What changed in this filing

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Item 1. Business

2024-04-18 compared with 2023-04-13 · 85 added, 73 removed, 183 unchanged (46% of the section changed)

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Our high-quality and trend-right merchandise offerings at everyday low prices are designed to appeal to the fashion and trend preferences of value-conscious customers.

Based on the strength of our brand and experienced leadership team, we believe we have fostered deep customer loyalty and high shopping frequency in the underserved communities in which we operate.

As a purpose-led company, we strive to consistently bring our purpose – Live BOLD, Live PROUD and Respect ALL – to life for both our customers and our associates each and every day.

Our stores are located at the crossroads of low to moderate income households and serve as a “one-stop shop” for the entire family.

Our stores average approximately 11,000 square feet of selling space and are typically located in outdoor community shopping centers across a variety of urban, suburban and rural markets.

As of January 28, 2023, we operated 611 stores in 33 states, with a focus on delivering a memorable store experience anchored in value.

Based on the strength of our brand and our experienced leadership team, we believe we have fostered deep customer loyalty and high shopping frequency in the underserved neighborhoods in which we operate.

As a purpose-led brand, we strive to consistently bring our purpose – Live BOLD, Live PROUD, Respect ALL – to life for both our customers and our associates each and every day.

Our stores are located primarily in neighborhoods with a concentration of low income households and serve as a “ one-stop shop ” for the entire family.

Our stores average approximately 11,000 square feet of selling space and are typically found in outdoor community shopping centers across a variety of urban, suburban and rural markets.

As of February 3, 2024, we operated 602 stores in 33 states, with a focus on delivering a memorable store experience anchored in value.

Competitive Strengths and Strategies

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We focus our merchandise on being fashionable and trend-right to appeal to our core customers.

We do not attempt to dictate trends, but rather, we devote considerable effort to identifying emerging trends and ensuring that our wide assortment of apparel and non-apparel merchandise is curated to appeal to the preferences of our target customers.

Our buying team tests new and emerging trends before reordering and actively manages the mix of basic, fashion, trend and branded products in our stores to keep the offering fresh and current.

Superior Value Proposition .

We seek to offer top quality, fashionable merchandise for way less spend.

We seek to offer high quality, fashionable merchandise for way less spend.

We believe our value proposition provides important access to trends for the lower-income customers we serve.

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instead, our everyday low price points offer superior value, allowing our customers to purchase multiple items per visit.

Our advertising expenses are low, as we do not rely on promotion-driven sales and instead seek to build our reputation through word-of-mouth awareness of our value in the communities we serve.

We do not rely on promotion-driven sales and instead seek to build our reputation through a steady stream of weekly in-store deliveries of the latest trends which drives word-of-mouth awareness of our value in the neighborhoods we serve.

One-Stop Shop for the Entire Family .

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Every store offers a wide variety of always-changing, curated products for men and women of all sizes and children from newborn to size 20.

Our stores include a wide assortment of sportswear, dresses, outerwear, footwear, intimate apparel and sleepwear, jewelry, handbags, beauty products, home goods, tech accessories, health and beauty aids, candy, fitness products, team sports products, toys and books.

We believe that our small-footprint stores, combined with a specialty store experience, friendly customer service where we often know the customer’s name, and breadth of merchandise, distinguishes our stores from many competitors and creates an exciting and welcoming environment that encourages repeat visits from the local community.

Our stores include a wide assortment of sportswear, dresses, outerwear, intimate apparel and sleepwear, footwear, jewelry, handbags, beauty products, home goods, tech accessories, health and beauty aids, candy, fitness products, team sports products, toys and books.

We believe that our small-footprint stores, combined with a specialty store experience, friendly customer service where we often know our customers ’ names, and breadth of merchandise, distinguishes our stores from many competitors and creates an exciting and welcoming environment that encourages repeat visits from the local community.

Strong and Flexible Sourcing Relationships .

We maintain strong sourcing relationships with a large group of suppliers.

