CTRN - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to the Citi Trends 1Q 2022 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, May 24, 2022. I would now like to turn the conference over to Nitza McKee, Senior Associate. ahead. go Please

Nitza McKee

and good on and On Thank for David you call Moschner. Finance, Thanks Trends morning, first us Makuen; Officer, Executive Citi is call. President quarter joining of today Jason Malika Chief everyone. Vice XXXX our earnings

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

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

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

David Makuen

and whatever on results times transformation fiscal other up XXXX Financial customers focus on ongoing you, we outlook. the first and Officer, call. the This for And morning, updating financial today and to will how on XXXX doubling items elaborate their of Moschner, Then our financial our will thanks and Accounting priority, fiscal providing by highest Jason for way. and everyone. before a helping you Finance first are highlight our Nitza. our related reviewing VP quarter earnings and results Good our our them our on on during Principal morning, down Thank for business quarter joining our our operational us begin associates tough and I of show comes for few

results, the driving Before factors, prices. and given that with recognize lapping food our high that disproportionately is a prices, operate environment turning difficult to our to XXX I last and impact geopolitical coupled rents store been to customers, number inflation These of tirelessly high including gas stimulus work for want also plus factors from ultra and core associates the instability fleets. our who year, our customers, our macro

this have easy during While XX them, they weather for resilient, just like it to many are been they other so and hasn't years. storm, for storms able strong, last the

always Importantly, for neighborhoods to and Citi new there our Trends be and will customers. will loyal always our be dedicated

the essentials the African, and No Our matter the the American and right headwinds, trends, it's respond unique ability at has fashion been the we and to serve time responsibility right store and right with to the Latinx to best day. and never keep throughout listen running for and families our stronger. it customers to that Trends and way day. fun associates want for possible and thank our keep every purpose driven, each Citi stores family each all every the I functions fresh and our

to turning Now results. our

behavior provided suggesting our shifts top our our traffic data line discretionary to third-party and is difficult stores. than in expectations first impacting with performance guidance. coupled were was bottom Our line negatively backdrop better results quarter with economic previously in line shopping The

conversion XXXX, consecutive basket want in and now underline metrics I well as basket holding above spend to trends to However, of up and conversion with our to basket with we strong are following the point. customer the XXXX levels. continue stability you. close have three very consistent and I calls core see shared and well, our And

at a executing agile our and Our resonating content is high reacting team level. and BUY reading, is

the more is scoop prices than up we don't ever. nimble offer and that break trends ample at in that will And team chasing Our bank. are available particular,

The the UPTs project definitely We customers arriving win, further across in our store six trends spot. With healthy are to categories. traffic Looking value and quarter, weekly. engage freshness with our off optimizing on format, chase a their remodeled conversion specialty teams with We extreme product have management our mix focusing manage initiatives we head customers toe new back multiple store of the classic rollout on. been phases successfully from newness product early a gradual to inventory soft levels our great cities is intensely multiple store on Trends legacy and setup, stores while in baskets. styling in CTx and our experience of or commence have and the to revitalized they stores incremental XX as Citi incremental start, neighborhood drive

transaction South Darlington, backdrop of located challenging We center previously our chain distribution We navigate diligently supply continue expenses. in to labor Carolina. manage and completed the and the challenges sale-leaseback managing announced while

We initiatives ability are making to a teams' great goods. lastly, new are our procure move BUY we MOVE on and progress substantial infrastructure improve And making our on CFO. progress and for our to search

landscape. rest to XXXX of as XXXX, we plan we thus, while our It's and therefore we year, our growth the the remainder expect impact primarily of still to look revising the and the broader customer for to the to continue we conservatively comparing prudent targets discretionary baseline. a macro As factors are shopping that pre-pandemic

call right turn we Jason to step therefore, Additionally, opening XXXX. a well as that, for the stores. in year. quarter open take our our over stores to new Jason? to the first results the detail, of balance approximately conservative And is as to fiscal intend guidance approach to updated XX during discuss now I'll believe the we With

Jason Moschner

David good Thanks and everyone. morning,

extreme strong a margin. government to fiscal the resulting applied quarter this, respond the Well environment difficult to balance inventory freight cities per six that name sales For our exceeded trends with and cash the our to keeping quarter our controlling a our customer's pressures rigorous in levels line and leaving our chase top within in the expectation gross said of to prior a discipline and achieved or so ended time delivered expenses of and prior dry total Despite of first lapping poised can we year inflation, above and guidance. based XXXX, our operating share end remained with appropriately David earnings clean occasion. us categories, stimulus We of as with powder few. headwinds we the position, in XXXX the needs on

of turn let's specifics our Now, QX the results. to financial

XXXX normalized comparison are provide to XXXX, order more of of for As results comparing operating mentioned relative a earnings in performance. release, QX select we QX our of to in

