CTRN - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Citi Trends Second Quarter 2022 Earnings Conference Call.

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, Wednesday, August 24, 2022. I would now like to turn the conference over to Nitza McKee, Senior Associate. ahead. go Please

Nitza McKee

Makuen; good on and On Thank for Officer, you call Plutino. Officer, Thanks Trends morning, second us David Executive Chief Citi is call. Chief quarter joining Financial today Heather Rita, our everyone. and XXXX our earnings

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

David Makuen

XXXX you, call. And morning, today thanks fiscal everyone. second Nitza. quarter earnings Good on Thank for joining our us

our are are are Officer, their other direction to high-level necessities, macro pressures customer we results in one of an Financial and their that begin, provide the result gas of will facing utilities, environment, with we strategic I overview in history, Heather Before environments After taking including you and outlook. wage financial customers inflationary of that, a outpacing fully important the be a our To the quarter then of provide transparent, most it's second the challenging rent, Plutino, economic base. items our food as our and Chief business our elaborate challenging related current few let the me across our a view near-term growth. on household performance

associates is new seeing comes existing aided Trends they whatever do by day conversion holding with Our clearly to and accounting than rates lowest pressures. our their to acknowledged, on stimulus our show and spending strong of what's Citi for though these and personally customers and that our helping what in size a plus purpose tough levels. pressure the our beginning have them extreme visited bracket since base been household income our income shopping most Even backdrop that But are hit number the household customers, hardest the been we to $XX,XXX talked basket an up decline many welcoming every average of I is discretionary year, are up way. stores, a to of just learn our and macro consistent and friend, their annual approximately more this year's those is last With from visits. share customer how week visit for like much XX% week ever, have is have times compared below, neighborhoods each delivers to experience crew feeling. persist, nicely important our of are record engaging customers city extremely and they believe when store many

needs quite we said model of which customer, our Trends can doing are to our confident valued loyal we to resonate. to well. better the and are entire the what brand that meet Having for remain this, the trends, customers does controlling our to committed family continue and we these assortments Given Citi the

to Hard at trends. adapting capture toes, to our more ladies six identified Our share, opportunities consumer in by cities market their trends value they extreme BUY on categories. chasing changing particularly cities team, in or and across have our particular, footwear work,

new our and ladies hyper-focused assortment sales, missy we that capitalizing play healthy assortments improve on adding managing and size by a the to of the Additionally, and to more offense continue rollout introducing Q I everyday or mix, including strength business. men's profit. casual margin to had we essentials our building inventories of maximizing driving on line, expanded the operating Overall, mentioned remain continued previously, our

the On lower number is to SG&A align to lower one the priority our sales side, expense our expenses expectations. with

expense across quarter on created assuming plan efficiencies lower conditions. by second the overnight, expenses already macro functions, we to a couldn't and adjust a sales structure our unfolded, aggressively but primarily our As build business we and brought action rightsize have taken base

approximately are to impacted Let can We wish controlling the what me very second for both on $XX significantly assure savings staff track or million be we contributions. half about SG&A of we of the are expense, XX% actions this on truly are we control, and decision reduce total the deleverage associates aggressive versus swift their by in including half. SG&A and reduction. expense taking XXXX second Overall, X% and to during appreciate a difficult you, XXXX we best XXXX and

quarter Before turn it versus the QX. from points sequentially our and year improved year-to-date. during about to I highlight basis business to few the over a want prior Comparable I Heather, to metrics QX XXX second transactions

XX% X% maintained the the for by for slightly outsized only and quarter to compared gross against at XXXX. high year's contracted a of XX.X% first half. growth last XX.X% of basket QX margin average We Our

the am I'll our updated basis. quarter debt, $XX in liquidity. million the year. will as the a pleased over Heather, well new remained who as results have member extremely second our detail decline She for that, call to our With the of We in-store CFO, I in cash decline turn in excellent team. of with dollar balance discuss our guidance to ended average XX% an and in a Heather? and XXXX $XXX leadership no million inventory Our with to on compared XX% quarter shape unit a of

