Citi Trends — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Total sales for Q2 2026 reached $211.6 million, a 10.9% increase year-over-year compared to $190.8 million in Q2 2025; year-to-date (26 weeks) sales were $442.5 million, up 12.7% from $392.5 million in 2025.
• Comparable store sales increased 10.5% in Q2 2026 and 12.2% year-to-date compared to the prior year; on a two-year basis, comparable store sales grew 19.7% in Q2 and 21.8% year-to-date.
• Gross margin was 40.6% in Q2 2026, an increase of 60 basis points from Q2 2025, driven by improved merchandise margins and reduced shrink, partially offset by higher freight costs due to fuel surcharges.
• SG&A expenses were $82.3 million in Q2 2026 (38.0% of sales), compared to $78.9 million (40.6% of sales) in Q2 2025; adjusted SG&A was $80.4 million in Q2 2026 versus $77.4 million in Q2 2025.
• Net income for the first half of Fiscal 2026 was $6.8 million, compared to $4.7 million in the first half of 2025; Q2 2026 GAAP net loss was $0.9 million versus net income of $3.8 million in Q2 2025 (which included an $11.0 million gain on the sale of a Savannah office building).
• Adjusted net income for the first half of Fiscal 2026 was $10.1 million, compared to an adjusted net loss of $3.0 million in the first half of 2025; Q2 2026 adjusted net income was $0.4 million versus an adjusted net loss of $5.4 million in Q2 2025.
• Adjusted EBITDA for the first half of Fiscal 2026 was $19.4 million, an increase of $14.1 million from $5.3 million in the first half of 2025; Q2 2026 adjusted EBITDA was $5.5 million, a turnaround from an adjusted EBITDA loss of $1.1 million in Q2 2025.
• Cash on hand was $55.9 million at the end of Q2 2026, with no debt and no borrowings under a $75 million credit facility.
• Merchandise inventory was $126.4 million at the end of Q2 2026, an increase of 7.5% compared to Q2 2025.

Guidance and Future Outlook

• Fiscal 2026 comparable store sales growth outlook raised to 9%–11% from the previous 8%–10%.
• Fiscal 2026 total sales growth outlook raised to 10%–12% from the previous 9%–11%.
• Fiscal 2026 gross margin expansion outlook remains at approximately 50 to 70 basis points.
• Fiscal 2026 adjusted SG&A leverage outlook raised to 160–180 basis points from the previous 130–160 basis points.
• Fiscal 2026 adjusted EBITDA outlook raised to $38 million–$42 million from the previous $35 million–$40 million; adjusted EBITDA margin expansion at the midpoint is expected to be approximately 230 basis points, up from the previous 200 basis points.
• New store count for 2026 is expected to be 20, down from the prior estimate of 25.
• The company expects to invest in 10 to 15 remodels in 2026, up from the prior guidance of 50 remodels.
• Capital expenditures for 2026 are expected to be $35 million–$40 million, consistent with previous guidance.

Business Segments and Product Lines

• The company operates 594 locations across 33 states as of the end of Q2 2026.
• During Q2 2026, the company opened four stores and closed one.
• The company remodeled 26 stores in Q2 2026, completing 51 remodels for the year-to-date period.
• The company launched its new Insiders Club customer relationship management platform.
• The company is executing a workforce model transition program shifting from a location-flexible model to an office-based model concentrated in Savannah and New York, impacting approximately 30 leadership and associate roles, with implementation costs including severance, relocation, and recruiting expected to be incurred through Q1 2027.

Market and Competitive Landscape

• Citi Trends is described as a leading off-price value retailer of apparel, accessories, and home trends primarily for Black families in the United States.
• The company's brand promise is "Styles That See You, Prices That Amaze You and Trends That Tell Your Story."
• Comparable store sales growth was driven by increases in average basket size and transaction count.

Risks and Challenges

• Forward-looking statements are subject to risks including general economic conditions, inflation, energy and fuel costs, unemployment levels, and political or social unrest.
• Risks include changes in market interest rates, wage levels, import taxes, tariffs, and trade restrictions.
• Potential impacts from natural disasters, pandemics, transportation delays, and freight rate changes are noted.
• Challenges include the ability to attract and retain workers, manage inventory shrinkage, gauge fashion trends, and navigate consumer spending patterns.
• Risks related to cybersecurity, data privacy, intellectual property, and litigation are identified.
• Delays and costs associated with building, remodeling, or opening new stores and distribution centers are highlighted.
• The company notes that it cannot provide a full reconciliation of forward-looking non-GAAP financial measures without unreasonable effort due to the unpredictability of certain adjustment items.

Management Commentary and Tone

• CEO Ken Seipel stated the company delivered another strong quarter with eight consecutive quarters of comparable store sales growth.
• Management emphasized that disciplined execution is translating sales momentum into improved profitability, noting that first-half adjusted EBITDA already exceeded the full-year adjusted EBITDA of fiscal 2025.
• Seipel expressed confidence in the company's ability to accelerate profitable growth and create long-term shareholder value, citing a strong debt-free balance sheet, merchandise strategy momentum, and a growing new-store pipeline.

Other Key Points

• The company updated its definition of Adjusted Net Income, Adjusted EBITDA, and Adjusted SG&A for 2026 to include an addback of equity-based compensation expense.
• The conference call and webcast were scheduled for August 25, 2026, at 9:00 a.m. ET.
• The press release includes reconciliations of GAAP to non-GAAP financial measures, detailing adjustments for equity-based compensation, shareholder matters, leadership succession, workforce model transition, severance, lease termination fees, and cyber incident expenses.