XXXX. are to XXXX results to earnings distribution center certain our addition, proxy Please for see to million, versus stack figures quarter QX adjusted top increase of $XXX XXXX, In last expenses related our from compared representing exclude year X.X%. of XX% selling declined Total sales adjusted exclude reconciliation XX% these contest. first X.X% for of store XXXX of on a XXXX a versus an the with release to adjusted the Comparable sales adjustments. were gain of and a increase

to share quarter higher $X.XX us which or remains resonating. as $X.XX $X.XX. was XXXX. basket first points compared our Gross per than basis Earnings strong, is in XXX $X.XX to margin XX%, was the content of tells compared conversion adjusted Our

the sell and is shrink with chain starting continued XXX disciplined fewer price of environment prior supply primarily current inventory higher chain headwinds. freight costs supply the Navigating Our management, stronger result to in deleverage markdowns partially due points offset improvement fluid. versus rates full and quarterly markups, by of rates, XXXX through, gross margin remains the lower and

negotiating compared $X.X basis also XX.X% XXXX, a sales, on elevated We to Adjusted was quarter quarter in was $X.X operations have the in GAAP as the was net compared from $X.X or with of the versus partners transportation $XX.X $X.X was or adjusted XXXX. increase shipping X.X%. million million basis, million mitigate quarter the XX.X% XX.X% million. of higher. SG&A worked first efficiency to X.X% margin while income of to adjusted our $X.X million Adjusted for rates income the million of operating first adjusted our costs. to SG&A up On to dollars internal compared the an was

quarter sheet. to at compared of QX, turning XXXX. Total to X.X% the by lower of our balance end Now inventory was the end the

packaway XX.X%. lower which our and store improved terms. store average inventory XXXX, was our our inventory inventory, than XX.X% in And on freshness was Excluding focus down reflects continued

expense During of the proceeds the in our completed XX center we million $XX XXXX gain be rent approximately basis fiscal expected gross of of is quarter pretext in Darlington, sale-leaseback The distribution to points. resulting in impact a South $XX million. to and Carolina,

and cash relates position debt. in our XXX,XXX $X.X As we ended remaining. with at We million, shares leaving million quarter $XX.X approximately aggregate of capital repurchase strong an million to $XX.X program, of the it cost buyback no

we As of our our in focus adequate and this we will our challenging prudently growth a liquidity in cash ensuring use balance investments past, the is and in stated primary of between strategy allocation environment. capital buybacks, Board,

Now turning year. of for the our guidance the balance to

that plan to believe conservatively. expectation the to prudent continue macro our With is pressure customer, it factors we

they first EPS after XX% XX% fiscal $XXX revised of certain to range, to guidance of our $X.XX XX% increase outlook versus during positive Full which midpoint comp converted or will million note to of $XX.X to year in XX% million expense this as EPS guidance. $XX.X of XXXX, expense $X.XX therefore, in have of from $XX.X X%. represents range, the awards XXXX. the non-cash million increase implies $X.XX adjusted $X.XX. $X.XX our to cash year We and GAAP a At to a of this year conversion the fiscal sales quarter of be XXXX. a result ranging vested stack year this million year that last this fiscal increase the Full $XXX of comparable top on longer by of fully as the or These SG&A compared this incremental $X.X range, of XXXX. stock, restricted to awards I'll the impacts approximately diluted follows: will diluted on midpoint related income adjusted million full midpoint settled At of this QX no operating in adjusted XXXX. adjusted Full basis the as an incremental and adjusted sales million to negatively of million. our decrease At over implies XX% to includes $XX.X EPS of

the the the our back are revised of optimizing call our the plans controls, and XX sheet. and every to executing opening To recognize wrap top challenging expenditures while work line controllables, on day. David? comments. each controlling and I'll for customers we David amaze sales therefore, turn are environment, and our laser-focused project to diligently that, we up, new maximize our for discipline approximately With closing balance $XX during stores million. we our given operations the year, Finally, capital managing cost We teams

David Makuen

Thanks Jason.

your take to and ongoing we provide business improvements want Before to unpredictable to our the in model us ahead. that additional our maximize confidence to beliefs and navigate the customers model some times questions, I years the give in profitability current make

First about our customers.

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will know tough DNA through. an characteristic groundwork current future our times times for while to indelible also equipped the growth. Our to we help strand they're solve for the leverage Its customers is laying of muscle and that

old startup. unfolding planned Regarding our incredibly definitely we we is a I as challenging model. the like an and the people, are and business in and our When manage our can The how period, brand Trends our XX modernization business felt back Citi of culture through look behaving at operations. take step be year a

to offer respect the takes assortment the critical model our is that where from team uniquely we level. to associate Our durable sit a new in to neighborhood history is how we the to all curated XX-year unique understanding

success and served my be thing brand away underlying legacy passion of the the in deeply that team care If to you that of humbled walk and one Citi built power really am decades Trends. and for growing I shares and with for something the the for a by decades about a special future. a strength it's from neighborhoods and the in the of many many member today, customers past it foundational associates for building value has

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Operator

Instructions] phone the Please line ahead. Group. first Dana is question with you. from Telsey Telsey Thank Our [Operator Advisory go of

open. Your line is

Dana Telsey

Good morning, and Hello, David everyone. Jason.

-- those any in about have you much the labor think your passing to of because are of versus price? or are the off equipment the terms managing things? the stores, costs? customer, managing you XX, be lastly, and stores is current just whether on accepted, internally how performing it's headwinds for And What new What by pricing accepted the on how XXXX some you are And then headwinds of environment not As you prior into seen XX CTx inflationary and category? the guide get hard are consumer and stores Thank how for you HVAC the them? you. to it's inflationary that with with on be base do the the versus the update goods how push other state

David Makuen

I'll try Nice tick our really you changed what morning. thanks some to dating we've into you through versus stance even your to those XXXX. start. price, good tell Good for I'll from that Dana. the we've from of Hi, and hear questions. On prior shared not back

nudge work this until to of working we that's throughout future. maintained it benefits. into And We value, consistently that. the case have price today We can of the features been and in up expect and year improving the up rest

one. things We the celebrate us increases really [ph], we've maintained and have less to the price And and heard right. manage resiliency that at And sort kind and so talk in the We've in ability within our basic and about, on not to for our passed low kind than call essential the trends. prior price of need, early of on next value but socks, inventory of relationships selling of XXXX not also it a and managed you moving not driven, cities, band out to trend trend bring the we've then at the fewer customer, which the prices maintained maybe really in underwear, the but levels, any only trend, us more customer. skews driven, lot that newness the area newness, on those thirdly, of our like

of So, stay successfully. course really I think all price managed we've and to the And points. those on kind we're assortment going

On the I day, to price. end the the -- labor at of course. answer similar we've We're think headwind, going the stay to

wage well tactical heard we've increases, standpoint a strategic you've from drastic from we've wage our very haven't to rather treated done me increases and benefit surgical and had cultural and As standpoint. needed, but speak, and we do people where a

and is in to our well course, in no the the ready that expect So, serve total And any that in loyalty our big disruptions. results our stores, the prior and right Really well the customer high great team, continue what of. headquarters, digit did had we lifts And for and expect the our we're by kind QX number passionate end that's higher on pleased future for of centers, close And the far. single that up us. pumped distribution seeing to in lifts tomorrow. tranche a the in QX. shared teams we'll indicate are see working to a we've that by as class. so to something than have do to of from for package And plan open of We're exciting, that XXXX we've initial XX another we XX we're without part the pretty we really you're basically remodels. perspective, matter function From period as here CTx about with we'll to and we a

the -- me last that's about going. on mind. your So, then And question, where you we're if refresh don't excited

Dana Telsey

of is it into get open? to a is number the or XX getting the supplies going the pushes because that headwinds openings from XX, to store XXXX, On store

David Makuen

it's one either right It's necessarily -- not now. actually

your Let me piece of answer question. the first

hit target. expect to We our thousand grow stores and store

no down everybody number We do of of this pace question shared that, we a we're The year. which bit prior. just with we've have and kind not that it slow little

in We sure. that faster expect a XXXX we'll move XX, and we'll to beyond, and so return move-- and to for XXXX pace

are our managing those to In effective really of start, into or part. company that the a resources remodels managing we're to more getting our fact, lowering in these not flight XXXX. the times stores sure of measure in throughout a off our great the deals already the able just to current business, prudent We'll core on, spread around challenges. new on business way it's only We it, but and in to running make want respect most an In done. move

on. we've We're XXXX in and excited it really in in thought from upping up pipeline. how it. XXXX there deals we about So, the in about so kind and number got of But the that's tons of

Dana Telsey

in exit QX far and of stimulus lapping what's or of cadence you the tax quarter, cadence the quarter, how is happening so Thank refunds? terms thing, to see last rate, date? it's And of you. the One it. Got whether did what

David Makuen

Sure. The answer better to Good got month. short by the cadence quarter, it question. the is

improvement So, and saw transaction consistent a and through strong consistent from in We conversion sequential counts. saw strong Feb April, our and basket. as we level

So continued in QX, the quick and improvement off initiatives in QX, of then, couple hold. are entered incremental traction momentum. The of and that summer the about. was taking rollout, parts improved we're of a our last improvements QX And talked the we're seeing the And encouraging for as some They're that learn, plug-in stick we we've a over early and throughout of gradual we've I'll QX. seen to sort month-to-month the test quarter. liking of calls we've that's contributing but saw

Dana Telsey

you. Thank

David Makuen

Have a welcome. You're great day.

Dana Telsey

You too.

Operator

you. Thank

Our next Hamblin of with Group. Capital Please question Jeremy is from the line go Craig-Hallum ahead.

line Your open. is

Jeremy Hamblin

great Thanks. and some I results. there's I following just want that that to up improved on to question to start clarify. last hear by sequential wanted

more So, where typical. and than from seasonality QX. basis little maybe stronger this just sales how up an QX bit be Are on QX is to significantly -- dollar expecting I refunds didn't tax absolute expectations out you a to historically, typical wanted QX? if there's color been QX because play of you around understand on QX as

David Makuen

and for Jeremy, calling Thanks asking hello. some questions. in

quarters guidance gets to as individual to earlier, projection guided trend very and ends it not is over any that run with similar better the QX to of guidance what year. can numbers we we've in is that Qs and today. While stated we're related the of tell meaning disclosing the our QX today the you the I What rate

that well packaway into time you the sequential sharing a important back-to-school winning and about summer past which the the is the three us I can from we're relationship normalized the from back-to-school. putting to to the think period priorities more quarter, single you I and confidence The that strong is accomplish season have Then, X, we we're gifting season. years is what feed July We're brand. expect standpoint then positioned current inclusive for in imagine, improvement order while around not tell every emphasis is remaining QX. we'll And way that -- the bill in right a roll of a it an offers we're and as quarter-to-quarter. we with So, can

rest of color that's how in shapes So, the some of up around the year our kind minds.

Jeremy Hamblin

in down pipe just million. a year it out ask context where and I apologize. guidance of you right you're But But by different expecting kind the me the of it. full let slightly -- $XX QX What roughly cut played

course a little QX, to where March, expectation now having trying kind you're of might a near-term more like three out over you we just of I'm in lower thinking is it a seasonally prior though. little I it Are play after going QX more bit understand just remaining change in the previously, summer little is the coming get your quarters? more expectations million typically? bit in in that we're that QX? versus So, $XX thought and Or equitably it's we going bounce to know might season the

David Makuen

Good question. Yeah. Yeah. Yeah. No, no.

a can you we certainly some than are as we inflationary think news, from to hope. we the that longer lingering. all know expected directional And little I give pressures linger insights all

you that take little decline so, away that and of And got QX more QX a can $XX than has it QX. million

all that's -- a bit appropriately But they a away pressures quarter takeaway. inflation and think fair as from to to each respond from can imagine, such. the we sliced you I

Jeremy Hamblin

inventory. just Great. the And That's into get helpful. wanted to then,

than maybe inventory are with recent lot So, I you levels a reasons are what of Inventory little consistent variety than retailers higher basis of expected. for we're higher that hearing expected, came up in some XX%, have bit a but levels weeks year-over-year a from about a on in packaway.

in to levels were pretty higher, do being a concerns risk close bit maybe if clearance to expecting then a given certainly two, markdown ago? your up QX. see not Are are higher where a little tick, to competitors a margins, thinking be levels, one, ago? all slightly inventory pressure In you -- I from expected lot there's rates any have I were year to months the -- terms just have also two, because that On you with some at maybe where might starting about go understand going certainly you from are of they three like think that basis, inventory them wanted than of of where which about you are a came they promotions? to probably you thinking been incremental And gross rates your be higher expected, in forward