Heather Plutino

part neighborhoods and getting I've to and commitment I June. remains joined significant. of business corporate, quickly the I'm know experience Trends be I team. distribution as, the well proposition, late center take to admiration for everyone. productive it's in background its excited CFO in the opportunities and as and Citi teams, the business leadership serve. further since been needs good business, months the been potential and to servicing very growth of can to model busy honored meeting Trends with and unique making Citi you leverage a two on And difference the imagine, gained model David, Thanks, as transform have I stores great in will customers. our for as our the family morning, home and role and identify retail value to a its to apparel, the Latina I'm accessories my in believe we African-American immersed deep

quarter in year. the second of Now turning results half to first and our the the

macro lowest our the lasting deeper extreme The the customers, David quarter notably income household impact difficult but headwinds persisting most mentioned, As expected. from remained from impacting all our longer than with and inflation environment been throughout we cohort. of inflationary pressures has

right-size quarter strong nimble and base. teams and have expense tirelessly in the margin our delivering remained our working to focused Importantly,

the million line ended Our quarter balance $XX and credit revolving we of unused. inventory and is remains healthy our cash, with sheet well-managed ample

cash balance in sale In transaction leaseback all continue close our September Oklahoma us on addition, earnings release, strategic initiatives. environment, operating our million positions center of of remaining $XX this our in while as to we distribution our adding to which mentioned well in navigate expect a to sheet Roland, focused to dynamic

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

decreased the quarter of sales conversion increase consistent X% As half performance. a remained second mentioned the representing versus in in approximately QX our year, to comparing versus decrease with earnings are quarter and a a million, a XX% were select the the quarter XX% XXXX and an QX, of first to consistent staff increase of or and historical relative of versus first last to lapping in XXXX release, provide for sales in in same X%. QX, for 'XX in were pre-pandemic results. results XX% periods operating of XX% Sales QX. and second Absolute of Total comparison XXXX, transactions with quarter compared quarter normalized we XXXX, second XXXX. more QX, stable the XXXX $XXX order three-year sales, Comparable

X% government stimulus unprecedented mentioned, XX.X% average in Importantly, size year-to-date David first by in XX.X% basket XX.X% Gross to the was our the to half impacted only margin compared and QX, contracted in as assistance. XXXX. a period XXXX, compared QX XXXX quarter of

point basis assortments our freight inventory in regard substantial disciplined results strong product with XXXX. and resonate headwinds, XXXX continue supply QX with management a customers. have only gross cost and successfully in With our Our navigated to mitigation, we QX that chain inbound environment, core to strongly versus reflective XX the are outbound resulting of margin increase

rate. the X.X% deleverage declined dollars top to experienced in pressure softer line our points XX.X% XXXX, expense resulted SG&A SG&A basis of of SG&A outsized a of sales. We XXXX XXX versus QX While rate expense QX versus on

As XXXX. last forward half $X.X million of to income in to reducing the compared the aligned million for our $X.X we revised net million QX income in in compared a $X.X has in lower XXXX loss and Operating expenses was loss David QX team quarter to million sales noted, than versus the Net more year. been our of of deleverage operating XX% the income QX second management XXXX. of aggressively was working look expectations year SG&A to to $X.X by

per XXXX quarter in basis. $X.X diluted $X.XX XXXX. earnings $X.XX per QX XXXX QX share And or share compared compared on $X.X finally, million was Second $X.XX an of in was adjusted EBITDA loss to million to diluted

per Now XX% some XXXX. and XXXX first sales diluted of adjusted and X%. $XXX.X XXXX $X.XX, prior margin compared $X.XX XXXX, XX.X% the center, as of XXXX, of XXXX in $X.XX million $X.XX, XX% of first stack was and the XXXX. versus Comparable for first as by million, in in X% top half to Total to in million were versus share increase transaction, XXXX on brief the year in XXXX, on XX% first the XX.X% $XX.X half decrease Gross the first sale XXXX was increase a I'll highlights million the $XX.X in XX.X% as of quarter turn distribution XXXX, declined of a $X.XX adjusted for of for sales a half first in of sales $XX.X versus half to half earnings and to a gain Year-to-date, adjusted. the three-year or adjusted. the XXXX. in versus EBITDA a versus in sale-leaseback from

QX Turning to XX% and to to XXXX inventory Total sheet. X% increased at quarter our end QX balance XXXX.

