Citi Trends reported a strong second quarter and lifted its full-year 2026 outlook after posting double-digit sales growth and a sharp improvement in profitability.
For the quarter ended Aug. 1, total sales rose 10.9% to $211.6 million from $190.7 million a year earlier, an increase of $20.9 million. Comparable store sales climbed 10.5%, with growth driven by higher average basket size and transaction count. On a two-year basis, comparable sales were up 19.7%.
Gross margin improved to 40.6% from 40.0% in the prior-year quarter, a gain of 60 basis points. SG&A expense rose to $82.3 million from $78.9 million, but as a percentage of sales it fell to 38.0% from 40.6%, reflecting leverage from the higher revenue base. Adjusted SG&A was $80.4 million, down from $77.4 million as a percentage of sales.
The company posted a net loss of $0.9 million in the quarter, compared with net income of $3.8 million a year ago. Adjusted net income was $0.4 million versus an adjusted net loss of $5.4 million in the prior-year period. Adjusted EBITDA improved to $5.5 million from a loss of $1.1 million, a year-over-year swing of $6.6 million.
Citi Trends ended the quarter with 594 stores after opening four locations and closing one. It remodeled 26 stores during the quarter and 51 for the year to date. Inventory rose 7.5% year over year to $126.4 million. Cash stood at $55.9 million, with no debt and no borrowings on its $75 million credit facility.
For the first 26 weeks of fiscal 2026, total sales increased 12.7% to $442.5 million from $392.5 million, a gain of $50.0 million. Comparable store sales rose 12.2%, or 21.8% on a two-year basis. Net income reached $6.8 million, up from $4.7 million a year earlier. Adjusted EBITDA jumped to $19.4 million from $5.3 million, an increase of $14.1 million.
The company raised its fiscal 2026 outlook. It now expects comparable store sales growth of 9% to 11%, up from 8% to 10%, and total sales growth of 10% to 12%, up from 9% to 11%. Adjusted EBITDA is now projected at $38 million to $42 million, compared with a prior range of $35 million to $40 million. The new store target was lowered to 20 from 25, while planned remodels were increased by 10 to 15 above the prior estimate of 50. Capital spending remains targeted at $35 million to $40 million. As a result of these announcements, the company's shares have moved -4.11% on the market, and are now trading at a price of $71.295. For more information, read the company's full 8-K submission here.