David Makuen

Jeremy. questions, Good

I'll versus script where inventory-wise. [indiscernible]. talked if our First about release, off, XXXX, is I sit are bit XXXX give we a And out and In you we very little about we color pleased but of obviously data there. can, versus

thing season spend important our devotion model considerable packaway remember an buys effort late those forward we roughly towards goods November So, to about selling and as back-to-school from as capturing business we that March and is a and of for XXXX, XXXX in eventual through even really of later.

up so, you quarter when out there. mid-XXs, buys last of at you you of kind pull need inventory said, of And against look to believe like we levels forward our end really year, season

it season up distribution good in we you deplete a the that that we up really a it unbelievable pulled to and drain that back-to-school in starting X% so rafters in and really and out sitting through when buy holiday, bucket, amount it the continuing And good we're forward centers. So, do basically margin is because then and in in our way. And speak. that's deals

important understand. that's to So color

fuel during is couple a of against is year last that's The important only we period. know, to last because average inventory store And year extremely the stimulus were other depleted up thing QX points. our

and over testament powder of skis, really And only to the focus the that's our team literally on so, average just what's manner. store, dry on keeping a manage four inventory not cities up an getting It's our effective be a our in is to levels all across X% walls. in

-- this risk all on markdowns what around and we're not yet point So, today. shared into built and can modeling extra then concerned feel spent of And terribly comfortable that's time we We assume with long maniacal story we keeping today. shared lot short, around way. we're that that your margins, we it a about what you

Jeremy Hamblin

Great.

Next me. one for

David Makuen

Thank you.

Jeremy Hamblin

Last Yeah. charge. million for me great just also, the understanding stock is SG&A Absolutely. color. non-cash around one the Thanks. That's $X.X

quarters. spend of the I if year, all sure that’s QX spread and really to in were But QX well. to guess of specific of was that's where that So, you SG&A last then sustainable wasn't QX your detail in few sounds that's of quarter over or from million, in if that like that $XX it And throughout in hitting And QX, little presumably was But be a all my award, or it more then that going one kind that absolute multiple just down not. hitting managing so level. Thanks. wanted over get in terms $X.X million I spend. just is XXXX? was quarters a here like kind to if around also spread next

David Makuen

Sure. Yeah.

is will I'll and and can then "non-cash $X.XX on end as take that spread it You million, no EPS becomes is bet. relative of It's the year, pointed in the and spread $X.X runs impact as out and by it one charge" quarter. the XXXX like QX the to And longer rest of one XX% But on one-time of part of part Jason part QX, deem more probably event the out, it our to number. year. two. across then Jason chime kind in the EPS about for this of

So a give a thing. you level high good that's I'll on SG&A.

about in terms to for minute we it over two feel we've we're on I'll managing Jason think how I of do it. how forecasted that one. one confident turn and or But it

Jason Moschner

stock. awards, on initial settled an was and that the relative fair elevated to our in fourth our value mid of which that XXXX of level those our the in it is accounting the Yeah. the price. managers XX-K certain conversion. to date value market that at And they were restricted grant converted take We nature cash was the the And into conversion quarter on was rules for that around that awards we to clarify footnotes price, that quickly their as well disclosed

in vest. and they straight the gets expense price until then line locked So, that is

on be awards going they'll straight vested future fair grant XXXX. of forward, fluctuations in no all awards based so will equity line then just fully no in and equity And be So have March expense our we settled mark-to-market value. awards, cash

we caveat the can As balance ability part to generally that around just through of relates it levels particularly think generally in speaking, as with to feel the spend of we confident expenses to variable -- QX XXXX, And year, QX. quarters. for QX, do of the it our the we in expense We're higher some -- the expenses. we fluctuations through control kept sales the it QX have we in that with generally through SG&A do SG&A the keep our as

same it and along followed QX think of being will path, even were where around staying point and we expect followed I but XXXX So, levels, XXXX. -- as in we the follow still XXXX the directionally starting

Jeremy Hamblin

Great. that context color. Best Thanks for wishes. and

David Makuen

Have Jeremy. day. Thanks great a

Operator

you. Thank

Our next Gordon Haskett. of line from is the Please question Grom ahead. go with Chuck

line Your open. is

Chuck Grom

lot. a Thanks Good morning. Hi.