QX versus inventory year, last in-store a in versus a QX QX decrease decrease in-store increased inventory decreased decreased dollars X% XX% in increased inventory goods, and dollars units. X% packaway Average XXXX X% of X% XXXX, Average XXXX. versus versus Excluding in XX% units. in only

are continued inventory with level and comfortable the inventory our for team thank management. agile, of disciplined We to their commitment

at remains repurchased capital ended As a to program, Board investments year-to-date, a of adequate to ensure debt. shares approximately focus position it light leaving and carefully evaluating no program. of dynamic quarter relates our strong million, we approximately are $XX.X and our we cash Directors cost of $XX of aggregate an we $XX Capital We environment, million maintain million in buyback remaining of allocation a on macro in and with XXX,XXX liquidity. our primary the the cash

and structure guidance of outlook sales for trends. managing In we have and our based revised the predictable of year light challenging the our turning quickly historic expense macro more for have aligning normalized pivoted on environment to a year. the to to Now, backdrop, our balance the

updated impact the of leaseback the as center Roland Our sale follows. including the is of guidance distribution

total low sales. half We second expect compared total in sales first increase to single-digit half

from in range million. represents X% decline this second XX% of gross half. an the guidance the $XXX year, high to full anticipate for low of the margin the XXs to previous For midpoint We XXs

in deleverage compared year SG&A second first the aggressive half incremental less significantly sale-leaseback from lease expense the to to expect half We net versus due of expense reduction prior transactions.

XXXX approximately approximately expenditures we they Finally, $XX capital liquidity have million expenditures in to the arise, as for to prudently are David chase ensure year. additional we as of reducing by $XX our opportunities capital mentioned, million resulting

is second proceeds customers' we to the be headwinds be be to balance these million, to operating challenging cash proved quarter expect half to QX meaningful including the inflationary half sale-leaseback our In million Roland expected transaction. factors, XXXX. results spending. from $XXX in the $XX a summary, the With approximately line impacting from with income approximately second with of discretionary Year-end

to through this the diligently we fortress As balance of continue the inventory, to we balance control expect sheet. uncertain year, selling persist the aggressively will expenses, environment and manage and

our delivering that our the XXX on updating forward every will closing for that, to you day call. getting assure With progress value can on at trends I call next comments. and I our right right David you the we across I topline, better the back Regarding strategic are stores. to turn look the David?

David Makuen

Thanks, Heather.

let up, me health core loop on wrap we of the the our customers. Before close

As our XX-year entire bold, we our their macro when home it return that we again customer live respect us serve to the and Citi tough life our all family all. by loyal times times, have will accessories seen needs neighborhood to purpose and history, customers time to local, for dedicated and Citi and across remain Trends. in resilient, challenges our shows time good apparel, Trends and subside, and proud live to both anchored Citi is

families managing functions capital and our we by solution. Citi our functions they never BUY faster and or and products, appeal we in search providing being remodel break follows; unfolds, accessories including are lower-income Trends at focused you. in our cash fresh but which a our the in along Move, number customer They and upgrade multicultural experience of the Whether when our contribute here Trends, the year tools consistently short a pitching don't deploying our and to to to to Number loose have. the on acted broaden CTx of to teams need our And strength Citi not the times, process that and management a our our by bank. we across our areas reimagination in associate usage. we hyper sell three; away productivity. to smarter, customer in four; MOVE bit and increase focus our tough making customers our fleet, of important our for new focus data-centric during Number better sheet, associates investments infrastructure, in out as it's are apparel, and of to Citi and OpEx, customers and the now least, number ensure support plan balance our in have these paying and lay neighborhoods difference. continuing Number sales one, that via is with five, BUY and last supporting are in on the two; on they will and households program working store shared of trend-right rest will continuing the As innovative applying thinking prices home

the wide We to space the and believe environment expand continue forward Trends fully to to is brand, significant look Citi there we operating reestablishing growth normalizes. once

customer resilient us who in confidence position a growth of our have loyal allow be We we know will to and time. return in to to

thank drivers of and Citi all our our that always, creators women As entire brand, engagement the customer to face our men and I want culture team, Trends are of the of into and the work carry Their us future. in the goes we hard making will is in shining difference unnoticed. their bright endless never serve a passion efforts live the purpose our to and neighborhood and

ready your back questions. now take are to you. Rita, to We

Operator

Instructions] from question line the question. Please with Group. comes Our Hamblin Craig-Hallum your of you. proceed first Jeremy Capital with Thank [Operator

