Citi Trends, Inc. (CTRN) Earnings Call Transcript & Summary

Thank you, Peter. Mr. Chairman, on the motion for the election, there's a majority of the shares represented at this meeting and entitled to vote have been cast in favor of the election of Brian Carney; Jonathan Duskin, David Makuen; Peter Sachse, Ken Seipel, Laurens Goff and Margaret Jenkins to serve new one-year terms to expire at the 2022 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified. Also a majority of the shares represented at this meeting and entitled to vote had been cast on an advisory basis for the approval of the compensation of the company's named executive officers as disclosed in the proxy statement; for the approval of the 2021 incentive plan; and for the ratification of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending January 29, 2022. We expect to report the results of the voting on a Form 8-K to be filed with the SEC within 4 business days of this meeting.

Thank you, Michael. The Chair declares that the Board's slate of Directors has been elected, the nonbinding advisory resolution to approve the company's compensation of its named executive has passed, the 2021 incentive plan has been approved and that the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending January 29, 2022, has been ratified. I hereby direct the voting results to be incorporated into the minutes of this meeting. With the formal portion concluded, I declare that this meeting is adjourned. We would like to now proceed with an update from David Makuen, our CEO, followed by a general question-and-answer session. David, it's all yours.

Thank you, Peter. Hello, and welcome, everyone. I'm David Makuen, CEO of Citi Trends. While 2020 was an interesting year to join a company as the country was in the midst of a worldwide pandemic, I could not be more proud of leading Citi Trends and having the pleasure of driving growth in the years ahead. As Citi Trends prioritize the health and safety of our customers and associates and successfully reopened all of our stores by mid-July of 2020, we effectively channel our people and their passion to deliver superior performance. Our senior leadership team, our store and distribution center associates and team members in Savannah and New York City were able to service our loyal and new customer base, resulting in a record year of profitability. The transformation of Citi Trends is well underway, and we are on our way to becoming a $1 billion brand. We continue to uncover new ways to elevate and amplify our unique specialty store experience across 33 states. Throughout fiscal 2020, we made progress in a number of key strategic initiatives and ended the year with comparable sales being flat to 2019, despite store closures emanating from the pandemic for a large part of the first quarter and a portion of the second quarter. Additionally, our gross profit for the year was a record 39.8%, representing an increase of 180 basis points over the prior year. With no debt, our balance sheet remains strong throughout the fiscal year and supported our growth. Lastly, from the end of 2019 to today, our shareholders have seen an approximate 260% return by our share price. As we navigate the current times and could foresee a return to a version of normal, our vision remains the same. Citi Trends aspires to be a leader in our unique space, one of few multi-category specialty value growth retailers focused primarily on underserved African-American and Latinx families. We provide a differentiated assortment of basics, fashion, trends and sought-after brands at amazing values. We are excited to continue our efforts in making Citi Trends the one-stop shop for our customers and associates located in the heart of their communities. Let me now remind you of our 4 strategic initiatives that will drive accelerated sales and earnings growth in the months and years ahead. They are: one, growing our fleet and expanding our customer base, where we are on track to open at least 3 new stores and approximately 20 remodels during fiscal 2021, and we have a long-term potential of opening an additional 400-plus stores to reach approximately 1,000 stores for the chain. Number two, optimizing our product mix. We're in the early innings, but our teams are embracing the concept of operating within the construct of 6 CITIs or categories, and each lead buyer is assuming the role of mayor of their respective Citi, with responsibility for bringing that Citi to life. And within each Citi, there are multiple product ZIP codes that keep our CITIs vibrant each and every day, offering freshness and newness to our customers. Number three area of strategic emphasis is reinvesting in our infrastructure. It's all about taking a strategic approach to reinvesting free cash flow from our strong and consistent operational results to make systems and infrastructure improvements across our buy, move and sell pillars of our operation. And lastly, number four, making a difference within the communities we serve. Our Board of Directors recently formed a Corporate Social Responsibility Committee. The Committee is overseeing our initiatives around ESG and social responsibility. Anchored by Citicares Council, our future efforts will not only make Citi Trends a better company, but will also help serve our melting pot of diverse employees and loyal customers. As we look to the future, we believe that a diverse and inclusive team is critical to our success. We strive to foster an intentionally inclusive, diverse and productive working environment, where our employees are valued and respected. We continue to focus on attracting, developing and retaining team members that reflect the diverse communities we serve. I am proud to say that nearly 80% of our employees are African-American or Latinx, and 83% of our employees are female, and more than 90% of our store management positions are filled by women. Additionally, we recently announced a search for a diverse female Board Member to add to our talented Board of Directors. We look forward to developing additional steps in evolving our diversity, equity and inclusion efforts to make a meaningful contribution to the lives of our associates and customers. With that, I will conclude my remarks, and we'll move right to your questions. Peter?

Thank you, David. We'll now proceed to the general question-and-answer session. Please follow the instructions provided on the meeting website to submit any and all questions.

Mr. Chairman, there are no questions.

Thank you, Michael, and thank you all for all of your support and for attending our 2021 Annual Meeting.

Thank you for attending the Citi Trends 2021 Annual Meeting of Stockholders. You may now disconnect.