wondered to if arrived XX%. guidance guys speak XX% comp how you the down to you Just at could

to provided. few you throughout next guys enough imply come line I run the the the in pretty sequentially year. And You that were fortunate view quarters, out over the if does uptick big three-year with stacks XQ a it

how second bit if you wondering number that help just on a willing for be you'd to of the I us And quarter. could just was you to got if little unpack So, us. give

David Makuen

Chuck. you. Hey, to Yeah. from Nice hear

with to the rollout of how the patterns seasonal methodologically few bit to gradual March also year we as QX of it winning the ago, QX, on improvement Let -- to winning to by, importantly sequential so of many meaning me within give the initiatives, And little color expect pretty a incremental talk in in mentioned holiday, tied our volume methodology the is QX consistent kind release, from I unfolds. cities. business largely and on speak, back-to-school, prior but a this minutes driven

the March of addition Q rollout the remodels, a traction the range, a more in which check of intense line stop our last CTx about for you missy of example, comp. spoken call, I've further expansion our size and out into As store, UPT portion of go the before

impacting down inputs lower on income So, based that lifts model. I'm persistent about all thought remain in we just our Really, the our we it, of kind sure level would of thought tamped you as a achieve the inflationary potentially customer. assumptions we those and impact of

by incremental relationships. are current these shifts color trend is In habits little customer, product I'd the activities trends to -- us. And wear change by bolstered our it's we're work of relevant. our good share then benefiting and regarding some of sequentially, really which a improved definitely on some that that driven is cities bit seeing it of So, end within mainly greater trending in

the you that we're And to work than wear seeing at-home household the sense, guess, continued in and and with the in of, is also we're and put we're caretaker in business simple still the forth. So, if trend pieces from a streetwear kind will, and that of together year you side, clothing could white flip flare wearing prior so remote and I a black matriarch portion, boom. -- a way on seeing lounge, who worker/remote casual strong the more year then, trend still last knit,

we're fact, and as can. really both surprise we every businesses them feeding In seeing we're day, those best us single

are well, build, incremental So, over all bolstering quarter-to-quarter are of that things confidence year. speak, so things our happening while are some the of that happening the kind to base in some like

terms the seeing well liberty in I now conversion previous conversion we're QX, wavering with just much at pressures. traffic consistent than We're that just in meters In metric. traffic compute is meters I'd therefore, conversion. to really level high wonderful, the conversion able and just this basket not that -- say, answer. in would and maybe stores with inflationary simply thing even our And I and share emphasize But to of over add shared XXX more is not and confidence or

So, come it is levels, basket XXXX. at mean, well same to our the to funds, never rate. interesting. really the are who points stores has still converting their similar mind consumer it's to And I XXXX then into the above do, basket -- the fact many our that

And of just really kind we so, all point incredible QX, pertains good. QX, as about and those of the as Memorial on rates -- holding to speak. it we their year, but We're of goods, the on Day take seeing feel rest specifically

and banger, a a of located. So have early back-to-school stores our sports to we where very because season then going be is are

traction seeing on things And already uniforms back-to-school we're and good so, goods. some like

certainly that unfolds. So, all good about gives us feelings QX how

Chuck Grom

guess, was terms XXXX overall evolution in apparel the what's basket in That's like helpful. has talk discretionary the basket you build off more it your become, I stayed actually hoping has the that of within Okay. that. then, changed I dollar or How since And of much about And basket? UPT? size, could to very area? just the mainly

David Makuen

questions. Great Yeah.

level that. you some on Let me thoughts high give

First off, and what UPT it's and being versus basket the that both driven by? talking now gains, XXXX It's being driven by -- AUR by is I'm improvement. both

almost relative better it's the the during brand, and of combined being with XXXX, $XX slightly contributing significantly quality Chuck, not price neighborhood those customer reported the frankly, as is you XXXX, almost in given bolted And that the higher which higher the the stimuli know, terms acceptance against of what market we how call it, and to points resiliency higher has the that to was -- better and value, trend encouraging, for the than to of flat to XX-XX, UPTs, and really XXXX, $X similar in is such up basket XXXX. to in XXXX. So,

in Q to in complexion in it of hasn't of as kind balance to good incremental The sort apparel trend But aberration kind of of of way it's in seeing we is has UPTs contribution own its XXXX. The the for a brand. else, holding to that I'd line fact sort consistent. the the the look impact, that did at because stayed we're wants a from and needs only much non-apparel, the way basket, it driven sure So, Q. basket, we're a call of same changed the between relatively what really everything

well. think I bodes

times of the both us keeping and and the arise those shows Q at that are addition all up line kind incremental the the wants merchants incremental I the activities. on think of it needs