Jeremy Hamblin

you question. Thank the taking for

the context kind So the the much to wanted I of how happening this then your about there's year start on a how And basis in to cetera. to wanted budget store of the is FY thinking does a cut remodels lower But really the for And growth. about with reset CTX remainder customer, go-forward to format, environment know get the growth? your a think XXXX, million, given openings. for your challenging currently by $XX to I getting of CapEx sense et to asking store that

David Makuen

store at crack Thanks Jeremy. for me growth let morning, And your us. joining question. take Good a

First fiscal XXXX. off, on

store aware, from to As open a and more we able our of trimmed also beginning environment year the this growth in to have be assumptions the continue you're bit new stores. successful prudent to be to

here. supply our is it, chase of pushed allow We've part spend of rest we we We'll delays, at year probably in call. liquidity stores stores, CapEx out. comes going about outside control, billing it's has I'll some more the to then it XXXX, the to stores opportunities new a of reflected as bit and conservative as in, early As had new landlord to later. some year kind the in chain some our comment. it year, XX-ish look our driven in largely close call the which to of the for difficulty this things slightly noted the range are by on up of growth we end of And slow When to too

you through we're half then great in hard the so deliver of for call to stores plans as as the can and that after tons the have in the get in working now here in can today. looks we'll imagine, and mid-fall. XXXX pipeline indicated midst, XXXX, like what And of we our We second early

So but more predict. like, looks that to come on to too what early

Jeremy Hamblin

in first Okay. But reverted for over go-forward you're a anticipating of the level couple seen terms slightly compare just this change just of that think imply sales any to of little of and half for sense the of get XXXX than I in guidance results. a currently. year expected. is improvement, you I what you QX, back of lower month better or given that seeing that's stabilized kind on have And you in basis at the had get did guidance you're of and terms to your a wanted a versus what to And to becomes the more kind trends a the I want recent sense But we clear cadence then here when picture now, last levels. sales months the similar of we've does

David Makuen

the to year-to-date the trends, kind have of expense our the to as bit half. call, With add and that. how regards transactions about about mentioned color extraordinarily little question of consistent. in Sure, on of we convergence we're and in one been thinking Jeremy, second a absolute comments our the happy Good

I and we've good way news income– a lining And how the as in silver think the held. is so look you – our pressures at lower

worried be would unfolded. I lot been really So big or downs. It's QX not ups [indiscernible] QX, way we've consistent big a of

loyal an come the -- seeing in and we those having is particular, of call, this you basis the which regular on means been audience. resilient idea brand the so, low-income frequently, absolute heard the and a total as door to level relatively the a bracket customer that believe, back shop on target have And a We're just in the of of in definitely pressures of given has hallmark case. footsteps the lower our the

indicated, improvement of just in right on-track right strong that -- the As Does we basket, through that that pressure sense? have it's is bit definitely in conversion, seeing analysis got we've as selling predict of and strong rigor you can in QX early what sort a tell you make sure will bit coming as but to little little of performance, it's We've the of prudent kind we of we supported UPT the overall, stable we're the these lot strong that look as we at which by on it's aren't after a second not hard whether most level. guide best metrics, given built But levels times. that as stable chosen it's going not. a [ph] of there, people half, think or to read. of drastically But number a improve and as trend retailers it could We're door. maintain all with the know,

Jeremy Hamblin

sure. helpful that's No, Yes. for

you the you transaction, the queue. taken a combination to with about can total, balance by an line, of cash done very that in of confirm? the hop strong what was one kind through then assume so for end annual dollars is think could you're guys sale-leaseback kind transactions sense the is DC, out But all of first Last two rent that going on that clearly, I flow Wanted cost Okay. that those get what to by in I'll of have when the those 'XX FY of to your basis? SG&A be terms added year. of sold with the the in we and taking DCs, going having

Heather Plutino

for $X hop and Jeremy, distribution the leases, two in center rent shy of On I'll Sure. annualized take is million. basis, expense the that. just an

X% million $XXX on can about it rate a an You think assuming of SG&A basis, as sales.

Jeremy Hamblin

Okay. it. Got

the that versus cuts had, total of don't – of know And of I the so, so does versus that that's much the terms coming stores expense in imply you've how I rent out think the DC then lower imply lower, But staffing in that million actually given levels expense. corporate. Is would fair $X your that increase are assumption? than pretty levels are a your XXXX, that your the

Heather Plutino

Yes. – about takes call a that, is There's so wage It's I'd Jeremy. many in you XXXX is, with overtime. There I DCs, there – would consistent stores rate say dealing from been puts if with and we've increases headcount and it, perspective. think

And mentioned, which we that mentioned, So, from how we've paper improve changes, -- There's on the offset headcount year, half and board, as and that we productivity. stores. David pen second with DCs expense productivity structure in of like then do improve -- the improved our attacking what spend the we we further we're is in into to really are aggressively the the do everything right? across

-- board. across it's it's So the really

Jeremy Hamblin

wishes best questions. Well, Thanks for year of been second definitely half and the taking hand. the on a it. Got tough the dealt

Heather Plutino

Jeremy. Thanks,

David Makuen

Thanks, Jeremy.

Operator

Thank you.

the from question. Telsey Dana with comes question Please of of your Telsey Advisory next Our proceed Group. line

Dana Telsey

Good and Heather. morning, welcome, everyone,

Heather Plutino

Thanks.

Dana Telsey

XX% follow-up. in tweaked mentioned sell-through of David, and have consumers I the basket categories the value XX,XXX a As of what as your having is And of assortment, on And anything levels and the seeing that holding household given high differences purchase up consumer that you're the that cohorts you're you're and on and conversion. Is as in there seeing? you income patterns? price you of you are terms below, David, terms incomes merchandise in about getting being size -- then

David Makuen

questions. for Thanks Dana. Great joining. Hi.

the of specificity, interesting. cohort it’s terms In

We’re differences in not their tremendous baskets. seeing

Q essential centric some and income and up basket lower of like think picking a of what's e.g., soaps been line, lotions slight However, and they in our such. there cohort, things HBA amongst towards and the skew expanded even more the are more has batteries

slight their we're thereby create of business couple embellishments skew makes a us as from years, grown we've of sought quite changes apparel. to higher that, basket, neighborhood store to carriers one-stop you income customer in is new us, and local seeing a And driven and which income features I quality resilience where bit know, capture sense most and -- sort our XX benefits, especially primarily more a the in no We're So be that in of the and in cohort to And and then, influx AUR. as that the a apparel higher as say than bit they cohort to cities. bit to last and would are little that’s frame to showing a AURs by, seeing can [ph]. so get higher you far we'll forth cases, the that more XX a trend, in our enabling of

over spectrum, of then lower the the would ends it's a what income cohort, that been out assortment we're last putting shut very enhancements income almost two year So down. making probably And there's trends cohort like we've of the higher some and the give new I the loving big guy. the enjoying to

in dedication his his business of locking to enjoying devotion strength we're and from is and big men's I as increase guy, casual -- and with a mentioned, just us, us. Our our his pretty he's wallet the loyalty

good pricing category And about on well little of mix and it's so in that's mix So forth. our $XX is, the well a cohorts. news then under store. -- is and over XX% unit The our bit

extreme and never, predicted two-and-a-half could years we interesting through wavered have So from really being last these we than have different value.

unit with you big shared of pretty a portion is that powerful is so And I under even factor and that XX% those $X.

the to merchants during strict great are these see times. adherence especially our to that maintaining tough value equation, a that's So,

look category And of point slightly watch But a to some out as significant. continue standpoint. set creating of of couple I'll that's more, mix the sales expansion a softness to present then offsetting So, our really call throughout And which and is It's to a rest already standpoint. it, multicultural nice not from incremental things, been we it's different mentioned. Q the the kind on the pricing We're distinct of seeing from the I missed. line test category It's front, of marketplace. I'll of some mix box. a positioning the box, out box indicators the be roll a our to in

As you of friendly we've the to remember, talked a more about box. adding assortment Latinx

stopped We have not out at all.