Our buying team, located primarily in New York City, plans, develops and creates (i) curated assortments by purchasing goods developed specifically with our customers in mind and (ii) opportunistically available excess inventory from reliable and trustworthy vendors, with the majority of our merchandise purchased for the current season and a lesser quantity held for sale in future seasons.

Our buying team, located primarily in New York City, plans, develops and creates curated assortments by (i) purchasing goods developed specifically with our customers in mind, (ii) selecting products for our customers from vendor catalogs and (iii) buying opportunistically available excess inventory from reliable and trustworthy vendors, with the majority of our merchandise purchased for the current season and a lesser quantity held for sale in future seasons.

To foster vendor relationships, we do not ask for typical retail concessions, such as promotional and markdown allowances.

Our closeknit vendor partnerships enable us to deliver fresh items weekly to our stores, positioning us as an “ instant gratification store ” , allowing our customers to “ buy now, wear now ” and avoid shipping fees and the wait for their potential online orders.

Dynamic Experience in a Friendly and Fun Environment .

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Non-apparel products are displayed on fixtures that highlight prints, patterns and themes of trend-right categories.

Our stores are easy to navigate, carpeted, well-lit and feature upbeat and trend-right overhead music appropriate for our target customers.

Our stores are easy to navigate, carpeted, well-lit and feature upbeat and current overhead music appropriate for our target customers.

Our stores are neat, orderly and clean, offering a friendly and fun environment.

In the first quarter of fiscal 2021, we launched our first “ CTx ” store, which represents the first major overhaul to our store format in over 10 years.

Our CTx format is a completely redesigned floor layout with an emphasis on visual merchandising that provides an enhanced shopping experience for our customers and drives sales conversion.

Our CTx format is a completely redesigned floor layout with an emphasis on visual merchandising that provides an enhanced shopping experience for our customers and drives traffic, average basket and conversion.

Going forward, all of our new and remodeled stores will be based on the CTx format.

Approximately 13% of our fleet was in the CTx format as of January 28, 2023.

Approximately 15% of our fleet was in the CTx format as of February 3, 2024.

Friendly and Helpful Store Associates .

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We have always led with a diverse and inclusive workplace;

more than 80% of our store associates are African American or multicultural, and more than 90% of our store management positions are filled by women.

90% of our store associates are African American or multicultural, and more than 91% of our store management positions are filled by women.

As a result, our store associates cultivate a unique culture at our stores that creates a high level of connectivity with our customers.

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Compelling and Cost-Effective Store Locations .

We locate our stores in high-traffic outdoor community shopping centers that are convenient to low and moderate income neighborhoods.

We generally utilize previously occupied store sites, which enables us to obtain attractive rents.

At the same time, from an investment perspective, we seek to design stores that are inviting and easy to shop, while limiting startup and fixturing costs.

We locate our stores in high-traffic outdoor neighborhood shopping centers that are convenient to primarily lower income families.

We generally utilize previously occupied store sites in locations where we are often the brightest and cleanest store in the shopping center, which enables us to obtain attractive rents.

When opening new

stores, we seek to partner with landlords that contribute to buildout costs, which helps maintain lower startup and fixturing investment.

Highly Talented and Motivated Leadership Team .

Our senior management team, led by David Makuen, our Chief Executive Officer, has extensive retail experience across a broad range of disciplines, including merchandising, real estate, finance, store operations, supply chain management and information technology.

Our management team plans and drives our growth strategy,

which is based on our constant focus on providing trend-driven merchandise anchored in value to the lower income, underserved African American and multicultural populations.

Our management team plans and drives our growth strategy, which is based on our constant focus on providing trend-driven merchandise anchored in value to the lower income, underserved African American and multicultural populations.

We believe our management team is integral to our success and positions us well for long-term growth.

Business Strategy

We believe that Citi Trends is in a unique position to serve our loyal customer base, with a long runway for store growth and a motivated leadership team supported by a healthy balance sheet.

We believe that Citi Trends is in a unique position to serve our loyal customer base, with a long runway for comp sales growth, store unit growth and a motivated leadership team supported by a healthy balance sheet.

We have identified the following four priorities that we believe will support long-term sales and earnings growth:

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We are continuing to remodel existing stores in this new CTx format, and all new stores will open in the CTx format.

While we believe that maximizing the productivity of our existing fleet provides significant opportunity for sales and earnings growth, we continue to believe that Citi Trends can grow to approximately 1,000 locations over time.

This goal, supported by a third-party study conducted in 2020, represents a potential 65% increase in the size of our current fleet, giving us the opportunity to increase our presence in both African American and multicultural geographies.

While we believe that maximizing the productivity of our existing fleet provides significant opportunity for sales and earnings growth, we continue to believe that Citi Trends has the potential to grow to approximately 1,000 locations over time.

This goal, supported by a third-party study conducted in 2020, represents a potential 65% increase in size of our current fleet, giving us the opportunity to increase our presence in both African American and multicultural geographies.

Managing Inventory and Maximizing Margin .

We believe that our sourcing methodology further differentiates our model.

Through a combination of products made exclusively for our core customers and highly recognized brands grounded in everyday value, we are known for delivering newness and freshness, resulting in a high-repeat shopping rate.

Our open-to-buy process allows us to be flexible and respond to trends.

Through a combination of products made exclusively for our core customers, available market goods and highly recognized brands grounded in everyday value, we are known for delivering newness and freshness, resulting in high shopping frequency.

Our open-to-buy process allows us to be flexible and responsive to emerging trends.

We practice rigorous inventory management, prioritizing choice and breadth over depth, improving our speed to market and driving faster turns.

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Continued expansion of non-apparel categories and investments in systems and automation will further optimize our product mix.

Further, we employ disciplined pricing studies to underpin our value offering while expanding margin, and we offer balanced “good, better, best” pricing tiers in certain areas of our assortment.

Further, we employ disciplined pricing studies to underpin our value offering while expanding margin, and we offer balanced “ good, better, best ” pricing tiers in most areas of our assortment.

Investing in Our Infrastructure .

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● “ Buy ” is everything associated with buying, planning and allocating the assortments that we offer to our customers.

We are currently investing in systems and data to enhance our teams’ roles and operations.

We recently invested in systems and data to enhance our teams ’ roles and operations.

● “ Move ” comprises our supply chain and our methods for moving goods from the time an order is placed until it arrives at the selling floor.

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Making a Difference .

Our team is committed to making a difference in the African American and multicultural communities that we serve.

Our team is committed to making a difference in the African American and multicultural neighborhoods that we serve.

We are on a journey towards enhancing our company-wide sustainability, diversity and inclusion and ethics-based efforts.

See “Community Involvement” under “Human Capital Management” below for more information on our initiatives to make a difference.

See “ Neighborhood Involvement ” under “ Human Capital Management ” below for more information on our CITI cares Council and initiatives designed to make a difference.

We plan to continue to integrate social and environmental sustainability into business practices to support long-term growth.

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Our merchandise is represented by six distinct “ Citis ” within the store:

a wide selection of apparel for juniors, missy and women (plus size), including fashion sportswear, outerwear, sleepwear, lingerie and scrubs.

a wide selection of apparel for men and big men, including fashion sportswear and outerwear.

fashion clothing for boys and girls up to size 20 and sizes for newborns, infants and toddlers, as well as kids uniforms and kids accessories.

a wide selection of apparel for juniors, missy and women (plus size), including trend right sportswear, outerwear, sleepwear, lingerie and scrubs.

a wide selection of apparel for men and big men, including trend right sportswear and outerwear.

a wide assortment of basics, fashion and trends for boys up to size 20 and girls up to size 16.

Also, sizes for newborns, infants and toddlers, as well as kids uniforms and kids accessories.

● Accessories & Beauty:

fashionable handbags, luggage, hats, belts, sunglasses, jewelry and watches for men and women, as well as basic undergarments for the entire family and expansive beauty and fragrance offerings for women and men.

fashionable handbags, luggage, hats, belts, sunglasses, jewelry and watches for men and women, underwear and socks for the entire family, as well as beauty and fragrance offerings for women and men.

