has answered. These class actions were resolved in fiscal 2025. The Company is unable to predict whether it may be subject to other lawsuits, claims or inquiries. While legal proceedings are subject to inherent uncertainties and the outcomes cannot be predicted. Based on currently available information, the Company does not believe that the resolution of any pending or threatened legal matters is reasonably likely to have a material adverse effect on its financial condition, results of operations, or liquidity. However, it is possible that future developments could result in losses that are material in a particular period. The Company is also party to purchase obligations for open merchandise orders of $ 161.7 million that is due within 12 months. 8. Leases The Company leases its retail store locations, its distribution centers and certain office space and equipment. Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods. The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized. Leases with an initial term of 12 months or less and leases with mutual termination clauses are not included on the consolidated balance sheets. The lease liability is measured at the present value of future lease payments as of the lease commencement date. 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. Lease costs consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ 2024 ​ 2023 Operating lease cost ​ $ 61,640 ​ $ 61,227 ​ $ 62,163 Variable lease cost ​ 12,719 ​ 11,061 ​ 11,070 Short term lease cost ​ 1,635 ​ 2,241 ​ 1,598 Total lease cost ​ $ 75,994 ​ $ 74,529 ​ $ 74,831 ​ 46 Table of Contents Future minimum lease payments as of January 31, 2026 are as follows (in thousands): ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ Lease Costs 2026 ​ ​ ​ $ 63,477 ​ ​ 2027 ​ ​ 51,588 ​ ​ 2028 ​ 42,083 ​ ​ 2029 ​ 32,612 ​ ​ 2030 ​ 22,216 ​ ​ Thereafter ​ 97,927 ​ ​ Total future minimum lease payments ​ ​ 309,903 ​ ​ Less: imputed interest ​ ​ ( 86,585 ) (1) ​ Total present value of lease liabilities ​ $ 223,318 (2) ​ ​ (1) Calculated using the incremental borrowing rate for each lease. (2) Includes short-term and long-term portions of operating leases. ​ 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 flow and other information related to operating leases are as follows (in thousands, except for weighted average amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ 2024 ​ 2023 Cash paid for operating leases ​ ​ ​ $ 63,261 ​ $ 62,582 ​ $ 68,371 Right of use assets obtained in exchange for new operating lease liabilities ​ $ 55,634 ​ $ 33,183 ​ $ 27,836 ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term (years) - operating leases ​ 6.86 ​ 7.26 ​ 7.54 Weighted average discount rate - operating leases ​ ​ 6.12 % ​ ​ 5.61 % ​ ​ 5.04 % ​ ​ 9. Segment Reporting The Company is the leading off-price value retailer of fashion apparel, accessories and home trends primarily for Black families. The retail operations represent a single operating segment based on the way the Company manages its business. The Company’s Chief Executive Officer, as our chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. This enables the Chief Executive Officer to assess the Company’s overall level of available resources and determine how best to deploy these resources across retail stores that are in line with the Company’s long-term company-wide strategic goals. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers. All sales and assets are located within the United States. The CODM assesses performance based on consolidated net (loss) income that is reported on the statement of operations as part of the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel. The CODM does not review assets in evaluating results, therefore such information is not provided. 47 Table of Contents The following table summarizes the Company’s one reportable segment profit or loss, including significant segment expenses, and includes the reconciliation to consolidated net income (loss) (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2025 ​ ​ 2024 ​ ​ 2023 Net sales $ 819,962 ​ $ 753,079 ​ $ 747,941 Cost of sales (exclusive of depreciation shown separately below) ​ ​ ​ ​ ​ ​ ​ ​ Merchandising and other ​ ( 452,734 ) ​ ​ ( 430,300 ) ​ ​ ( 418,103 ) Freight in and out ​ ( 42,586 ) ​ ​ ( 40,736 ) ​ ​ ( 44,721 ) Selling, general, and administrative expenses ​ ​ ​ ​ ​ ​ ​ ​ Store expenses - payroll and related expenses ​ ( 94,579 ) ​ ​ ( 91,558 ) ​ ​ ( 90,405 ) Store expenses - rent ​ ( 67,648 ) ​ ​ ( 66,660 ) ​ ​ ( 67,110 ) Corporate expenses - payroll and related expenses ​ ( 28,808 ) ​ ​ ( 29,614 ) ​ ​ ( 26,189 ) Distribution center expenses - payroll and related expenses ​ ( 17,787 ) ​ ​ ( 16,686 ) ​ ​ ( 17,412 ) Other segment expenses (1) ​ ( 104,349 ) ​ ​ ( 95,655 ) ​ ​ ( 83,414 ) Depreciation ​ ( 18,482 ) ​ ​ ( 18,822 ) ​ ​ ( 18,990 ) Asset impairment ​ ( 579 ) ​ ​ ( 2,536 ) ​ ​ ( 1,051 ) Gain on sale of building ​ 10,960 ​ ​ — ​ ​ — Gain on insurance ​ 482 ​ ​ — ​ ​ — Interest income ​ 1,993 ​ ​ 2,473 ​ ​ 3,874 Interest expense ​ ( 342 ) ​ ​ ( 319 ) ​ ​ ( 306 ) Income tax (provision) benefit ​ ( 296 ) ​ ​ ( 5,836 ) ​ ​ 3,907 Net income (loss) $ 5,207 ​ $ ( 43,170 ) ​ $ ( 11,979 ) ​ (1) Other segment expenses represent other store, corporate and distribution center expenses including utilities, repairs, supplies, insurance, professional fees and other miscellaneous fees. ​ ​ ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. ​