area, that's been a playing fact, within two in stores within in to customers years. and more fleet around and current In we're we're three and to appealing the more last while multicultural our for offense also that new built

So, that's another example of what's working.

a fiscal carry customers give that great responded many a never shoes outfit are the for us she's on fun that around with there Citi So, a and from and arms be drove because our fit having better we our We one. you this pockets. wide year Trends. I'll and shoe based her will doing got bit business that will pretty for purchasing significant

usage and expectation, ladies trends. then I I'll So, to we And the current give right the during kind sales we that responding and that most able we're opportunities to and some occasions into the like a be really a have we slight on of a and that's to roar we're said and doing during to part pandemic footwear apparel seeing bit we're great saw year. occasions think ready different to a have playing during then to not And a in of those footwear it's distinct in usage been front, despite kind been fortunate lower years, with the pandemic our we're a And expand ladies, call, we what up catching nod back the liquidity we example, from what where work a casualization of, master have the paused to of the to so better during of in the offense team are speak. enough class to call trends. change chase a examples. some

seeing So, in and traction. really we're that's good all motion,

Dana Telsey

performance outperformed Great. CTX, big that's been have in a stores topic And of the know I those then others.

As obviously, still just other XXXX Thank of thing other are we or a same CTX through you're you currently, path, levels you're pressure And my the how inflation outlook environment, on what difference? of then in two we? is you. terms that some any what think inventory about year? about as SG&A thinking have inventory, go And where thinking pack-away, the buckets evaluate? And to on given the there SG&A of reduction are either given you

David Makuen

I'll questions. question, quickly with on it pleased inventory. SG&A the we've seen then for Heather are so But to take that CTX CTX, results we and and Good I'll turn the year-to-date. over Absolutely.

continue to ones. day I real these serve we've work our do couldn't the about up how existing Rockin we that So, present what say, continued every love a of but more host with to Trends, brand, even new my pressures, associates differences who how City new completed to showing the you be no they Roland, a customers old excited pleased and macro stores do get despite so with

want seen this year feedback, to So inventory? year-to-date. more we're going seeing speak and do we're Heather, strong a you because to and to of the and do SG&A great performance we've hearing handful just

Heather Plutino

Sure.

we, are So Dana, right? where question was your

Dana Telsey

Yes.

Heather Plutino

reductions for So in identified we and the of of line the pepper words the we're in about enough as million. And of those and cost are where going XX% aggressively, to P&L. banking savings, $X have So going half other here it it diligently just year. after can't that find we call are capture the yeah, it piece, to we working remainder it's mentioned, We've been of sight right? captured million second $XX in the in hard,

will XXXX, about Year. will we are you, I we when we firmly continue lever will think done. et there's it restructure, mind, services, volume-related some one-time of organizational think tell right? FY SG&A $XX XXXX, I would in in of get right? We XX% What the would and in all changing going one-time that structure, we items million about in in that that absolutely about put I changing there, cetera, just then right? program, New into dedicated but sure the put category, XXXX, half it making in I'd to reset category changing are cetera. There et the the So if keep into some of So

think inventory Your forward. think I question was how to how to about packaway -- think going question on and about your

Dana Telsey

Yes.

Heather Plutino

So September do DCs in have we -- yeah, sitting releasing we fall packaway do start amount support that in of an we are very in holiday to sales. excited and the of

balance to that pretty come the start we'll of dramatically over So down see the year. amount

Dana Telsey

Thank it. Got you.

Heather Plutino

bet. You

Operator

you. Thank

with next with Haskett. your line Chuck question. the comes question proceed from Our Grom of Please Gordon

Chuck Grom

equal lot. half I I'm Heather be to in a And your is gain thanks is XXXX? on – second question which DC curious the is EBIT Roland is congrats new guidance, on on assumption, My if half second the to responsibilities. Hey, for the included expected the the believe of

Heather Plutino

Great Yeah. question.

said, That impact sale we expense. back lease gain of lease So be with I’m right That the line to that hop the the going on statement is in transaction. does on of that, in it David. will XXXX the include exclusive

Chuck Grom

Okay.

So be And to are sense know will you the proceeds $XX any excludes be? the about the it going on gain I million? gain. think what

Heather Plutino

We're still working that Chuck. number,

still I think share early to it's little that.