● Home & Lifestyle:

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Our goal is to deliver outstanding value every day.

We do this by offering access to fashion and trends at affordable prices that are desirable for low- to moderate-income customers.

We do this by offering access to fashion and trends at affordable prices that are desirable for lower income families.

As a normal course, we do not engage in promotional activity such as high-low pricing, coupons or sales other than our regularly scheduled markdowns.

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Our buyers have extensive experience and have developed long-standing relationships with many of our vendors.

Our buying office is located in New York City, and the team travels regularly to the major United States markets, visiting major manufacturers and attending national and regional trade shows.

Our buying office is located in New York City, and the team travels regularly to the major United States markets, visiting manufacturers and attending national and regional trade shows.

Our buying team sources goods in a couple of ways.

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Our buyers collaborate with these vendors to design products that are of high aesthetic value and appealing to our customers.

Second, we maintain strong relationships with nationally recognized brands that we partner with to buy and customize products that are geared in size, color and style towards our core customers.

The majority of our merchandise is first-quality and purchased in season.

High-quality excess inventory is purchased at advantageous pricing with the intent to sell later in the same season or the following season.

Second, we maintain strong relationships with nationally recognized brands and labels that we partner with to buy and customize products that are curated in size, color and style for our core customers.

Third, we leverage our vendor relationships to opportunistically buy close-out product at incredible value.

The majority of our merchandise is first-quality and delivered in season.

purchase high-quality excess inventory at advantageous pricing with the intent to sell later in the same season or the following season.

This allows us to deliver exciting value on select highly desirable goods.

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A store-level planning system assists our planning and allocation teams in their efforts to allocate merchandise to individual stores based on sales performance and planned inventory levels.

We plan to implement significant technology upgrades to each of these systems in fiscal 2023 after a system disruption at the end of fiscal 2022 delayed our original plans.

We launched a significant technological upgrade to our Planning and Allocations systems in 2023.

Leveraging the new environment, we are able to more effectively allocate products, strategically distributing them across weather zones, volume bands, and demographic segments.

These upgrades should optimize our inventory distribution to better meet the needs of our customers.

Our buyers also regularly review the age and performance of merchandise and manage both the reordering and markdown processes.

Store Operations

Our stores are located in the heart of the lower-income communities we serve.

Our stores are located in the heart of the lower-income neighborhoods we serve.

We hire a diverse staff of women and men from the local area surrounding our stores.

As of January 28, 2023, more than 80% of our store associates are African American or multicultural, and more than 90% of our store management positions are filled by women.

As of February 3, 2024, 90% of our store associates are African American or multicultural, and more than 91% of our store management positions are filled by women.

We cater to entire families and offer a one-stop shopping experience in the communities in which we operate.

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Cost-effective store locations are an important part of our store profitability model.

Accordingly, we look for locations in outdoor community shopping centers that offer attractive rents and meet our demographic and economic criteria.

Accordingly, we look for locations in outdoor neighborhood shopping centers that offer attractive rents and meet our demographic and economic criteria.

We have a dedicated real estate management team responsible for new store site selection, and we employ rigorous analysis to approve final store selection decisions.

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We aim to be an integral part of our customers ’ community by providing a compelling shopping destination and career opportunities.

After completing a study in 2020 with a third-party provider, we believe we can grow our fleet to approximately 1,000 stores over time.

After completing a study in 2020 with a third-party provider, we believe we have the potential to grow our fleet to approximately 1,000 stores over time.

Advertising and Marketing

Our marketing goals are to build the Citi Trends brand, promote customers’ association of the Citi Trends brand with value, quality, fashion and everyday low prices and drive traffic into our stores.

We generally focus our advertising efforts on utilizing emails, social media and text messaging.

We use our social media channels to highlight our brand and engage our customers with compelling digital content on a regular basis.

Our website at www.cititrends.com showcases our latest in-store products and provides information about our business, including a store locator.

