Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 01, 2020 | Aug. 17, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Aug. 1, 2020 | |
Entity File Number | 000-51315 | |
Entity Registrant Name | CITI TRENDS, INC. | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 52-2150697 | |
Entity Address, Address Line One | 104 Coleman Boulevard | |
Entity Address, City or Town | Savannah | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 31408 | |
City Area Code | 912 | |
Local Phone Number | 236-1561 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | CTRN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,634,162 | |
Current Fiscal Year End Date | --01-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001318484 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Aug. 01, 2020 | Feb. 01, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 146,741 | $ 19,923 |
Short-term investment securities | 5 | 27,562 |
Inventory | 94,545 | 138,258 |
Prepaid and other current assets | 16,847 | 14,278 |
Income tax receivable | 1,055 | 1,186 |
Total current assets | 259,193 | 201,207 |
Property and equipment, net of accumulated depreciation of $271,749 and $262,570 as of August 1, 2020 and February 1, 2020, respectively | 61,923 | 64,985 |
Operating lease right of use assets | 171,711 | 169,854 |
Long-term investment securities | 15,675 | |
Deferred income taxes | 7,234 | 6,669 |
Other assets | 763 | 755 |
Total assets | 500,824 | 459,145 |
Current liabilities: | ||
Accounts payable | 77,679 | 79,596 |
Operating lease liabilities | 46,777 | 42,944 |
Accrued expenses | 15,802 | 14,755 |
Accrued compensation | 13,136 | 13,013 |
Layaway deposits | 724 | 554 |
Total current liabilities | 154,118 | 150,862 |
Noncurrent operating lease liabilities | 139,877 | 135,316 |
Revolving credit facility | 41,600 | |
Other long-term liabilities | 1,772 | 1,923 |
Total liabilities | 337,367 | 288,101 |
Stockholders' equity: | ||
Common stock, $0.01 par value. Authorized 32,000,000 shares; 15,967,948 shares issued as of August 1, 2020 and 15,907,666 shares issued as of February 1, 2020; 10,634,162 shares outstanding as of August 1, 2020 and 10,834,134 shares outstanding as of February 1, 2020 | 158 | 157 |
Paid in capital | 93,702 | 93,180 |
Retained earnings | 184,916 | 186,772 |
Treasury stock, at cost; 5,333,786 shares held as of August 1, 2020 and 5,073,532 shares held as of February 1, 2020 | (115,319) | (109,065) |
Total stockholders' equity | 163,457 | 171,044 |
Commitments and contingencies (note 8) | ||
Total liabilities and stockholders' equity | $ 500,824 | $ 459,145 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Aug. 01, 2020 | Feb. 01, 2020 |
Condensed Consolidated Balance Sheets | ||
Accumulated depreciation | $ 271,749 | $ 262,570 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 32,000,000 | 32,000,000 |
Common stock, shares issued | 15,967,948 | 15,907,666 |
Common stock, shares outstanding | 10,634,162 | 10,834,134 |
Treasury stock, shares | 5,333,786 | 5,073,532 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Oct. 31, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Consolidated Statements of Operations | |||||||
Net sales | $ 216,151 | $ 182,830 | $ 332,275 | $ 387,862 | |||
Revenue, Product and Service [Extensible List] | Net sales | Net sales | Net sales | Net sales | |||
Cost of sales (exclusive of depreciation) | $ (127,147) | (114,612) | (211,517) | (242,850) | |||
Selling, general and administrative expenses | (57,623) | (62,989) | (111,699) | (126,436) | |||
Depreciation | (4,933) | (4,607) | (9,879) | (9,221) | |||
Asset impairment | (472) | (286) | (472) | ||||
(Loss) Income from operations | 26,448 | 150 | (1,106) | 8,883 | |||
Interest income | 14 | 414 | 231 | 793 | |||
Interest expense | (377) | (40) | (540) | (78) | |||
(Loss) Income before income taxes | 26,085 | 524 | (1,415) | 9,598 | |||
Income tax benefit (provision) | (6,218) | (147) | 390 | (1,433) | |||
Net (loss) income | $ 19,867 | $ 377 | $ (1,025) | $ 8,165 | |||
Basic net (loss) income per common share | $ 1.90 | $ 0.03 | $ (0.10) | $ 0.68 | |||
Diluted net (loss) income per common share | $ 1.90 | $ 0.03 | $ (0.10) | $ 0.68 | |||
Weighted average number of shares outstanding | |||||||
Basic | 10,451,194 | 11,881,896 | 10,446,915 | 11,929,019 | |||
Diluted | 10,458,036 | 11,881,896 | 10,446,915 | 11,944,101 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 01, 2020 | Aug. 03, 2019 | |
Operating activities: | ||
Net (loss) income | $ (1,025) | $ 8,165 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 9,879 | 9,221 |
Non-cash operating lease costs | 23,829 | 23,041 |