Chuck Grom

great. in the higher and just walk came higher consistent, prices customer? at of when things you do from if on were to quarter, gas that is prices throughout that all? volatility plan utility as Any July those think your passed when to back you business like about and curious lot and sense Okay, pressures feel said your the And gas now that food. talk down, stores second you highlighted, the for you you of prices David, but getting prices the quarter, in just then the changed a there's And half particularly

David Makuen

good Hi, question. Chuck, yes,

really recall saw the and talked customers followed and by then was was the some heard utilities had that what probably far in last in speaking volume we most as these release, we earnings You the call, say, of markets, and come about prices correlation in a refresh news by we place. gas good, focus -- where coming where lot or the most hurt, of, what of just a down least pretty biggest a fourth do of should groups some rent, I us. down we saw gosh, to in And hurting it our kind the saw of are couple of actually was is and we of good informal kind food midsized gas "Oh, prices our associates we concern a kind of data in in gas of gas recently. terms prices at qualitative We

to back-to-school that steps. there's associates some when customers interesting we going on, point, they on it's based during on did feel when overall, were relief see down time quickly So of and that the did down, cautiously prices definitely And prices traffic But and and they from because What down? tailwind rose. paydays stay a spoke and talking bother we down. we sort that, we're be last of gas both coming response came sales of time nice Then lot coming the could provided or optimistic to I any what's we coming response asked, to little updates down, during you? food the you, a gas else’s think period course, some

aggressively I it the importance much We they up all. on typically price up maybe, wasn't is to stores kind the bit heard a neighborhoods slips. think in of the easing in even passing little gone If which reality shop was are grocery food consumer. of in at there our rise in, food

a sign that But modular So and takes definitely there's good having development. is the and some down, gives number a given, one was there. the come reason good

half rest see I the So cautiously the and year how going serve we're it that the shakes to quarter over of and out. think

Chuck Grom

Great. I Okay. And think… then

David Makuen

know question, didn't. – Yes I if me let but

Chuck Grom

state holidays didn't also if know benefit was some from this just there tax Yes. I year.

know I roughly across know maybe that think yet. this chance tax don't country, to days year. of last don't at more I more year. if holiday than amplification data the saw a had I you the benefit state XX% you've look if

David Makuen

we Great have. question. Yes,

earlier have impact and positive days days years. some more prior some We cases, than in from seen

our we compared late how XXXX mid, grouping tax is So period, early back-to-school of cohorts gains free speak. XXXX mid to and as and nice some some produced holidays the as help back-to-school early to so high, we've time three looked cut at call them. seen We've

what those days. seeing liking during we're So we're

Chuck Grom

stacks the roughly sort August back rate my like what And Is sounds year. extrapolating the even half of from a back was? though the the sort half line down bit second of that little run Okay. you it it be at might arrived on of better how the you how geo than – quarter top of question Great. got there, you're last into just X.X firstly, looks quarter the then second the like three-year

David Makuen

kind bunch extraordinarily about to Difficulty] It the the we're But we is of there, compared I'm traditional one the in pandemic with a terms that up, two, QX and given got kind -- kind into as kind volume quarter-to-quarter history. this into uncertain environment of back [Technical way datapoints has kind been and blender of for more prior sure mapped well. to QX of of believe, those well operating of in – got builds debuilds relationships, QX how compared of what rest relationship will to stabilized of hold Chuck, the we the mixed year, to largely that maybe of few or dose our absolute the to you're volume

to addition geometric some use we stuff get to in of to So, the this. that

Chuck Grom

color. [Technical for Okay, the Have great. very Thanks. much Thanks Difficulty].

Operator

Thank you.

