Citi Trends (NASDAQ:CTRN) outlined its ongoing turnaround strategy and growth targets during a presentation led by Chairman and CEO Ken Seipel alongside CFO Heather Plutino and Chief Merchandising Officer Lisa Powell. The event was hosted by D.A. Davidson consumer analyst Mike Baker, who introduced the company as one of the more compelling turnaround stories he has followed in recent years.
Recent sales performance and momentum
Seipel said Citi Trends has delivered “industry-leading comparable sales growth” since he took the helm roughly 19 months ago, attributing performance to transaction increases, broad-based product strength, and more disciplined execution. He highlighted holiday and year-to-date comparable sales results released the same morning.
- Holiday comp store sales: up 9.3%, on top of last year’s 7.1% increase, for a two-year stack of 16.4%.
- Year-to-date through December comp store sales: up 9.8%, representing a two-year stack year-to-date of 13.3%.
Business model and customer focus
Citi Trends described itself as an off-price retailer specializing in family apparel, accessories, and home categories. The company is headquartered in Savannah, Georgia, with buying offices in New York, and operates 591 stores across 33 states. Seipel said stores are approximately 12,000 square feet, with strong penetration in the Southeast and locations positioned in customers’ neighborhoods.
Seipel emphasized what he called a differentiated positioning within off-price retail: Citi Trends is “the only off-price retailer specifically focused on African-American customers,” with assortments intended to deliver styles, brands, and trends at compelling prices for an underserved demographic. He described the customer base as loyal and high-frequency, supported by neighborhood proximity and word-of-mouth traffic.
He also detailed a three-tier product strategy designed to serve shoppers across income levels:
- Opening price point: value basics, signed in stores as “Citi Score.”
- Better tier (core): breadth and fresh styles, typically priced between $7 and $12, spanning women’s, men’s, children’s, footwear, and home.
- Best tier (expanding): more trend-relevant fashion at off-price levels and “extreme value” branded deals purchased at steep discounts, sometimes up to 75% off MSRP.
Management said it aims to grow the extreme value segment to represent an incremental 10% of total sales, describing these branded deals as traffic and basket drivers that can also support margin performance.
Seipel described the company’s core customer as having an average age of around 40, often living in multi-generational households. He said more than one-third of customers shop weekly or biweekly, and that this frequent segment includes households with incomes ranging from $75,000 to $150,000. He also described a monthly-shopping segment typically in the $50,000 to $75,000 income range, as well as a more budget-conscious, less frequent shopper group.
Marketing, community presence, and store upgrades
During the holiday season, