What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-06-07 compared with 2022-12-08 · 54 added, 121 removed, 181 unchanged (49% of the section changed)

8 unchanged sentences

Total current assets

Property and equipment, net of accumulated depreciation of $ 258,622 and $ 283,445 as of October 29, 2022 and January 29, 2022, respectively

Property and equipment, net of accumulated depreciation of $ 265,473 and $ 262,525 as of April 29, 2023 and January 28, 2023, respectively

Operating lease right of use assets

6 unchanged sentences

Accrued compensation

Income tax payable

Layaway deposits

6 unchanged sentences

Authorized 32,000,000 shares;

16,160,267 shares issued as of October 29, 2022 and 16,090,365 shares issued as of January 29, 2022;

8,356,254 shares outstanding as of October 29, 2022 and 8,617,210 shares outstanding as of January 29, 2022

16,116,915 shares issued as of April 29, 2023 and 16,158,494 shares issued as of January 28, 2023;

8,312,902 shares outstanding as of April 29, 2023 and 8,354,481 shares outstanding as of January 28, 2023

Paid in capital

1 unchanged sentence

Treasury stock, at cost;

7,804,013 shares held as of October 29, 2022 and 7,473,155 shares held as of January 29, 2022

7,804,013 shares held as of April 29, 2023 and 7,804,013 shares held as of January 28, 2023

Total stockholders’ equity

9 unchanged sentences

Gain on sale-leaseback

Income from operations

Interest income

Interest expense

Income before income taxes

Income tax expense

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

Gain on sale-leasebacks

Income from operations

(Loss) Income from operations

Interest income

Interest expense

Income before income taxes

Income tax expense

Basic net income per common share

Diluted net income per common share

(Loss) Income before income taxes

Income tax benefit (expense)

Net (loss) income

Basic net (loss) income per common share

Diluted net (loss) income per common share

Weighted average number of shares outstanding

3 unchanged sentences

(in thousands)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

Operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Non-cash operating lease costs

3 unchanged sentences

Non-cash stock-based compensation expense

Gain on sale-leasebacks

Gain on sale-leaseback

Changes in assets and liabilities:

5 unchanged sentences

Layaway deposits

Net cash (used in) provided by operating activities

Net cash used in operating activities

Investing activities:

Purchases of investment securities

Purchases of property and equipment

1 unchanged sentence

Proceeds from sale-leasebacks

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Financing activities:

3 unchanged sentences

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents:

3 unchanged sentences

Cash paid for interest

Cash payments of income taxes

Cash payments (refunds)of income taxes

Supplemental disclosures of non-cash investing activities:

7 unchanged sentences

Vesting of nonvested shares

Issuance of nonvested shares under incentive plan

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

Issuance of nonvested shares

Forfeiture of nonvested shares

1 unchanged sentence

Net share settlement of nonvested shares

Repurchase of common stock

Balances — April 29, 2023

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 — July 30, 2022

Vesting of nonvested shares

Issuance of nonvested shares under incentive plan

Forfeiture of nonvested shares

Stock-based compensation expense

Net share settlement of nonvested shares

Balances — October 29, 2022

Treasury Stock

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 restricted stock units

Issuance of nonvested shares

Issuance of common 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

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

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (unaudited)

October 29, 2022

April 29, 2023

Significant Accounting Policies

1 unchanged sentence

Citi Trends, Inc.

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

As of October 29, 2022, the Company operated 615 stores in urban, suburban and rural markets in 33 states.

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

As of April 29, 2023, the Company operated 608 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 2022 Form 10-K.

Operating results for the third 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.

Fiscal 2022 and 2021 both have 52 -week accounting periods.

Operating results for the first quarter of 2023 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 the current economic uncertainty.

The following contains references to fiscal years 2023 and 2022, which represent fiscal years ending or ended on February 3, 2024 and January 28, 2023, respectively.

Fiscal 2023 has a 53 -week accounting period, and fiscal 2022 had a 52 -week accounting period.

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 third quarter of 2022 and 2021, there were 220,000 and 38,000 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 29, 2022 and October 30, 2021, there were 226,000 and 38,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

For the first quarter of 2023 and 2022, there were 102,000 and 222,000 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 29, 2022

October 30, 2021

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 29, 2022

October 30, 2021

April 29, 2023

April 30, 2022

Weighted average number of common shares outstanding

4 unchanged sentences

The facility was amended in August 2015 and May 2020 to extend the maturity dates.

The facility was further amended on April 15, 2021 to modify terms and extend the maturity date to April 15, 2026.

The facility was further amended in April 2021 to modify terms and extend the maturity date to April 15, 2026.

In May 2023, the facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”).

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.

1 unchanged sentence

The facility has an unused commitment fee of 0.20 % and permits the payment of cash dividends subject to certain limitations.

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.

As of October 29, 2022, the Company had no borrowings under the credit facility and $ 0.6 million of letters of credit outstanding.

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 1.25 % , 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.

As of April 29, 2023, 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 29, 2022 and October 30, 2021, the Company utilized the annual effective tax rate method to calculate income taxes.

The effective income tax rate was 23.0 % for the first thirty-nine weeks of 2022, compared to 21.5 % for the first thirty-nine weeks of 2021.

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

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022 ("IRA").

The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate alternative minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022.

The Company is continuing to evaluate the IRA and its potential impact on future periods, and at this time the Company does not expect the IRA to have a material impact on its consolidated financial statements.

The Company has historically used the annual effective tax rate method to calculate income taxes.

For the first quarter of 2023, the Company used the discrete effective tax rate method to determine its tax expense based upon interim period results.

The Company determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the first quarter of 2023.

Commitments and Contingencies

3 unchanged sentences

Stock Repurchases

Repurchases of Common Stock

The Company periodically repurchases shares of its common stock under board-authorized repurchase programs.

2 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

April 29, 2023

April 30, 2022

Total number of shares purchased

1 unchanged sentence

Total investment

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

At October 29, 2022, $ 50.0 million remained available under the Company’s stock repurchase authorization.

At April 29, 2023, $ 50.0 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 clothing, 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 from sales to customers is disaggregated by “CITI” or major merchandise category.

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

Accessories & Beauty

Home & Lifestyle

The Company leases its retail store locations and certain office space and equipment.

The Company leases its retail store locations, 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.

In April 2022, the Company completed a sale-leaseback of its distribution center in Darlington, South Carolina that resulted in a gain of $ 34.9 million and a 20-year lease term with the option to extend for six additional periods of five years each.

In September 2022, the Company completed a sale-leaseback of its distribution center in Roland, Oklahoma that resulted in a gain of $ 29.2 million and a 15-year lease term with the option to extend for six additional periods of five years each.

The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized.

1 unchanged sentence

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.

In September 2022, the Company completed a sale-leaseback of its distribution center in Roland, Oklahoma for net proceeds of approximately $ 35.6 million.

The total annual rent for this property starts at approximately $ 2.7 million with increases of 2 % annually over the 15-year lease term.

The net proceeds included $ 0.6 million of advance funding for a capital improvement project that will be amortized over the 15-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 $ 29.2 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 $ 29.5 million and $ 25.8 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 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

April 29, 2023

April 30, 2022

Operating lease cost

2 unchanged sentences

Total lease cost

Future minimum lease payments as of October 29, 2022 are as follows (in thousands):

Future minimum lease payments as of April 29, 2023 are as follows (in thousands):

Remainder of 2023

4 unchanged sentences

(2) Includes short-term and long-term portions of operating lease liabilities.

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

Thirty-Nine Weeks Ended

October 29, 2022

October 30, 2021

Thirteen Weeks Ended

April 29, 2023

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