Chuck Grom

No. My helped. last That to great you. -- That's actually Thank really color. trying just That’s yeah. just I'm is, understand. question

better May. month question of quarter, the to continued earlier, talked the getting You into and improvement Dana's business each about

consumer. have of work guys terms what more in and just you maybe You're speak I food, to consumer you the that And the just concerns if the just was inflation. could curious on your gas guarded done rent internally has understand to

it you I Just I guess, details just has you better? like -- And have it think then, changed? gotten Has your now? become consumer business gotten I'm right case the do that's more little incrementally your what's understand, on if bit a much guess, trying as concerned? incrementally to why has

David Makuen

Great No. question. Yeah.

I'll I think our what we've base. back done neighborhood. led in input give direct more a groups, little primarily some than basis direct often trade of I tank by Hey, getting fill pressure from primarily to speak. of date, regular later. I a Chuck, a my field call, a pleasure like, again a and them is mirrors internal it from and our driving my hold to it's forth who that's and associate you choices. a customer series of the some color disproportionate makes hearing because don't week on heart that's their, of and hurt, portion the base up the a amount keeping And fact it and paycheck the local. And real We to and hearing And distance curtailing certainly, buy probably on in so driving in focus I then things so driving it We're gas with have up my fill time, that

are likely home home, many closer that, bit, staying benefiting for they is respects, Now we them. near in our to because a traffic are most and

probably there's qualitative Again, put is this and there. So, data, not a take quant.

The second thing we're hearing is rent.

these of rents and rents are higher -- the and average utility even renter. cohort pressure going slight up, up, in landlord they're costs versus to on rents often -- obviously over my indexes passed renters. being utilities And for the those going population customer way Our feeling of guys a income, the

this tough things [indiscernible] tranche, more are below. facing facing the like lower They're really on and some times. is and certainly And income evictions, think some really,

is two are certainly the rent. those up Food as showing the three, that gas are -- most. but in number high coming not and as so, not And

within talking watching end of the benefit, that talking because I'll of to talking three-mile just and is that over of that. for XX% they're to store. female even and of our carefully, day, for quarters aren't a kid to some a kind a and option options really options the a or as our associate shop with our do know, shop that to back dedicated roughly And and and of there's might neighborhood. we're At So, once in guy, to to that There the volume there's literally a was on a in so kind in a frequently think three base there the the neighborhood in we're but shopping keep there, of customers be to of a go about. lot chain, family. neighborhoods speak, local you We commentary a of our less a being lot around range while, baby the a I and not tabs woman being

to, I've model customer our boundless. I is, I fortifying, located the think And the conversion that's sheer I think, to like frankly, which for we're basket curate levels. really, talked loyalty, and our and talked of of lastly, our our frankly, when they little reduced, a So, how audience, there if -- their and in were, as wish about then available about some respect, more. they we the it And frequently. frequent, where loyalty durability terrible. fact we managing -- this and less they But disposable a are feel healthy those are and to they come guess, who love I can But in they coming talk shop can't they they way it, come in do, income and

in couple actually think the I going and over more research going some in digging and of -- to Chuck, more that, down, earlier So what I missing, find are And these next we're lead a little anything. of then in the But what do to the we I lastly, do like rest on situations. is we're best. that to out what research the to is quantitatively that's that's mentioned we, do way we we of year. figure the to to doubling best what think if that's of most like going all short-term, just date. And in unfold And weeks, know do I retail, call,

as I audience. trends, true will and through long keep our providing and this staying are to that, this. our get And think as basics fashion to purpose we doing it mission we so, us of to help And

Chuck Grom

a it. Thanks Got lot.

David Makuen

day. Thanks Chuck. Have good a

Operator

you. Thank

question ahead. Please Benchmark. from with the go last of is Our Lawrence John line

Your line is open.

John Lawrence

Yeah. guys. morning, Good

David Makuen

Good morning, John.

