- Q3 2025 EBITDA Improvement: Adjusted EBITDA loss narrowed to $2.9M (vs. $3.3M in 2024) and exceeded guidance, with full-year EBITDA guidance raised.
- Strong Sales Growth: 10.8% comp store sales growth YoY, 16.5% two-year stack, and total sales of $197.1M (+10.1%), driven by traffic and strong performance in children’s, men’s, and basics categories.
- 2027 Expansion Plan: Targets $45M EBITDA (+$60M from 2024), $900M+ sales, 42% gross margin, and 37% SG&A rate, supported by 25+ new stores annually and 650 total stores by 2027.
- Capital and Store Strategy: Full-year 2025 capex of $23M includes 3 new stores, 62 remodels, and 4 closures, with accelerated openings in Q3 2026 to meet growth goals.
- Shrink Mitigation & Tech Investments: AI-powered camera systems reduced shrink to <1.5% of sales in 2025, with tech expansion to 67% of stores in 2026, alongside CRM rollout for customer retention.
Operational Highlights
The company has established a clear line of sight to achieve $45 million of EBITDA in 2027, representing a $60 million increase from 2024 levels, driven by consistent comparable store sales performance, gross margin expansion, operating expense leverage, and strategic new store expansion. Citi Trends plans to open about 25 new stores in 2026, followed by at least 40 stores per year in 2027 and onward, targeting a store count of around 650 by 2027.
Growth Strategy and Outlook
Citi Trends expects full-year comp store sales growth of high single digits and full-year gross margin expansion of approximately 230 basis points. For the year, the company expects to open three new stores and remodel 62 locations, and plans to close four stores. Full-year capital expenditures are expected to be approximately $23 million. In Q4, comps are expected to be up high single digits with a two-year stack in the mid-teens, and Q4 EBITDA is expected to be in the range of $10 million to $12 million.
Valuation and Metrics
With a P/S Ratio of 0.45 and EV/EBITDA of 29.79, the market seems to be pricing in a moderate growth trajectory. Analysts estimate next year's revenue growth at 7.1%. The company's ROE is -14.8%, and ROIC is -115.53%, indicating potential areas for improvement. The Net Debt / EBITDA ratio is 9.37, suggesting a relatively high debt burden.
Technology and Customer Loyalty Initiatives
Citi Trends is implementing various initiatives to drive growth, including the rollout of new camera systems with AI capabilities and facial recognition to mitigate shrink, and the launch of a CRM system, dubbed the "Insiders Club," in Q1 2026. The CRM aims to offer customers early access to deals, emerging trends, and exclusive value, driving incremental traffic and loyalty.