US’ Citi Trends posts solid Q3; boosts full-year guidance

Citi Trends, an apparel and accessories retailer, has reported a solid third quarter (Q3) for the period ended November 01, 2025, with total sales rising 10.1 per cent to $197.1 million, driven by a 10.8 per cent increase in comparable store sales.

The retailer said gains in traffic, basket size and conversion reflected the continued success of its three-tiered merchandise strategy, including trendy product, off-price deals and more branded extreme-value offerings.

Citi Trends has delivered a stronger Q3, with sales up 10.1 per cent and comparable store sales rising 10.8 per cent on improved traffic and conversion.
Gross margin dipped due to freight timing, while SG&A rose with higher incentive costs.
Net loss was stable and adjusted EBITDA improved.
With solid year-to-date gains, the retailer raised its 2025 outlook.

Gross margin slipped 90 basis points to 38.9 per cent, in line with internal plans. The company noted normalised product margins plus the pull-forward of freight costs from the fourth quarter, while last year’s margin benefitted from unusually low markdowns and shrink following a strategic inventory reset.

Selling, general, and administrative (SG&A) expenses rose to $79.3 million, mainly due to higher sales processing costs and $3.2 million in incremental incentive compensation tied to improved financial performance. On an adjusted basis, SG&A leveraged 130 basis points year-on-year (YoY). Citi Trends posted a net loss of $6.9 million, broadly unchanged from last year, with adjusted EBITDA improving to a loss of $2.9 million from $3.3 million.

The company remodelled 24 stores and opened three, ending the quarter with 593 locations.

Quarter-end cash stood at $51.1 million with no debt, while merchandise inventory fell 3.1 per cent YoY to $123.5 million, reflecting revised pre-holiday delivery timing, Citi said in a financial release.

“I am pleased to report another quarter of strong results, reflecting disciplined execution and meaningful progress with our strategic transformation. We delivered a strong back-to-school season fuelled by continued momentum in our Children’s, Mens and Basic apparel divisions. I’m also excited to announce that this holiday season we are launching the rebranded Citi Trends ‘Joy Looks Good on You’ campaign and updated social media presence under the ‘@wearecititrends’ tagline,” said Ken Seipel, chief executive officer.

For the 39-week period, total sales increased 8.8 per cent to $589.6 million, with comparable store sales up 10 per cent. Adjusted EBITDA was roughly breakeven, marking a $21.2 million improvement from 2024 on stronger sales, higher gross margin and SG&A leverage.

Citi Trends raised its fiscal 2025 guidance, now expecting high-single-digit comparable store sales growth, gross margin expansion of around 230 basis points and approximately 90 basis points of SG&A leverage. Full-year EBITDA is projected between $10 million and $12 million, exceeding prior expectations. Q4 comparable sales are also expected to rise by high-single digits, with gross margin between 40 and 41 per cent and EBITDA of $10 million to $12 million.

“We have established a clear line of sight to achieve approximately $45 million of EBITDA in fiscal 2027, which would represent a $60 million improvement from 2024 levels. While we’re in the early stages of what I believe will be a compelling transformation, we have built a definitive, actionable and internally controllable plan to accelerate shareholder value creation over the next few years,” Seipel added.

Fibre2Fashion News Desk (HU)