What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-06-09 compared with 2021-12-08 · 54 added, 131 removed, 184 unchanged (50% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Short-term investment securities

Prepaid and other current assets

1 unchanged sentence

Total current assets

Property and equipment, net of accumulated depreciation of $ 281,004 and $ 279,080 as of October 30, 2021 and January 30, 2021, respectively

Property and equipment, net of accumulated depreciation of $ 268,982 and $ 283,445 as of April 30, 2022 and January 29, 2022, respectively

Operating lease right of use assets

15 unchanged sentences

Authorized 32,000,000 shares;

15,967,965 shares issued as of October 30, 2021 and 15,981,394 shares issued as of January 30, 2021;

8,590,129 shares outstanding as of October 30, 2021 and 9,876,901 shares outstanding as of January 30, 2021

16,159,393 shares issued as of April 30, 2022 and 16,090,365 shares issued as of January 29, 2022;

8,515,802 shares outstanding as of April 30, 2022 and 8,617,210 shares outstanding as of January 29, 2022

Paid in capital

1 unchanged sentence

Treasury stock, at cost;

7,377,836 shares held as of October 30, 2021 and 6,104,493 shares held as of January 30, 2021

7,643,591 shares held as of April 30, 2022 and 7,473,155 shares held as of January 29, 2022

Total stockholders’ equity

8 unchanged sentences

Selling, general and administrative expenses

Income from operations

Interest income

Interest expense

Income before income taxes

Income tax provision

Basic net income per common share

Diluted net income per common share

Weighted average number of shares outstanding

Citi Trends, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

Thirty-Nine Weeks Ended

Cost of sales (exclusive of depreciation)

Selling, general and administrative expenses

Asset impairment

Gain on sale-leaseback

Income from operations

10 unchanged sentences

(in thousands)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

Operating activities:

1 unchanged sentence

Non-cash operating lease costs

Asset impairment

Loss on disposal of property and equipment

2 unchanged sentences

Non-cash stock-based compensation expense

Gain on sale-leaseback

Changes in assets and liabilities:

3 unchanged sentences

Accrued compensation

Income tax receivable

Income tax payable

Layaway deposits

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Investing activities:

Sales/redemptions of investment securities

Purchases of investment securities

Purchases of property and equipment

Insurance proceeds related to investing activities

Net cash (used in) provided by investing activities

Proceeds from sale-leaseback

Net cash provided by (used in) investing activities

Financing activities:

Borrowings under revolving credit facility

Repayments of revolving credit facility

Payments of debt issuance costs

Cash used to settle withholding taxes on the vesting of nonvested restricted stock

Dividends paid to stockholders

Repurchases of common stock

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents:

3 unchanged sentences

Cash paid for interest

Cash payments of income taxes

Cash (refunds) payments of income taxes

Supplemental disclosures of non-cash investing activities:

6 unchanged sentences

Balances — January 29, 2022

Issuance of nonvested shares under incentive plan

Forfeiture of nonvested shares

Stock-based compensation expense

Net share settlement of nonvested shares

Repurchase of common stock

Balances — May 1, 2021

Issuance of nonvested shares under incentive plan

Vesting of nonvested shares

Issuance of nonvested shares

Issuance of comon stock under incentive plan, net of shares withheld for taxes

Forfeiture of nonvested shares

2 unchanged sentences

Repurchase of common stock

Balances — July 31, 2021

Vesting of nonvested restricted stock units

Issuance of nonvested shares under incentive plan

Stock-based compensation expense

Net share settlement of nonvested shares and restricted stock units

Repurchase of common stock

Balances — October 30, 2021

Balances — April 30, 2022

Treasury Stock

Balances — February 1, 2020

Vesting of nonvested restricted stock units

Balances — January 30, 2021

Issuance of nonvested shares under incentive plan

3 unchanged sentences

Repurchase of common stock

Dividends to stockholders ( $ 0.08 per common share)

Balances — May 1, 2021

Issuance of nonvested shares under incentive plan

Stock-based compensation expense

Net share settlement of nonvested shares

Balances — August 1, 2020

Issuance of nonvested shares under incentive plan

Forfeiture of nonvested shares by employees and directors

Stock-based compensation expense

Net share settlement of nonvested shares and restricted stock units

Repurchase of common stock

Balances — October 31, 2020

See accompanying notes to the condensed consolidated financial statements (unaudited).

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (unaudited)

October 30, 2021

April 30, 2022

Significant Accounting Policies

1 unchanged sentence

Citi Trends, Inc.

and its subsidiary (the “Company”) is a growing specialty value retailer of apparel, accessories and home trends primarily for African American and Latinx families.

As of October 30, 2021, the Company operated 600 stores in urban, suburban and rural markets in 33 states.

and its subsidiary (the “Company”) is a growing specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and Latinx families.

As of April 30, 2022, the Company operated 614 stores in urban, suburban and rural markets in 33 states.

The condensed consolidated financial statements are prepared in accordance with U.S.