Our marketing goals are to build awareness of the Citi Trends brand, promote customers ’ association of the Citi Trends brand with value, quality, fashion and everyday low prices, engage our customers in meaningful ways, and drive traffic into our stores.

We generally focus our organic advertising efforts on emails, social media and text messaging.

We use our social media

channels to highlight our brand and engage our customers with compelling digital content on a regular basis.

We generally focus our paid marketing efforts on radio, digital ads, paid social media influencers, and website retargeting.

Our website, cititrends.com , showcases our latest in-store products and provides information about our business, our locations, and more.

The majority of merchandise sold in our stores is shipped directly from our company-operated distribution centers in Darlington, South Carolina and Roland, Oklahoma, utilizing third-party delivery partners.

Our stores receive multiple shipments of merchandise each week from our distribution centers.

In addition, we initiated a vendor direct-to-store shipping program in fiscal 2020 that continues to enable us to expedite the delivery of select merchandise to our stores by shipping directly from our vendors.

In addition, we utilize a vendor direct-to-store shipping program that enables us to expedite the delivery of select merchandise to our stores by shipping directly from our vendors.

The Darlington distribution center has 550,000 square feet of space, and the Roland distribution center has 565,000 square feet of space.

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These systems support purchase order management, price and markdown management, merchandise planning and allocation, general ledger, accounts payable, sales audit, loss prevention, store operations and supply chain functions.

We have developed and are executing on our strategic roadmap to upgrade our information systems.

In fiscal 2021, we implemented a cloud-based business intelligence platform to provide robust analytical capabilities across our enterprise and extend visibility to granular levels of the business.

In addition, we completed a project to replace our point-of-sale systems across the entire fleet of stores, which included new hardware, software and payment systems, to improve our store operational processes, increase transactional efficiencies and provide enhanced visibility to the business.

We will continue to execute on our roadmap in fiscal 2023 with the planned implementation of an upgraded ERP system that was delayed due to the cyber disruption at the end of fiscal 2022, as well as an increased focus on modernizing our supply chain systems and further enhancing our merchandising, planning and allocation systems to advance our use of data and analytics.

We have developed and are continuing to execute our strategic technology roadmap.

In fiscal 2023, we made significant improvements to our systems as we successfully upgraded our enterprise resource planning system ( “ ERP ” ) which marked a pivotal milestone for the Company.

The upgraded environment included the implementation of new Planning & Allocation systems as well as a new Enterprise Data Warehouse.

These new systems enable us to manage our business operations with greater precision and agility, while leveraging data-driven insights to inform decision making across our organization.

This upgrade enabled significant enhancements to our systems and also provides the foundation for future growth and innovation.

The markets we serve are highly competitive.

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Our marks registered with the U.S.

Patent and Trademark Office include “Citi Trends,” “Citi Steps,” “Citi Trends Fashion for Less,” “CitiHome,” “CitiCARES,” “Lovestar,” “MCMXXXIII,” “Lil Ms Hollywood,” “Red Ape,” and “Vintage Harlem.” Our policy is to pursue registration of our marks and to vigorously protect them.

Patent and Trademark Office include “ Citi Trends, ” “ Citi Steps, ” “ Citi Trends Fashion for Less, ” “ CitiHome, ” “ CITI cares , ” “ MCMXXXIII, ” “ Lil Ms Hollywood, ” “ Red Ape, ” and “ Vintage Harlem.

” Our policy is to pursue registration of our marks and to vigorously protect them.

The nature of our business is seasonal.

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The success of Citi Trends is directly attributable to our people and their passion to achieve our performance goals.

We recognize the importance of attracting and retaining top talent in our workforce that reflects the communities we serve.

We strive to make Citi Trends a diverse, inclusive and safe workplace, with opportunities for our associates to grow and develop in their careers, supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between our associates and their communities.

As of January 28, 2023, we had approximately 2,700 full-time and approximately 2,100 part-time associates.

We recognize the importance of attracting and retaining top talent in our workforce that reflects the neighborhoods we serve.

We strive to make Citi Trends a diverse, inclusive and safe workplace, with opportunities for our associates to grow and develop in

their careers, supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between our associates and their communities.

