Citi Trends, Inc. (CTRN) shares jumped in premarket trading Tuesday after the value-focused retailer showed that its turnaround is gaining real momentum. The company posted double-digit sales growth, tightened its losses substantially, and improved its balance sheet—even though the bottom line is still in the red.
The third-quarter results weren't perfect. The company reported an adjusted loss of 88 cents per share, which missed analyst expectations of a 79-cent loss. But investors seemed more interested in what's going right than what's still being fixed.
Sales Momentum Continues to Build
Quarterly sales came in at $197.1 million, up 10.1% year over year and ahead of the $192.7 million analysts were expecting. More importantly, comparable store sales grew 10.8% in the period. On a two-year basis, comps increased 16.5%—the kind of sustained performance that suggests something real is happening with the business.
CEO Ken Seipel pointed out that this marks the fifth consecutive quarter of positive comp performance, pushing year-to-date comps to 10.0%, or 12.3% on a two-year stack basis. That's a solid track record for a value retailer navigating a challenging environment.
Gross margin came in at 38.9%, which was in line with the company's internal plan but down 90 basis points from the third quarter of 2024. The decline reflected product margins similar to the first half of 2025, plus some freight costs that were pulled forward from the fourth quarter to help balance holiday workloads in distribution centers.
Balance Sheet Strength
The company's adjusted EBITDA loss narrowed to $2.9 million, compared with a loss of $3.3 million a year ago. That's progress, and the balance sheet looks solid: Citi Trends ended the quarter with $51.1 million in cash, no debt, and no borrowings on its $75 million credit facility.
Merchandise inventory totaled $123.5 million, down 3.1% from the third quarter of 2024. Average store inventory rose 4.5% from a year ago, reflecting revised timing of pre-holiday product deliveries.
Upgraded Outlook
The company raised its full-year guidance to the high end of prior ranges. Citi Trends now expects full-year comparable store sales to rise in the high-single digits, with gross margin expanding about 230 basis points and SG&A leveraging about 90 basis points versus 2024.
Full-year EBITDA is now projected at $10 million to $12 million, above the previous outlook and representing a $24 million to $26 million improvement from 2024. The effective tax rate is still expected to be about 0%.
The company plans to open three new stores, remodel 62, and close four locations in 2025, with capital expenditures projected at about $23 million, toward the low end of its prior range.
For the fourth quarter, Citi Trends expects comparable store sales to rise in the high-single digits, with gross margin projected between 40% and 41%.
Shares were up 9.83% to $48.40 in Tuesday trading.
