Citi Trends Inc. reported fiscal second-quarter 2026 revenue of $211.6 million, a 10.9% increase from the prior year and $6.1 million above consensus estimates of $205.5 million. Adjusted earnings per share came in at negative $0.11, beating the forecast of negative $0.35 by $0.24 per share. The company cited an 8th consecutive quarter of comparable store sales growth, with comps rising 10.5% year-over-year and a two-year stack reaching 19.7%.
Gross margin expanded to 40.6%, up 60 basis points from a year earlier, while adjusted SG&A expenses totaled $80.4 million, rising from $77.4 million in Q2 2025. SG&A as a percentage of sales improved by 260 basis points to 38%, contributing to adjusted EBITDA of $5.5 million, a $6.6 million improvement from the prior year’s loss of $1.1 million. Adjusted EBITDA margin increased to 2.6%, up 320 basis points.
For the first half of 2026, adjusted EBITDA reached $19.4 million, generating more profit in six months than the entire prior year. Sales flow-through to profit stood at 28% year-to-date. Management highlighted continued strength in back-to-school performance, with two-year comparable sales running at about 25% into the current quarter.
Despite the positive financial results, shares of Citi Trends fell 6.25% to $69.70 in after-hours trading, extending a decline from the prior close of $74.35. The stock has traded between $29.60 and $77.91 over the past 52 weeks, with a market capitalization of $555 million. The company trades at a P/E ratio of 51.8 and a PEG ratio of 0.38.
Full-year fiscal 2026 guidance was raised across key metrics. Comparable store sales growth is now projected at 9% to 11%, up from the prior 8% to 10% range, while total sales growth is expected to reach 10% to 12%. Gross margin expansion is forecast at 50 to 70 basis points, and adjusted SG&A leverage is projected at 160 to 180 basis points, an increase from the prior 130 to 160 basis points. Adjusted EBITDA guidance was lifted to $38 million to $42 million, compared with the prior range of $35 million to $40 million.
Capital expenditures remain unchanged at $35 million to $40 million, but the company reduced its 2026 store opening target to about 20 new locations, down from 25, citing timing considerations. Expansion plans accelerate to roughly 40 new stores annually starting in 2027, with each mature location expected to generate about $1.5 million in sales and mid-teens four-wall contributions. Store remodel activity is set to increase to 60 to 65 locations from the prior 50.
Chief Executive Officer Ken Seipel emphasized consistent execution across the quarter, noting that customers are willing to spend more when trends align with expectations. The company also highlighted progress in its Insiders Club loyalty program, launched in July, and the deployment of enterprise closed-AI tools for data extraction and analytics. Fuel surcharges and freight costs are expected to persist through 2026, posing margin pressure.
