CTRN - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter 2018 Earnings Release.

During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session [Operator Instructions].

As a reminder, this conference is being recorded Friday, November 30, 2018. to conference like to now would turn over the Mr. I Managing Director Filandro, at Tom ICR. ahead. go Please

Tom Filandro

Mary. you, Thank

Our earnings sent Time. release was AM at Eastern X:XX out this morning

you Investor Relations the at www.cititrends.com. copy on If company's section received is the the it available of under website not have release, the

for that to from You aware Management those the results our statements Litigation Securities Reform on on subsequent remarks of Bruce? XXXX. that I President questions. you and made may XX-K company's materially refer forward-looking with this call your other Bruce Private can should forward-looking of to to recent Executive turn discussion statements differ Mr. do the statements. in to these should and Form will response report future call the make of Smith. the more statements now cause be a the detailed may in additional Therefore Officer, contain We performance. Exchange reliance actual within not factors the prepared not statements. during forward-looking the most These Commission meaning Act described undue place filings Securities guarantee Chief and you over

Bruce Smith

strong X% results. and sales you even Thanks, Brian quarter Lattman. by and a In businesses. a on Financial expected top Tom. to Officer, strength X.X% on Presidents, We Short increase X.X% home and of last morning comparison our Vice increased Christina store last to for with everybody sales Stuart quarter, of a two is the our joining accessory X%, increase thank year's quarter, Good us Also Clifford; challenging comp continued third call today. third and the Chief merchandising in comparable Senior in third the year's led had

apparel ladies to our of goal. the fall in us caused short category weakness However,

of merchandise release to fashion nearly increased sales the our as to penetration fashion. we this earnings certain did well the early year's Due had the classes, million on long-term fall. needed the taken avoids corrective reliance pivot sales commitments that of the quarter's mentioned we a which ladies we over Although, ladies we relation builds have and shift to once good income, $X third the action on in they liquidity, in out last of in buying calendar. reads change to model, not perform total total From make year, net in would quarter last fiscal this due in standpoint and

our As expected this on bottom-line. had impact a negative fairly significant

fairly costs SG&A moved as sales out quarter, of quarter. similar and shift the a and the out expenses freight week-to-week such therefore the not of While are constant did from have

details Now I discuss over will the results to I provide on call expectations. to Stuart turn the additional future before

Stuart Clifford

to decreased third you, X.X% in Total quarter Thank Sales the $XXX Bruce. million. a

call, last As due quarter XXXX having each year fiscal fiscal in week we XX on starts to year mentioned this than weeks. one quarter's later last

of beginning the was Back the the As the from this $X week, sales the last a strong total to year. third second by third year due million, the quarter School falls August that comparison negatively shift quarter to To result, impacted quarter of at

up for XX the transaction. For comp comp X% November number And home continued the and number merchandise of increased comparable compare a including compares of sales the while XX% up X, increase of X% three the X, XXXX X%. quarter quarter. disclosure unit increase third store top be strong strongest looking performer, a Accessories the a which not X% Children that than quarter, identical store sales the third sales going in flat offset of comparable first after X% quarter. up the up was X% increase transactions in decreases XXXX. this last year's the in a area reflected total were November year comparable items less X% against clarity, shift customer year. to sales categories, third And partially sales sales, X% ladies less XX% were X% sales were at increase after basis. ended weeks year. an positive impact than of in weeks XX third store quarters average a down calendar the by footwear the XXXX X% the in this XXXX. store year's year third category of almost average strong shifted the last various The X% ended increase to In does Men's sale was on sales the in up X.X% In higher, on the our per in last quarter, in being up of addition to X% were weeks

decreased a percentage margin gross in basis XX basis to costs freight as quarter sales. Third of primarily a increase points points due XX

due of million of a on fuel a costs and transportation to to costs. out by continued the $X of as sales shift addition freight higher the sales proportionate of freight hikes freight impacted In pressure shift was of prices percent rate without quarter

year-to-date, the first XXXX. margin with flat For quarters gross the is three compared of

SG&A quarter expenses virtually compared Third were flat XXXX. with

last per million income third or million the through points year's or Year-to-date net per income of for quarter XX $XXX,XXX three in share a $X.XX expenses the primarily company earned from loss last net year's with first was expenses shift. expense the expenses. $X.XX million result third due income of or $X.XX Net sales the share. last Adjusted $X.XX per per was expenses of a declined the quarters. compared share points share $X.XX $X.X in contest three year's with percentage per has $XX.X increased or in sales quarters XX.X% Year-to-date of $XX net to quarter. share quarter basis last in $XXX,XXX as to SG&A of to a proxy deleverage compared relation calendar loss basis a percent of as ratio As or third SG&A year's have in adjusted the sales XX