4 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2021 Form 10-K.

Operating results for the third quarter of 2021 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business and continued uncertainty surrounding the economic impact of the novel coronavirus, including variants of the coronavirus (“COVID-19”) and the duration and extent of any economic stimulus programs.

Operating results for the first quarter of 2022 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business, the current economic uncertainty and the extent to which future business will be impacted by the COVID-19 pandemic.

The following contains references to fiscal years 2022 and 2021, which represent fiscal years ending or ended on January 28, 2023 and January 29, 2022, respectively.

1 unchanged sentence

COVID-19 Pandemic

In March 2020, the World Health Organization declared the spread of the COVID-19 a global pandemic.

The pandemic has resulted in periods of disruption for the Company, including the temporary closure of stores and limited store operating hours, reduced customer traffic and consumer spending, and delays in the manufacturing and shipping of products.

The Company saw improvement in its financial results and positive trends during the latter half of 2020 and through the first three quarters of 2021 as governments eased restrictions and provided economic stimulus, along with the acceleration of vaccine distribution, leading to an increase in spending and increased customer demand.

The Company expects continued uncertainty in its business and the global economy due to the COVID-19 pandemic, including potential volatility in employment trends and consumer confidence, current or future restrictive actions that may be imposed by governments or public health authorities, the duration and extent of any economic stimulus programs, supply chain interruptions, increased distribution and transportation costs, increased payroll expenses, and increased costs to maintain safe work and shopping environments.

The impacts of the pandemic have had, and may continue to have, an adverse impact on the Company’s financial condition, results of operations and liquidity.

The Company will continue to monitor the effects of COVID-19 and take the necessary actions to serve our associates, customers, communities and shareholders.

The COVID-19 pandemic continues to evolve and has caused significant volatility and disruptions in our business, particularly during fiscal 2021 and 2020.

Despite the recent improvement in trends, we cannot reasonably predict the extent to which our future business will be impacted by the pandemic.

Cash and Cash Equivalents/Concentration of Credit Risk

9 unchanged sentences

The Company includes as assumed proceeds the amount of compensation cost attributed to future services and not yet recognized.

For the thirteen weeks ended October 30, 2021 and October 31, 2020, there were 38,000 and 134,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, there were 38,000 and 150,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

For the first quarter of 2022 and 2021, there were 222,000 and 38,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

The following table provides a reconciliation of the weighted average number of 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:

Thirteen Weeks Ended

October 30, 2021

October 31, 2020

Weighted average number of common shares outstanding

Incremental shares from assumed vesting of nonvested restricted stock

Weighted average number of common shares and common stock equivalents outstanding

Thirty-Nine Weeks Ended

October 30, 2021

October 31, 2020

April 30, 2022

Weighted average number of common shares outstanding

1 unchanged sentence

Weighted average number of common shares and common stock equivalents outstanding

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market at the measurement date.

Fair value is established according to a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Unadjusted quoted prices in active markets that are accessible at the measurement date for assets or liabilities.

The fair value hierarchy gives the highest priority to Level 1 inputs.

Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Unobservable inputs are used when little or no market data is available.

Level 3 inputs are given the lowest priority in the fair value hierarchy.

As of October 30, 2021, the Company’s investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity.

Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):

Corporate debt securities (Level 2)

Obligations of states and municipalities (Level 2)

The amortized cost and fair market value of investment securities as of October 30, 2021 by contractual maturity are as follows (in thousands):

Mature in one year or less

Impairment of Assets

If facts and circumstances indicate that a long-lived asset or operating lease right-of-use asset may be impaired, the carrying value is reviewed.

If this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value.

There was no impairment expense recorded in the first thirty-nine weeks of 2021.

In the first thirty-nine weeks of 2020, non-cash impairment charges related to an underperforming store totaled $ 0.3 million, comprised of $ 0.2 million for an operating lease right-of-use asset and $ 0.1 million for leasehold improvements and fixtures and equipment.

Revolving Credit Facility

6 unchanged sentences

Borrowings under the credit facility bear interest (a) for Eurodollar Loans, at a rate equal to the Eurodollar Rate plus either 1.25 % , 1.50 % or 1.75 % , 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 % or (iii) the Eurodollar Rate plus 1.0 % , plus, in each case either 0.25 % , 0.50 % or 0.75 % , based in any such case on the average daily availability for borrowings under the facility.

The Company had no borrowings under the credit facility as of October 30, 2021.

As of April 30, 2022, the Company had no borrowings under the credit facility and $ 0.6 million of letters of credit outstanding.

Income taxes are accounted for under the asset and liability method.

4 unchanged sentences

If there is a change in tax rates, the Company would recognize the impact of such change in income in the period that includes the enactment date.

For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, the Company utilized the annual effective tax rate method to calculate income taxes.

The effective income tax rate was 21.5 % for the first thirty-nine weeks of 2021, compared to 23.2 % for the first thirty-nine weeks of 2020.