Asset impairment | 286 | 472 |
Loss on disposal of property and equipment | 5 | 22 |
Deferred income taxes | (565) | 88 |
Insurance proceeds related to operating activities | 1,012 | |
Non-cash stock-based compensation expense | 1,005 | 1,054 |
Changes in assets and liabilities: | ||
Inventory | 43,713 | 7,424 |
Prepaid and other current assets | (6,729) | (2,808) |
Other assets | (8) | (32) |
Accounts payable | (2,239) | (2,190) |
Accrued expenses and other long-term liabilities | (13,181) | (22,566) |
Accrued compensation | 122 | (1,489) |
Income tax receivable/payable | 131 | (2,493) |
Layaway deposits | 170 | 1,145 |
Net cash provided by operating activities | 55,393 | 20,066 |
Investing activities: | ||
Sales/redemptions of investment securities | 43,754 | 29,554 |
Purchases of investment securities | (522) | (25,073) |
Purchases of property and equipment | (5,839) | (8,374) |
Insurance proceeds related to investing activities | 573 | |
Net cash provided by (used in) investing activities | 37,393 | (3,320) |
Financing activities: | ||
Borrowings under revolving credit facility | 43,700 | |
Repayments of revolving credit facility | (2,100) | |
Cash used to settle withholding taxes on the vesting of nonvested restricted stock | (483) | (728) |
Dividends paid to stockholders | (831) | (1,912) |
Repurchases of common stock | (6,254) | (4,544) |
Net cash provided by (used in) financing activities | 34,032 | (7,184) |
Net increase in cash and cash equivalents | 126,818 | 9,562 |
Cash and cash equivalents: | ||
Beginning of period | 19,923 | 17,863 |
End of period | 146,741 | 27,425 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 424 | 62 |
Cash payments of income taxes | 44 | 3,838 |
Supplemental disclosures of non-cash investing activities: | ||
Accrual for purchases of property and equipment | $ 1,088 | $ 343 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Paid in Capital | Retained Earnings | Treasury Stock | Total |
Balances at Feb. 02, 2019 | $ 157 | $ 91,794 | $ 176,094 | $ (80,620) | $ 187,425 |
Balances (in shares) at Feb. 02, 2019 | 15,827,713 | 3,669,476 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Vesting of nonvested restricted stock units | $ 1 | 1 | |||
Issuance of nonvested shares under incentive plan (in shares) | 57,133 | ||||
Stock-based compensation expense | 706 | 706 | |||
Net share settlement of nonvested shares and restricted stock units | $ (1) | (712) | (713) | ||
Net share settlement of nonvested shares and restricted stock units (in shares) | (36,237) | ||||
Repurchase of common stock | $ (1,640) | (1,640) | |||
Repurchase of common stock (in shares) | 82,312 | ||||
Dividends paid to stockholders | (958) | (958) | |||
Net (loss) income | 7,788 | 7,788 | |||
Balances at May. 04, 2019 | $ 157 | 91,788 | 180,864 | $ (82,260) | 190,549 |
Balances (in shares) at May. 04, 2019 | 15,848,609 | 3,751,788 | |||
Balances at Feb. 02, 2019 | $ 157 | 91,794 | 176,094 | $ (80,620) | 187,425 |
Balances (in shares) at Feb. 02, 2019 | 15,827,713 | 3,669,476 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | 8,165 | ||||
Balances at Aug. 03, 2019 | $ 157 | 92,120 | 180,287 | $ (85,164) | 187,400 |
Balances (in shares) at Aug. 03, 2019 | 15,855,281 | 3,942,076 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Adoption of lease accounting standard | (2,060) | (2,060) | |||
Balances at May. 04, 2019 | $ 157 | 91,788 | 180,864 | $ (82,260) | 190,549 |
Balances (in shares) at May. 04, 2019 | 15,848,609 | 3,751,788 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of nonvested shares under incentive plan (in shares) | 27,478 | ||||
Forfeiture of nonvested shares (in shares) | (19,969) | ||||
Stock-based compensation expense | 348 | 348 | |||
Net share settlement of nonvested shares and restricted stock units | (16) | (16) | |||
Net share settlement of nonvested shares and restricted stock units (in shares) | (837) | ||||
Repurchase of common stock | $ (2,904) | (2,904) | |||
Repurchase of common stock (in shares) | 190,288 | ||||
Dividends paid to stockholders | (954) | (954) | |||
Net (loss) income | 377 | 377 | |||
Balances at Aug. 03, 2019 | $ 157 | 92,120 | 180,287 | $ (85,164) | 187,400 |
Balances (in shares) at Aug. 03, 2019 | 15,855,281 | 3,942,076 | |||
Balances at Feb. 01, 2020 | $ 157 | 93,180 | 186,772 | $ (109,065) | $ 171,044 |
Balances (in shares) at Feb. 01, 2020 | 15,907,666 | 5,073,532 | 15,907,666 | ||
Increase (Decrease) in Stockholders' Equity | |||||
Vesting of nonvested restricted stock units | $ 1 | $ 1 | |||
Issuance of nonvested shares under incentive plan (in shares) | 86,025 | ||||
Forfeiture of nonvested shares (in shares) | (8,872) | ||||
Stock-based compensation expense | 469 | 469 | |||
Net share settlement of nonvested shares and restricted stock units | (479) | (479) | |||
Net share settlement of nonvested shares and restricted stock units (in shares) | (34,487) | ||||
Repurchase of common stock | $ (6,254) | (6,254) | |||
Repurchase of common stock (in shares) | 260,254 | ||||
Dividends paid to stockholders | (831) | (831) | |||
Net (loss) income | (20,892) | (20,892) | |||
Balances at May. 02, 2020 | $ 158 | 93,170 | 165,049 | $ (115,319) | 143,058 |
Balances (in shares) at May. 02, 2020 | 15,950,332 | 5,333,786 | |||
Balances at Feb. 01, 2020 | $ 157 | 93,180 | 186,772 | $ (109,065) | $ 171,044 |
Balances (in shares) at Feb. 01, 2020 | 15,907,666 | 5,073,532 | 15,907,666 | ||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | $ (1,025) | ||||
Balances at Aug. 01, 2020 | $ 158 | 93,702 | 184,916 | $ (115,319) | $ 163,457 |
Balances (in shares) at Aug. 01, 2020 | 15,967,948 | 5,333,786 | 15,967,948 | ||
Balances at May. 02, 2020 | $ 158 | 93,170 | 165,049 | $ (115,319) | $ 143,058 |
Balances (in shares) at May. 02, 2020 | 15,950,332 | 5,333,786 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of nonvested shares under incentive plan (in shares) | 17,808 | ||||
Stock-based compensation expense | 536 | 536 | |||
Net share settlement of nonvested shares and restricted stock units | (4) | (4) | |||
Net share settlement of nonvested shares and restricted stock units (in shares) | (192) | ||||
Net (loss) income | 19,867 | 19,867 | |||
Balances at Aug. 01, 2020 | $ 158 | $ 93,702 | $ 184,916 | $ (115,319) | $ 163,457 |
Balances (in shares) at Aug. 01, 2020 | 15,967,948 | 5,333,786 | 15,967,948 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | ||
May 02, 2020 | Aug. 03, 2019 | May 04, 2019 | |
Consolidated Statements of Stockholders' Equity | |||
Dividends paid to stockholders | $ 0.08 | $ 0.08 | $ 0.08 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Aug. 01, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation Citi Trends, Inc. (collectively referred to herein with its wholly owned subsidiary as the “Company”) is a value-priced retailer of fashion apparel, accessories and home goods for the entire family. As of August 1, 2020, the Company operated The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of February 1, 2020 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended (the “2019 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2019 Form 10-K. Operating results for the twenty-six weeks ended August 1, 2020 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 changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from the novel coronavirus (“COVID-19”) pandemic. Fiscal Year The following contains references to fiscal years 2020 and 2019, which represent fiscal years ending or ended on January 30, 2021 and February 1, 2020, respectively. Fiscal 2020 and 2019 both have Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduced an expected credit loss model for the impairment of financial assets measured at amortized costs. The model replaces the incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized cost. The Company adopted ASU No. 2016-13 on February 2, 2020. The adoption of the new standard did not have a material impact to the Company’s consolidated financial position, results of operations or cash flows. |
Impact of the COVID-19 Pandemic
Impact of the COVID-19 Pandemic | 6 Months Ended |
Aug. 01, 2020 | |
COVID-19 | |
Impact of the COVID-19 Pandemic | |
Impact of the COVID-19 Pandemic | 2. Impact of the COVID-19 Pandemic In December 2019, COVID-19 emerged and spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. After closely monitoring and taking into consideration the guidance from federal, state and local governments, the Company temporarily closed all of its retail store locations and distribution centers effective March 20, 2020. Beginning April 24, 2020, the Company started to reopen stores in select states in accordance with state and local government guidelines. As of July 18, 2020, the Company safely reopened all of its stores and distribution centers. The temporary closure of the Company’s stores has had, and may continue to have, an adverse impact on the Company’s financial condition, results of operations and liquidity. In the first quarter of 2020, the Company took several steps to increase its cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, including (i) the drawdown of million in principal amount under the revolving credit facility on March 20, 2020 and an amendment to the revolving credit facility to extend the term to August 2021; (ii) temporary furloughs of substantially all store and distribution center personnel and a significant portion of the corporate staff, with employee benefits for eligible employees continued through the temporary furloughs; (iii) temporary tiered salary reductions for management level corporate employees and a reduction to the cash portion of non-employee director fees; and (iv) extensions of payment terms with vendors and suppliers. Other measures taken by the Company to mitigate the impact of the pandemic that began in the first quarter of 2020 and are continuing include (i) negotiating rent concessions with landlords; (ii) executing substantial reductions in operating expenses, store occupancy costs, capital expenditures and other costs; and (iii) temporarily suspending share repurchases and dividend payments. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. The provisions include technical corrections to tax depreciation methods for qualified improvement property which allow for accelerated depreciation, an employee retention tax credit and the deferral of the employer portion of social security deposits. Under the CARES Act, the Company deferred payment of approximately million of additional tax deposits during the remainder of the calendar year as allowed by the CARES Act. The total amounts of deferred payroll taxes will be paid in two equal installments during the fourth calendar quarters of 2021 and 2022. In addition, in the second quarter of 2020, the Company recognized a created under the CARES Act based on qualified wages paid primarily to store and distribution center associates. The retention credit is included in selling, general and administrative expenses on the condensed consolidated statements of operations for the twenty-six and thirteen weeks ended August 1, 2020. |
Cash and Cash Equivalents_Conce
Cash and Cash Equivalents/Concentration of Credit Risk | 6 Months Ended |
Aug. 01, 2020 | |
Cash and Cash Equivalents/Concentration of Credit Risk | |
Cash and Cash Equivalents/Concentration of Credit Risk | 3. Cash and Cash Equivalents/Concentration of Credit Risk For purposes of the condensed consolidated balance sheets and condensed 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. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Aug. 01, 2020 | |
Earnings per Share | |
Earnings per Share | 4. 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 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 cost attributed to future services and not yet recognized. For the twenty-six weeks ended August 1, 2020 and August 3, 2019, there were shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution. For the thirteen weeks ended August 1, 2020 and August 3, 2019, there were 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: Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Weighted average number of common shares outstanding 10,446,915 11,929,019 Incremental shares from assumed vesting of nonvested restricted stock — 15,082 Weighted average number of common shares and common stock equivalents outstanding 10,446,915 11,944,101 Thirteen Weeks Ended August 1, 2020 August 3, 2019 Weighted average number of common shares outstanding 10,451,194 11,881,896 Incremental shares from assumed vesting of nonvested restricted stock 6,842 — Weighted average number of common shares and common stock equivalents outstanding 10,458,036 11,881,896 |
Impairment of Assets
Impairment of Assets | 6 Months Ended |
Aug. 01, 2020 | |
Impairment of Assets | |
Impairment of Assets | 5. 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. Non-cash impairment expenses consisted of the following (in thousands): Twenty-Six Weeks Ended Thirteen Weeks Ended August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019 Operating lease right-of-use asset impairment $ 181 $ 190 $ — $ 190 Store asset impairment 105 282 — 282 Total asset impairment $ 286 $ 472 $ — $ 472 |
Revolving Credit Facility
Revolving Credit Facility | 6 Months Ended |
Aug. 01, 2020 | |
Revolving Credit Facility | |
Revolving Credit Facility | 6. Revolving Credit Facility On October 27, 2011, the Company entered into a five-year, $50 million credit facility with Bank of America. The facility was amended on August 18, 2015, extending the maturity date to August 18, 2020. The facility was amended again on May 12, 2020, extending the maturity date to August 18, 2021. The amended facility provides a 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 financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of and permits the payment of cash dividends subject to certain limitations. Borrowings under the Revolving Credit Facility bear interest (a) for Eurodollar Loans, at a rate equal to LIBOR plus either , based in any such case on the average daily availability for borrowings under the facility. On March 20, 2020, in response to the COVID-19 pandemic, the Company borrowed million on the credit facility to enhance its liquidity position. Such borrowings accrued interest ranging from . During the second quarter of 2020, the Company repaid |
Income Taxes
Income Taxes | 6 Months Ended |
Aug. 01, 2020 | |
Income Taxes | |
Income Taxes | 7. 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. For the twenty-six weeks ended August 1, 2020 and August 3, 2019, the Company utilized the discrete effective tax rate method to determine its tax expense based upon interim period results. The Company concluded that the use of the discrete method was more appropriate than the annual effective tax rate method because the full-year tax rate is not reliably predictable. The effective income tax rate was 27.6% for the twenty-six weeks ended August 1, 2020, compared to 14.9% for the twenty-six weeks ended August 3, 2019. The difference in the effective income tax rate was due to a pretax loss for the twenty-six weeks ended August 1, 2020 compared to pretax income in the prior year and lower federal and state tax credits this year. On March 27, 2020, the CARES Act was enacted into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses (“NOLs”) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Aug. 01, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, landlords, employees or former employees. 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. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity. |
Stock Repurchase Program and Ca
Stock Repurchase Program and Cash Dividends | 6 Months Ended |
Aug. 01, 2020 | |
Stock Repurchase Program and Cash Dividends | |
Stock Repurchase Program and Cash Dividends | 9. Stock Repurchase Program and Cash Dividends Repurchases of Common Stock In November 2018, the Company’s board of directors approved a program that authorized the repurchase of up to $25.0 million in shares of the Company’s common stock. During the twenty-six weeks ended August 3, 2019, the Company repurchased In November 2019, the Company’s board of directors approved a new program that authorized the repurchase of up to $25.0 million in shares of the Company’s common stock. During the twenty-six weeks ended August 1, 2020, the Company repurchased 260,254 shares of its common stock at an aggregate cost of $6.3 million. This repurchase program was completed in February 2020. On March 13, 2020, the Company’s board of directors approved another new program that authorized the repurchase of up to $30.0 million in shares of the Company’s common stock. Due to the current economic uncertainty stemming from the COVID-19 pandemic, the Company has temporarily suspended any repurchases as of March 23, 2020 and plans to continue to monitor the situation based on business conditions and regard for its financial liquidity needs. Dividends On February 18, 2020, the Company’s board of directors declared a dividend of $0.08 per common share, which was paid on March 17, 2020 to stockholders of record as of March 3, 2020. On April 28, 2020, the Company announced the suspension of future cash dividends due to the current economic uncertainty stemming from the COVID-19 pandemic. Any determination to declare and pay cash dividends for future quarters will be made by the Company’s board of directors. |
Revenue
Revenue | 6 Months Ended |
Aug. 01, 2020 | |
Revenue | |
Revenue | 10. Revenue Revenue Recognition 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. 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. 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. Disaggregation of Revenue The Company’s 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. In the following table, the Company’s revenue from contracts with customers is disaggregated by major product line. The percentage of net sales related to each classification of its merchandise assortment was approximately: Twenty-Six Weeks Ended Thirteen Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019 Accessories 31 % 34 % 30 % 34 % Ladies' 23 % 23 % 22 % 23 % Children's 22 % 21 % 21 % 21 % Men's 17 % 16 % 19 % 17 % Home 7 % 6 % 8 % 5 % |
Leases
Leases | 6 Months Ended |
Aug. 01, 2020 | |
Leases | |
Leases | 11. Leases The Company leases its retail store locations and certain office space and equipment. Leases for store locations are typically for a term of one 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. Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Operating lease cost $ 24,465 $ 23,858 Variable lease cost 4,125 4,263 Short term lease cost 817 515 Total lease cost $ 29,407 $ 28,636 In response to the impact of the COVID-19 pandemic on the Company’s operations, the Company suspended certain lease payments 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 is engaging in ongoing discussions with landlords regarding the potential restructuring of lease payments and rent concessions. As of August 1, 2020, the Company negotiated contractual rent concessions on certain leases in the form of early renewals, rent deferrals and rent abatements. The Company has 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 FASB in April 2020. As a result of this election, the Company recognized rent abatement credits of approximately Future minimum lease payments as of August 1, 2020 are as follows (in thousands): Fiscal Year Lease Costs Remainder of 2020 $ 27,185 2021 47,852 2022 38,284 2023 30,967 2024 22,649 Thereafter 36,563 Total future minimum lease payments 203,500 Less: imputed interest (16,846) (1) Total present value of lease liabilities $ 186,654 (2) (1) Calculated using the incremental borrowing rate for each lease. (2) Includes short-term and long-term 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 flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts): Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Cash paid for operating leases $ 18,920 $ 25,174 Right of use assets obtained in exchange for new operating lease liabilities $ 27,044 $ 42,357 Weighted average remaining lease term (years) - operating leases 5.28 4.34 Weighted average discount rate - operating leases 3.29% 3.75% |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 01, 2020 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Citi Trends, Inc. (collectively referred to herein with its wholly owned subsidiary as the “Company”) is a value-priced retailer of fashion apparel, accessories and home goods for the entire family. As of August 1, 2020, the Company operated The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of February 1, 2020 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended (the “2019 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2019 Form 10-K. Operating results for the twenty-six weeks ended August 1, 2020 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 changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from the novel coronavirus (“COVID-19”) pandemic. |
Fiscal Year | Fiscal Year The following contains references to fiscal years 2020 and 2019, which represent fiscal years ending or ended on January 30, 2021 and February 1, 2020, respectively. Fiscal 2020 and 2019 both have |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduced an expected credit loss model for the impairment of financial assets measured at amortized costs. The model replaces the incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized cost. The Company adopted ASU No. 2016-13 on February 2, 2020. The adoption of the new standard did not have a material impact to the Company’s consolidated financial position, results of operations or cash flows. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Earnings per Share | |
Schedule of reconciliation of the number of average common shares outstanding used to calculate basic and diluted earnings per share | Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Weighted average number of common shares outstanding 10,446,915 11,929,019 Incremental shares from assumed vesting of nonvested restricted stock — 15,082 Weighted average number of common shares and common stock equivalents outstanding 10,446,915 11,944,101 Thirteen Weeks Ended August 1, 2020 August 3, 2019 Weighted average number of common shares outstanding 10,451,194 11,881,896 Incremental shares from assumed vesting of nonvested restricted stock 6,842 — Weighted average number of common shares and common stock equivalents outstanding 10,458,036 11,881,896 |
Impairment of Assets (Tables)
Impairment of Assets (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Impairment of Assets | |
Schedule of asset impairments | Twenty-Six Weeks Ended Thirteen Weeks Ended August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019 Operating lease right-of-use asset impairment $ 181 $ 190 $ — $ 190 Store asset impairment 105 282 — 282 Total asset impairment $ 286 $ 472 $ — $ 472 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Revenue | |
Schedule of revenue from contracts with customers disaggregated by major product line | Twenty-Six Weeks Ended Thirteen Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019 Accessories 31 % 34 % 30 % 34 % Ladies' 23 % 23 % 22 % 23 % Children's 22 % 21 % 21 % 21 % Men's 17 % 16 % 19 % 17 % Home 7 % 6 % 8 % 5 % |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Leases | |
Schedule of lease expense | Lease costs consisted of the following (in thousands): Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Operating lease cost $ 24,465 $ 23,858 Variable lease cost 4,125 4,263 Short term lease cost 817 515 Total lease cost $ 29,407 $ 28,636 |
Schedule of future minimum rent payments under operating leases | Fiscal Year Lease Costs Remainder of 2020 $ 27,185 2021 47,852 2022 38,284 2023 30,967 2024 22,649 Thereafter 36,563 Total future minimum lease payments 203,500 Less: imputed interest (16,846) (1) Total present value of lease liabilities $ 186,654 (2) (1) Calculated using the incremental borrowing rate for each lease. (2) Includes short-term and long-term operating leases. |
Schedule of supplemental cash flow and other information | Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts): Twenty-Six Weeks Ended August 1, 2020 August 3, 2019 Cash paid for operating leases $ 18,920 $ 25,174 Right of use assets obtained in exchange for new operating lease liabilities $ 27,044 $ 42,357 Weighted average remaining lease term (years) - operating leases 5.28 4.34 Weighted average discount rate - operating leases 3.29% 3.75% |
Significant Accounting Polici_2
Significant Accounting Policies (Details) | 12 Months Ended | ||
Jan. 30, 2021 | Feb. 01, 2020 | Aug. 01, 2020storestate | |
Significant Accounting Policies | |||
Number of stores operated | store | 579 | ||
Number of states in which company operates | state | 33 | ||
Length of fiscal year | 364 days | 364 days |
Impact of the COVID-19 Pandem_2
Impact of the COVID-19 Pandemic (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020USD ($) | Aug. 01, 2020USD ($)installment | Jan. 30, 2021USD ($) | Mar. 20, 2020USD ($) | |
Impact of the COVID-19 Pandemic | ||||
Deferred payment of amounts due for employer portion of social security tax deposits | $ 1.7 | $ 1.7 | $ 3 | |
Number of installments to pay for deferred payment of amounts due for the employer portion of social security tax deposits | installment | 2 | |||
Employee retention credit due to Covid-19 | $ 1.5 | |||
Line of Credit | ||||
Impact of the COVID-19 Pandemic | ||||
Borrowings outstanding | $ 43.7 |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Reconciliation of average number of common shares outstanding used to calculate basic and diluted earnings per share | ||||
Weighted average number of common shares outstanding | 10,451,194 | 11,881,896 | 10,446,915 | 11,929,019 |
Incremental shares from assumed vesting of nonvested restricted stock | 6,842 | 15,082 | ||
Weighted average number of common shares and common stock equivalents outstanding | 10,458,036 | 11,881,896 | 10,446,915 | 11,944,101 |
Restricted Stock | ||||
Antidilutive securities | ||||
Shares excluded from the calculation of diluted earnings per share | 165,000 | 143,000 | 173,000 | 135,000 |
Impairment of Assets (Details)
Impairment of Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Impairment of Assets | |||
Operating lease right-of-use asset impairment | $ 190 | $ 181 | $ 190 |
Store asset impairment | 282 | 105 | 282 |
Total asset impairment | $ 472 | $ 286 | $ 472 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) $ in Thousands | May 12, 2020 | Mar. 20, 2020USD ($) | Aug. 18, 2015USD ($)bbl / agreement | Oct. 27, 2011USD ($) | Aug. 01, 2020USD ($) | Aug. 01, 2020USD ($) |
Revolving Line of Credit | ||||||
Borrowings under revolving credit facility | $ 43,700 | |||||
Debt repaid | $ 2,100 | |||||
Line of Credit | ||||||
Revolving Line of Credit | ||||||
Term of credit facility | 5 years | |||||
Maximum borrowing capacity | $ 50,000 | $ 50,000 | ||||
Borrowings under revolving credit facility | $ 43,700 | |||||
Borrowing capacity, accordion feature | 25,000 | |||||
Maximum borrowing capacity including accordion expansion | $ 75,000 | |||||
Number of covenants | bbl / agreement | 1 | |||||
Unused commitment fee (as a percent) | 0.25% | |||||
Line of Credit | Minimum | ||||||
Revolving Line of Credit | ||||||
Effective interest rate (as a percent) | 1.625% | |||||
Line of Credit | Maximum | ||||||
Revolving Line of Credit | ||||||
Effective interest rate (as a percent) | 3.50% | |||||
Line of Credit | LIBOR | Minimum | ||||||
Revolving Line of Credit | ||||||
Margin added to variable rate (as a percent) | 2.25% | |||||
Line of Credit | LIBOR | Maximum | ||||||
Revolving Line of Credit | ||||||