Now over I Bruce. to call will the turn back

Bruce Smith

one Thanks, Stuart. opened In while other and one we stores store expanded closing new developments store. third quarter successfully four

that million program through another $XX Board returned to share XXXX. of our the to open we've expect completed with a the authorized in we started stock the full $XX in our Board dividends of million $XX stores year. actions program repurchase And Board new a for by time, in that our expanded year. our connection this million authorized capital repurchases. and We repurchase taken continuation by These stockholders we program that program. Since March XX the of capital stock Also approximately return return combination are announced today approximately we

As season, our are most offerings enter selling the the holiday had. excited prime gift ever giving we about including we merchandize we've that selection,

we X% far release, guidance at range of fourth earnings comp to fourth As of maintained Thus stated the sales our quarter, a range. for guidance $X.XX to X%. sales $X.XX of in store quarter that comparable morning's the in including positive midpoint per this store share at the are

to maintain we non-apparel on and fashions growing by our forward, urban components leader value and continue of focus Looking apparel the providing both customers. priced to business being our our the

we Mary any will questions. Now take

Operator

the And go Please comes ahead. first Instructions] Hatton. [Operator from Luke question

Luke Hatton

Thanks question. morning. Good taking my for

well ladies for with resonate business? starting expecting just strategy I in that fully then what as last you're correcting also the So inventory through And ladies your did the for is that not timeline quarter? that guess, what's business, moving

Bruce Smith

for would Brian your please Luke. morning, question. Good Yes. Lattman, answer Thanks you that?

Brian Lattman

Sure.

that can As point timing customers. a we have the to business, in at far amount a so we to fortunately, tends as that seeing react fix in time, merchandizing the any our decent we result liquidity model what were to of from

this from tell far QX, we And not sales better to guidance liable in through our merchandize can taken appropriate that comp dramatic we've always change we ladies expect in ensure strategy the markdown move results move have the QX, the we're in through the stores. but as as as to expecting a the you past As trends for been our inventory done through spring. in would

to needed. markdowns We take the as continue will situation the monitor and

Luke Hatton

I you. heading you been And that any was from thoughts upward wage of Thank hearing of anything into pressure retailers how about other are pressure? And wondering, you just you're on sort sort XXXX? we've of of, experiencing upward terms can provide a then on about And thinking couple in Great. wages. initial our

Bruce Smith

gains. those process our our as them store a still probably we'll future Luke, we Yes. for number feel effort for years. to through in do a on believe continue And pressure our possible consistently We of of make efficient pressure wages. have we as of found to wage pressures than as make more to had years, will continued that wage of our actually and more minimum although, offset we've every raising through productivity foreseeable offset all associates the store these exist to markets. try lot much the impact order to make continue to wage Federal ways the Currently,

Luke Hatton

of seeing lines, on transportation along same and cost? Got chain are it. the And then you any sort supply pressure

Brian Lattman

definitely. the Yes, freight year been even and into was it a quarter. pressure earlier year. in mentioned last all third point that We really has And

For is percent basis the year-to-date, freight up year. over last the XX sales a as of points

During the points. basis quarter it was XX

but XX of points shift is was number. month the that somewhat basis kind probably by been and of nine Although impacted the norm, sales, that's

the I As transportation it us on rate various a on We're guess, of we store lowest our each to carrier will and to the to including looking strategies at things, get out some system we on way call side today. that the we shipments that also each approach look alternatives choice shipment. might management outbound ensure to at XXXX, that to likely automate inbound the we're number allow change shipper looking do we

continuing So a it is pressure point.

our is last year. with Fortunately, gross year-to-date margin flat

But have it So offset in it. we've to to able to we're going continue working areas. other been

Luke Hatton

me, to there can of terms and of growth the I of term, what well. as that gets then on EPS just side guess in last longer margin blocks XX% us us Understood. one And building then store XX% comp walk the from algorithm through you sort

Stuart Clifford

Sure.

if model small up It yield leverage. get to We XX been X% those guidance, X.X% of on note able So and expense comps to still of range leverage we assuming will that X% get are when that a that will, annual earnings leverage. we're on year-to-date X% X% tend and of X%, points above. that growth we to XX% a expenses store with expense XX% a basis combined amount do really to is our you in I comp to based things. should both

there. could push a of improve to we've continue improvement a little XX also year. reasonable last our maybe to our And we this than leverage that expense store if to and get basis we than a we continue XX it's we capabilities, think better X% long-term little over as a points gross that that But would XX bit bit we So year XX the we did maybe done planning up expect better so comp. to basis long-term to margin point expect

And XX so between per expenses our to of from long-term. margin X.X% operating and hopefully say, the basis gross points X% XX above increasing up and towards let's leading maybe over margin, to year, improvement

Luke Hatton

thank Great you.

luck I think that's for it Good next me. quarter.