As of February 3, 2024, we had approximately 2,700 full-time and approximately 2,100 part-time associates.

Of these associates, approximately 4,000 are employed in our stores and the remainder are employed in our distribution centers, buying offices and corporate office.

We are not a party to any collective bargaining agreements, and none of our associates are represented by a labor union.

Corporate Culture.

In fiscal 2021, we launched a comprehensive new purpose and values culture platform.

“ CITI LIFE ” - Corporate Culture.

Our purpose and values culture platform is a primary driver of how our teams collaborate on projects and initiatives that contribute to our results and ability to attract new talent who desire to work for a purpose-led brand.

The foundation of “ Citi Life ” is that Life is best when you Live BOLD, Live PROUD and Respect ALL.

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We continue to focus on attracting, developing and retaining team members that reflect the diverse communities we serve.

As of January 28, 2023, more than 80% of our team members are African American or multicultural and 84% are female.

As of February 3, 2024, 85% of our team members are African American or multicultural and 82% are female.

In addition, three of our nine board members are African American females.

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Accordingly, we are committed to the health, safety and wellness of our associates.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our associates as well as the communities in which we operate.

We continue to follow guidance released by state and federal health officials to create a safe environment for our associates to work and our customers to shop.

As of the end of fiscal 2022, many of the associates at the Company’s corporate and buying offices continued to work remotely.

We follow guidance released by state and federal health officials to create a safe environment for our associates to work and our customers to shop.

Compensation and Benefits .

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Commensurate with our purpose and values, we continually seek ways to enhance our training and development programs to further ensure they provide associates with the resources they need to help achieve their career goals and build management and leadership skills.

Community Involvement .

We believe that building connections among our associates, their families and our communities creates a more meaningful, fulfilling and enjoyable workplace.

We formed the CITI cares (“cares” - Citi Trends Against Racism Employee Solutions) Council in August 2020 to create and oversee initiatives of change that will have a positive impact in the lives of our customers and associates.

The CITI cares Council is a diverse group of our associates who are passionate about making a difference.

They represent every division and level of the company that reflects gender, ethnic and geographic diversities.

The purpose of the CITI cares Council is to collaborate with community leaders, organizations, individuals and established programs in local underserved communities on the core areas of education, healthcare, employment and exposure.

Citi Trends has been engaged in multiple community programs.

In February 2021, we launched our Black History Makers program to honor Black entrepreneurs who are making an impact in their communities.

The program is designed to increase awareness of Black-owned businesses, and we provided ten $5,000 grants to Black business owners.

We conducted the program again in February 2022, and we launched our third annual campaign for this program in February 2023 to continue building on the momentum.

Neighborhood Involvement .

We believe that building connections among our associates, their families and our communities creates a more meaningful, fulfilling and enjoyable workplace and a tighter-knit community.

We also believe in giving back to the people and communities we serve.

In August 2020, internal stakeholders convened the CITI cares Council, a diverse group of our associates who are passionate about making a difference.

These associates work in every division and at every level of the company and reflect a diversity of genders, ethnicities and geographies.

Underscoring everything we do, the Council creates and oversees initiatives that drive positive change and growth for our customers and associates.

It collaborates with community leaders, organizations, individuals, and established programs in local underserved communities.

Since 2022, the CITIcares Council has partnered with established Goodwill community programs.

Citi Trends' donations of new, quality clothing and home goods generate funds to advance select Goodwill programs which align with our values.

Our partnership is currently active in fifteen markets, and we plan to expand this partnership over time to serve more of our collective communities.

Citi Trends empowers small business owners in our store areas through our Black History Makers Grant program.

Launched in 2021, the program supports Black entrepreneurs who are making an impact in their communities.

It is designed to increase awareness of Black-owned businesses, and we provide ten $5,000 grants to Black business owners each year.

Since its launch, CITI cares , on behalf of Citi Trends, has awarded a total of $150,000 to 30 outstanding Black entrepreneurs.

Available Information

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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-K

Item 1. Business