Citi Trends, Inc. ( CTRN ) shares are trading lower premarket Tuesday after the company reported second-quarter results.

The company reported quarterly sales of $176.6 million, which increased by 1.7% Y/Y, missing the Wall Street consensus of $179.13 million.

Gross margin stood at 31.1%, compared to 38.2% in the same period last year. This was impacted by $9.4 million in markdowns from a strategic inventory reset and $4.0 million in shrinkage due to physical inventory results and accrual rate adjustments.

Citi Trends ( CTRN ) reported an adjusted loss per share of $1.94 vs. the consensus loss of $0.52.

The company opened one new store, closed three stores, and remodeled 15 stores, ending the quarter with 597 locations.

Citi Trends ( CTRN ) had cash of $59.3 million at quarter-end, with no debt and no borrowings under a $75 million credit facility.

In the second quarter, the company did not repurchase any shares. As of the end of the quarter, $50.0 million remained available under the share repurchase program.

Outlook: Citi Trends ( CTRN ) anticipates a mid-single-digit decline in the second half of fiscal 2024 sales due to the 53rd week of last year and store closures.

For the second half of 2024, the company expects comparable store sales to be flat or increase by low single digits compared to the second half of fiscal 2023.

The company plans to close 10 to 15 underperforming stores this year, including the six already closed, as part of its fleet optimization strategy. It expects to end fiscal 2024 with approximately 590 stores.

Ken Seipel, Interim Chief Executive Officer, said, “Following an evaluation of several key areas of our business including an extensive review of our product assortment, we made the strategic decision to execute an inventory reset to quickly clear through slow-selling and aged inventory.”

“In Q2, our home and impulse categories delivered double digit comps and our back-to-school Children’s categories got off to a strong start. I am pleased to report that Q3 is off to a solid start with positive low-single-digit comparable store sales growth through the first three weeks of the quarter.”

Price Action: CTRN shares are trading lower by 11.8% at $14.50 premarket at the last check Tuesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.