The difference in the effective income tax rate was primarily due to a favorable tax impact of restricted stock vestings in the current year, partially offset by an increase in pretax income compared to the same period of 2020.

For the first quarter of 2022 and 2021, the Company utilized the annual effective tax rate method to calculate income taxes.

The effective income tax rate was 23.7 % for the first quarter of 2022, compared to 20.7 % for the first quarter of 2021.

The difference in the tax rate was due to a favorable tax impact of restricted stock vestings in the prior year.

Commitments and Contingencies

4 unchanged sentences

Repurchases of Common Stock

In November 2019, the Company’s board of directors approved a stock repurchase program that authorized the repurchase of up to $ 25 million of the Company’s common stock.

In the first quarter of 2020, the Company repurchased 260,254 shares of its common stock at an aggregate cost of $ 6.3 million.

In March 2020, the Company’s board of directors approved another $ 30 million stock repurchase program.

Shortly thereafter, due to the economic uncertainty stemming from the COVID-19 pandemic, the Company suspended its stock repurchase program until September 2020 when the program was reinstated.

Further, the Company announced that its board of directors approved new $ 30 million stock repurchase programs in each of December 2020, June 2021 and August 2021.

In the first thirty-nine weeks of 2021, the Company repurchased 1,023,343 shares of its common stock under its repurchase programs at an aggregate cost of $ 85.3 million.

In addition, the Company completed a block repurchase of 250,000 shares of its common stock at an aggregate cost of $ 21.9 million.

As of October 30, 2021, the Company had approximately $ 8.1 million available under its previously announced stock repurchase program.

On November 30, 2021, the Company announced that its board of directors authorized another $ 30 million stock repurchase program.

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 were as follows (in thousands, except per share data):

Thirteen Weeks Ended

April 30, 2022

Total number of shares purchased

Average price paid per share (including commissions)

Total investment

On March 15, 2022, the Company announced that its board of directors approved an additional $ 30 million stock repurchase program.

At April 30, 2022, $ 54.7 million remained available under the Company’s stock repurchase authorization.

Revenue Recognition

The Company’s primary source of revenue is derived from the sale of apparel, accessories and home trends to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise.

The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise.

Sales taxes collected by the Company from customers are excluded from revenue.

8 unchanged sentences

The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers.

In the following table, the Company’s revenue is disaggregated by “CITI” or major merchandise category.

The percentage of net sales for each CITI within the merchandise assortment was approximately:

In the following table, the Company’s revenue from contracts with customers is disaggregated by “CITI” or major merchandise category.

The percentage of net sales for each CITI with the merchandise assortment was approximately:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

Beauty & Accessories

Accessories & Beauty

Home & Lifestyle

4 unchanged sentences

The lease liability is measured at the present value of future lease payments as of the lease commencement date.

In April 2022, the Company completed a sale-leaseback of its distribution center in Darlington, South Carolina for net proceeds of approximately $ 45.5 million.

The total annual rent for this property starts at approximately $ 3.2 million with increases of 2 % annually over the 20-year lease term.

The net proceeds included $ 5.6 million of advance funding for a capital improvement project that will be amortized over the 20-year lease term.

The lease contains the option to extend for six additional periods of five years each.

The transaction met the requirements for sale-leaseback accounting, resulting in a gain of approximately $ 34.9 million on the condensed consolidated statements of operations.

The related land and property were removed from property and equipment, and an operating lease right-of-use asset and lease liability of $ 42.6 million and $ 37.0 million, respectively, were recorded in the condensed consolidated balance sheets.

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.

1 unchanged sentence

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

April 30, 2022

Operating lease cost

2 unchanged sentences

Total lease cost

In response to the impact of the COVID-19 pandemic on the Company’s operations, the Company suspended certain lease payments in 2020 under its existing lease agreements.

During the suspension of payments, the Company continued to recognize expenses and liabilities for lease obligations and corresponding right-of-use assets on the balance sheet in accordance with the applicable accounting guidance.

The Company continues to engage in discussions with landlords regarding the potential restructuring of lease payments and rent concessions.

As of October 30, 2021, the Company negotiated contractual rent concessions on many leases in the form of early renewals, rent deferrals and rent abatements.

The Company elected to account for qualifying COVID-19 related rent concessions as if they were part of the enforceable rights and obligations under the existing lease agreements, as permitted by the updated guidance provided by the Financial Accounting Standards Board in April 2020.

As a result of this election, the Company recognized rent abatement credits of approximately $ 0.1 million and $ 0.8 million during the thirteen weeks ended October 30, 2021 and October 31, 2020, respectively.

Future minimum lease payments as of October 30, 2021 are as follows (in thousands):

Future minimum lease payments as of April 30, 2022 are as follows (in thousands):

Remainder of 2022

6 unchanged sentences

Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts):

Thirty-Nine Weeks Ended

October 30, 2021

October 31, 2020

Thirteen Weeks Ended

April 30, 2022

Cash paid for operating leases

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements