Citi Trends Inc. reported a narrower-than-expected loss and revenue that exceeded analyst projections for the second quarter, though its shares declined after the discount retailer trimmed its new store expansion plans and maintained a conservative full-year outlook.
The Savannah, Georgia-based company posted a loss of 11 cents per share, beating the consensus estimate of a 35-cent loss, according to market data. Revenue rose 10.9% year-over-year to $211.6 million, topping the $205.5 million forecast.
Comparable store sales increased 10.5% from the prior year, marking the eighth straight quarter of growth and a 19.7% increase on a two-year basis. Gross margin expanded by 60 basis points to 40.6% during the period.
For the first half of fiscal 2026, Citi Trends reported net income of $6.8 million and adjusted EBITDA of $19.4 million, up $14.1 million from the same period last year. The company ended the quarter with 594 stores, $55.9 million in cash, and no debt.
Despite the strong operational performance, Citi Trends trimmed its full-year guidance. The retailer now expects comparable store sales growth of 9% to 11%, up from the prior range of 8% to 10%, and total sales growth of 10% to 12%, compared to the previous 9% to 11%. Adjusted EBITDA is projected at $38 million to $42 million, with a midpoint of $40 million, exceeding its prior guidance midpoint of $37.5 million.
However, Citi Trends reduced its new store target to 20 locations for the year, down from an earlier estimate of 25. Shares fell 1.82% in pre-market trading following the announcement.
Chairman and CEO Ken Seipel highlighted the company's consistent sales momentum and improved profitability, noting that the first-half adjusted EBITDA already surpassed the full-year figure for fiscal 2025.
