Citi Trends Tops Q2 Forecasts but Shares Dip Despite Raised Outlook

Citi Trends, Inc. (NASDAQ:CTRN) delivered better-than-expected second-quarter results on Tuesday, with strong comparable sales growth and improving profitability helping the off-price retailer outperform Wall Street forecasts.

Despite the earnings and revenue beats, shares fell 1.82% in pre-market trading as investors weighed the improved full-year outlook against a reduction in the company’s store-opening plans.

Citi Trends reported a second-quarter loss of $0.11 per share, considerably better than the consensus forecast for a loss of $0.35 per share. Revenue increased 10.9% year-on-year to $211.6 million from $190.8 million, exceeding analysts’ expectations of $205.5 million.

Comparable Sales Extend Growth Streak

Comparable store sales advanced 10.5% from the same period last year, giving Citi Trends its eighth consecutive quarter of comparable sales growth.

Ken Seipel, Chairman and Chief Executive Officer, said, “CITITRENDS delivered another strong quarter, with comparable store sales increasing 10.5% and 19.7% on a two-year basis, marking our eighth consecutive quarter of comparable store sales growth. Just as importantly, our disciplined execution is translating that sales momentum into significantly improved profitability, with first half net income of $6.8 million and adjusted EBITDA of $19.4 million — already exceeding the adjusted EBITDA we generated for all of fiscal 2025.”

Gross margin also strengthened during the quarter, expanding by 60 basis points to 40.6%.

First-Half Profitability Shows Significant Improvement

For the first six months of fiscal 2026, Citi Trends generated net income of $6.8 million and adjusted EBITDA of $19.4 million.

Adjusted EBITDA improved by $14.1 million compared with the first half of fiscal 2025, highlighting the impact of stronger sales and tighter operational execution on profitability.

The first-half adjusted EBITDA figure has already surpassed the amount generated during the whole of fiscal 2025.

Citi Trends Raises Full-Year Sales and EBITDA Forecasts

Following the stronger first-half performance, Citi Trends upgraded several elements of its fiscal 2026 guidance.

The retailer now expects comparable store sales to increase between 9% and 11%, compared with its previous forecast of 8% to 10%.

Total sales are projected to grow between 10% and 12%, up from the earlier guidance range of 9% to 11%.

Adjusted EBITDA is now forecast at between $38 million and $42 million, with a midpoint of $40 million. The previous range stood at $35 million to $40 million, with a midpoint of $37.5 million.

Store Expansion Target Reduced

One weaker element of the updated outlook was Citi Trends’ store expansion plan. The company now expects to open 20 new locations during fiscal 2026, down from its previous target of 25.

Citi Trends finished the quarter with 594 stores and $55.9 million in cash. The company reported no debt, providing financial flexibility as it continues investing in its retail network while pursuing further improvements in sales and profitability.

Although the reduced store-opening target may have tempered the market’s response, the quarter showed continued momentum in comparable sales, expanding margins and substantially stronger earnings performance.

Citi Trends stock price