Margin added to variable rate (as a percent) | 2.50% | |||||
Line of Credit | Federal Fund Rate | Minimum | ||||||
Revolving Line of Credit | ||||||
Margin added to variable rate (as a percent) | 0.50% | |||||
Line of Credit | LIBOR, One Month | ||||||
Revolving Line of Credit | ||||||
Increase pricing for loans (as a percent) | 1.00% | |||||
Line of Credit | LIBOR, One Month | Minimum | ||||||
Revolving Line of Credit | ||||||
Margin added to variable rate (as a percent) | 1.25% | |||||
Line of Credit | LIBOR, One Month | Maximum | ||||||
Revolving Line of Credit | ||||||
Margin added to variable rate (as a percent) | 1.50% |
Income Taxes (Details)
Income Taxes (Details) | Mar. 27, 2020 | Aug. 01, 2020 | Aug. 03, 2019 |
Income Taxes | |||
Effective income tax rate | 27.60% | 14.90% | |
Number of years certain net operating losses ("NOLs") may be carried back | 5 years |
Stock Repurchase Program and _2
Stock Repurchase Program and Cash Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 18, 2020 | May 02, 2020 | Aug. 03, 2019 | May 04, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | Mar. 13, 2020 | Nov. 30, 2019 | Nov. 28, 2018 |
Stockholders' Equity | |||||||||
Stock Repurchase Program, Authorized Amount | $ 30,000 | ||||||||
Stock Repurchased During Period, Value | $ 6,254 | $ 2,904 | $ 1,640 | ||||||
Cash dividends declared per share | $ 0.08 | ||||||||
Stock Repurchase Program | |||||||||
Stockholders' Equity | |||||||||
Stock Repurchase Program, Authorized Amount | $ 25,000 | $ 25,000 | |||||||
Stock Repurchased During Period, Shares | 260,254 | 82,312 | |||||||
Stock Repurchased During Period, Value | $ 6,300 | ||||||||
Treasury Stock, Value, Acquired, Cost Method | $ 1,600 |
Revenue (Details)
Revenue (Details) | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Revenue, initial application period, cumulative effect transition | ||||
Period of time company allows customers to return merchandise | 30 days | |||
Accessories | ||||
Revenue, initial application period, cumulative effect transition | ||||
Revenue from contracts with customers disaggregated by major product line (as a percent) | 30.00% | 34.00% | 31.00% | 34.00% |
Ladies' | ||||
Revenue, initial application period, cumulative effect transition | ||||
Revenue from contracts with customers disaggregated by major product line (as a percent) | 22.00% | 23.00% | 23.00% | 23.00% |
Children's | ||||
Revenue, initial application period, cumulative effect transition | ||||
Revenue from contracts with customers disaggregated by major product line (as a percent) | 21.00% | 21.00% | 22.00% | 21.00% |
Men's | ||||
Revenue, initial application period, cumulative effect transition | ||||
Revenue from contracts with customers disaggregated by major product line (as a percent) | 19.00% | 17.00% | 17.00% | 16.00% |
Home | ||||
Revenue, initial application period, cumulative effect transition | ||||
Revenue from contracts with customers disaggregated by major product line (as a percent) | 8.00% | 5.00% | 7.00% | 6.00% |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Oct. 31, 2020 | Aug. 01, 2020 | |
Leases | ||
Lease term | 5 years | |
Operating lease cost | $ 23,858 | $ 24,465 |
Variable lease cost | 4,263 | 4,125 |
Short term lease cost | 515 | 817 |
Total lease cost | $ 28,636 | $ 29,407 |
Minimum | ||
Leases | ||
Extension term | 1 year | |
Maximum | ||
Leases | ||
Extension term | 5 years |
Leases - COVID-19 Impacts (Deta
Leases - COVID-19 Impacts (Details) $ in Millions | 3 Months Ended |
Aug. 01, 2020USD ($) | |
Leases | |
Rent abatements due to the number of leases renegotiated in response to the negative financial impacts of COVID-19 | $ 0.6 |
Leases - Cash flow and other in
Leases - Cash flow and other information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 01, 2020 | Aug. 03, 2019 | |
Supplemental cash flow and other information related to operating leases | ||
Cash paid for operating leases | $ 18,920 | $ 25,174 |
Right of use assets obtained in exchange for new operating lease liabilities | $ 27,044 | $ 42,357 |
Weighted average remaining lease term - operating leases | 5 years 3 months 10 days | 4 years 4 months 2 days |
Weighted average discount rate - operating leases (as a percent) | 3.29% | 3.75% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Aug. 01, 2020USD ($) |
Future minimum lease payments under operating leases | |
Remainder of 2020 | $ 27,185 |
2021 | 47,852 |
2022 | 38,284 |
2023 | 30,967 |
2024 | 22,649 |
Thereafter | 36,563 |
Total future minimum lease payments | 203,500 |
Less: imputed interest | (16,846) |
Total present value of lease liabilities | $ 186,654 |