Our Benchmark. your question with Lawrence of from John proceed the line last with question. Please comes

John Lawrence

and morning Good Heather. welcome,

Heather Plutino

John. Thanks,

John Lawrence

steps you of door process able of deal? the new to than merchandise? bit David, the have an free the attracting works. up to effort of is about being rather getting start us process us in the know more could of get of deals. you newness off And the to I new how Remind the you and it that or get that just been more just cash available a talked just little able by freshness reminding a

David Makuen

to focus We're aiming and Great hear Hi, entice we're this trying of has are yet. engaging develop that dollars to also priority, priority important, The the More into headwind customers. you tell luxury don't right? so, from Both lower conservation. would values for our the right putting buying time greatest stuff right most I just our customer. maniacal have market question. the been John. at on than combat such. traffic. We really right for the the of Nice you. But given to the assortment incremental on expense

progressively we're the very pick So into back to that to period early of ’XX, later sell been up on. the beginning chain late our take the ’XX meant to year what during supply we've They I to aware of of. you attractive marketplaces in disruption the all back highlight merchants and focusing goods year. drove those

we're always right, values And model that So, a deliver that's really so our November, to because our really school, January germane kind given what's get on, that literally on mix to product of our through that'll to now inventory are in fall hands great Heather buys. are built as we're pack-away November, of these opportunistic and don't that possessing nice and we commented December, hacker August, and on holiday. December during place starting some take back model,

to as buildings we're that seeing. So then of right stores broader our that's back accessories, serve are that across serve, footwear we we cetera, in and we that pleased better. [indiscernible] like appeal that And lifeblood Latinx many we're customer sure apparel, so coming neighborhoods to so Meaning, days, to spent men's, and our it's we're et going can than customer. latter XXX on our a And customer more we're speak including really and our liking the to so current is and evolving adding our their audience, and literally we process them we home trends get out one can communities namely the and the more of nicely communities, for making what and kids, and plus rest African-American part of us. we're speak, more our the identifying women's, home, into but have,

We're of it populations. African-American -- of large rapidly. pretty our kind falls we and Latinx broaden schedule under for the we're ahead now, the rarely tell evolving process. suitable good, would this of and full brand So to your buy with process the appeal after going vigor audiences, the back as we I are really to two question, you,

what of about we fall roundout pretty And the excited that. move pool we're we as and about for gift and forward, have for holiday giving, the that year. excited then we're So rest

And mechanically. question. your I that works think, good it I things going how see forward. some that's So we'll hope answers

John Lawrence

one And Thanks. Great. longer-term last question.

before pandemic. right you the know I strategic. Just started

team deeper up, cutting sure, And you do you've now far -- and little into short all macro that built or some long a of as sort You've sort looking dive of sort changes. that. the as of How just of -- term business I'm that, term, thought there, but dictate about balance versus of the making muscle a the conditions bit. just

David Makuen

have very add that. saying, not in are it general, color in very, some role. a on by We, I'll bloated organization. general, defined a We, Sure. very decision. start to difficult was Happy

ton We layers. We levels. give all of a to contributions collaboratively have a from that not culture work all very supports

We're provide also but pick, teams recognizing what we're in that and our we automation eliminated. very and of which individuals also overall to to work. a study was name be that this though, is would So we balancing make it for technology few. how data, the to definitely hard a about business really John, to evolving need picture The roles very form picture, both difficult decisions we evolving of the

what us is particular investing less in of, and few as less going on nonetheless, require the productive. operate heard technology, efficient function But us will through So we're speak some may about, you've And people, that time. for with a a example, make data certain of to headcount more people over enable product is functions it which front. will unfortunately, tough and that

we but done is look much benefits them time, we'll a more have us that seeing about over and also improvements doing systems course, how and to space. to growth for rightsizing couple the And optimistic a business in we're And future on improvements position already with a are better So nothing already monitor. allow huge we'll of associated where are of effective with and appropriate to handle then, as today we've the those evaluate we're year this productive. and infrastructure and our return as a be smaller we success,

be it -- we're would So it. short balancing winded,

we certain to we're absolutely You're but cautious. But the being take at choice actions to right-size structure. same point, had right, no expense our

John Lawrence

that. Good half. the luck for second Thanks in Right.

David Makuen

Thanks, John. you Talk later. to

Operator

call the presentation continue Thank you. your to you. or with closing will Mr. Please I now Makuen, remarks. back turn

David Makuen

Rita. your so rest Talk Bye, joining. everybody great of a summer. to bye. you Thanks time. Have much, Thanks for next

Operator

call your your That for ask thank for today. disconnect that does conference conclude participation you the lines. please We Thank you. and you

Citi Trends (CTRN) 24 Aug 222022 Q2 Earnings call transcript