John Lawrence

you periods, you further. are those guess, in one step question, just pressures of would that, inflation little sort at customers base, of some I for Hi, or around in years you a your neighborhood What find for effect customers effect but there? X shopping maybe have David, customer Chuck's seen answered you some when further look that that for maybe then this as were whatever? them your past or is step see about, down or what somewhat When these upstream that historically, July and take that then and trade you they trade back-to-school the last you pressure in just one the on

David Makuen

question, great It's Yeah. a John.

go if and the in you have to of trends, resilience strength shown think historical the kind time. definitely of coming of I recessionary back we post out a period

example. an see in for that could as You XXXX, the XXXX brand,

spending which are regional shopping have key And this of today. were know we some shopping local. XXXX, a I characteristics they what to suggested area. were of in -- were they so about back these customer of idea with And is different I'll shopping a we're us, going they area, I'll of trading on different up, bit aka, and out, -- and all outside think, off both. our immediate as it, their local in are zone times reaching what associated pad there, or I some for we've trading trip read the through But little call going Chuck, the is wallet a doing driving what

continuing They beauty reported and our in And year our that brand dollar for a a I to and I out the of they're and local us believe think the year. support what grocer trips patronizing hub and QS local the sort and a maybe in current will less be are to is staying and they're the what regional/XX-minute probably staying times, trends and us. hub, that's a of think, away in these rest player store. little area, what's, seeing we're we that

a local base the that's that we belief something So in have shopping for is business, a it's and affordable.

the value, of And their shop but ring local out trade down, of and home. some so, to value on stay in that are still closer maybe and it's maybe instead of it's word regional to or ring, going back gas to going your to they shopping save

prices that's of lot this values but that of So, in to offer our metrics to notion a up. terms of think again, key don't holds it drop-ins how call great at I in qualitative, and are stuff on posting And I continue break together going what we're in the incredible bank.

just dropping pretty you. this We that we're happen to going we sure we're and about are season great three bucket, the you're example, thinking in great because appreciate new For that to different week, dropping and us values blowout is programs we forward have buy in in go, do you, Thank customer you're our value. always like

a it. us of think, are, that. continue done who from that. We'll to It's Does So, do sense? the make that we've I doing always and responds customer hallmark we

John Lawrence

Great.

David Makuen

Great.

John Lawrence

that. And have going the comment but it, on I you are for Thanks to you stores. you how new mentioned more missed did many remodels might do?

David Makuen

XX total not I to remodels. of a did We did have, change. because still zero by mention that on I end XX going was on there specifically, the books, we're And no QX. of approximately the in completing

prior, year. pace on of the meaning disclosed what within to we've over we're half well So, first half the

John Lawrence

new far store a of remodel performance the And as as no real difference the between and lift? a

David Makuen

each new The we're out and yeah, it’s the new we obviously, sales pleased remodel, those fresh the and measuring gate that store against a stores -- remodels, the back stores. to seeing, new, feeding group we're Well, groups, of appropriate little as going a control goods But on what of comp it feed with coming and of the measure planned. we're it's -- we're differently.

John Lawrence

the Can other do you maybe on see some me that? for pretty And in question merchandise the what as robust as availability is deals Last Great. there. of is, far companies heard comment we've you talk pipeline? about out

David Makuen

Sure. I that. do can

values seeing the on. us, thing. it goods goods model branded attractive the good a but in can for it's that that private for And unfortunately, that our an on brands our represent don't to on terrific anymore, needless come mentioned a from represents other say, desk label unfortunately but up As we're and we I now across that cancellations pick There need definitely is is, basis. chase business for call, the daily something industry, across goods becomes

it's at And somewhat, so, call, BTS look mentioned strategic with on Citi to bolstering it we take to is opportunistic is Trends a about good and very in opportunities. do fall pretty flush the buying right holiday we're BTS, manner. and I for of -- more intends bolstering that advantage those the like now which in although And looking environment,

most that never So, customer. out love in it, right yeah, for don't out any do importantly, willy-nilly families. we're African, go We deal. we're out just we it been for that, there. strategic not product our do great We've and and there. Latinx And is that's our a that American very smart and sure way. right We We -- make up picking

John Lawrence

for Great. Thanks color. luck. the Good

David Makuen

John. Thanks Have great a day.

Operator

further are questions on at there phone And this you. moment lines. the Thank no

David Makuen

quarter Thank you, Have Citi a first Memorial and Bye-bye. Malika. Thanks everybody Day. upcoming XXXX the week for Trends earnings great joining call.

Operator

you that Thank participation ask We please disconnect today's Have for you. gentlemen, Ladies call. conclude thank that does and day. and a lines. your you good your

Citi Trends (CTRN) 24 May 222022 Q1 Earnings call transcript