Bruce Smith

Thanks, Luke.

Operator

Please have [ph]. do Danon question a go Elon We ahead. Instructions] [Operator from

Unidentified Analyst

Hey, guys.

Bruce Smith

Elon. Good morning

Unidentified Analyst

Good guys Hello. are morning. How doing? you

Bruce Smith

Good.

Unidentified Analyst

on bottoms miss or where just a Another women's what question and color miss, was can detail you was bit give the fashion tops, it the was, exactly? little more it

Bruce Smith

Yeah, details Really reasons, any level. for not the specific thanks lower question, the for than to try Elon. we competitive category give

about the advantage over off give was. miss talked competitors what apparel that for we'd fashion an while rather the our we being ladies So not fashion, quarter,

Unidentified Analyst

that worked the touched of How you last still And should work is it or being are discounted? the you when the I through Is question, now? inventory through you system? we but guess of -- I should don't on look do in have know, when inventory that -- stores -- kind of at way its you kind

Bruce Smith

Brian into touched why on some that give don't you earlier. that. Brian, insight

Brian Lattman

when like we've ensure move earlier, always to the through markdowns, we merchandise. So done, said take I that mean, we I need appropriate as we

are through get it we working it. So are currently through confident we'll and

Unidentified Analyst

-- up weakness the so includes ladies? And of it kind the in X.X still includes

Bruce Smith

That is correct.

Unidentified Analyst

Quarter-to-date.

margin merchandise did some what I pressure gross of had was negative way with quantify you how from -- impact discussed from logistics, terms -- margin it in then that margin to know you perspective, And about any until is on ladies? there merchandise the much a Okay.

Bruce Smith

an quarter. during higher overall core Yes, about not just merchandise to the on the from margin was basis due over ladies, -- XX basis, markdowns points down but

Operator

And comes Lawrence Please from our question ahead. next John go [ph].

Unidentified Analyst

morning. Good you. Thank Yes.

Bruce Smith

John. morning, Good

Unidentified Analyst

Yeah, bit, little Bruce estate on real the could you comment, a just side.

looking you're get this to program you two As new and three. capital at this

gains can as the in just of real far of cut Some becoming at seeing looking guess, advantages or all? any larger out markets, boxes where at any, you as are possible, you're available from I estate that you are these some negotiations

Stuart Clifford

that where back And of biggest really open change been the probably because that years we've before you get expect If never up you the to that have able over seen has is look been stores mall couple of would last we to the it. cost. where able into we were

and And we're you back few so stores years, the up to malls go XX. Today two in if just entire had chain. we

guys course, were at Fashion guys been situations centers Rainbows the that, Metro division, we take is which you we're with there compete So tend urban have the of in that we shopping advantage none And when in hasn't look urban to we you some and when Ross’ able the there. its a been most, that at DISCOUNTS, of Outside be and and want to even of radical shift. in, world contracting. look the dd's to division. Cato’s be those that of And of the

And our It's typical in opportunities. shift primarily a center. so shopping we're the not in major mall really seeing

Unidentified Analyst

you about move or that? are is systems Great, thanks. side, some to that next something first or investments those than of out the -- And imminent half it secondly, projects when talk in that transportation more be on year CapEx efficiency, would

Stuart Clifford

First next year, half yes. of

Unidentified Analyst

is -- anything CapEx far on along what timeframe that? on budget be any enough it And will like

Stuart Clifford

As management the would goes, as be not system significant. far it transportation

Unidentified Analyst

is, of you you all? little late the you the in did Okay. me, that call, you comps, situation think And cost one did mention was I quantify fashion last at for on what

Stuart Clifford

quarter, the okay. down during context Well, was we X% -- in the comp ladies did of

Unidentified Analyst

good Thanks, luck.

Stuart Clifford

John. you, Thank Okay.

Operator

ask gentlemen Ladies does lines. conference you conclude you participation. that disconnect for We your And thank for today. the that your please and

Citi Trends (CTRN) 30 Nov 182018 Q3 Earnings call transcript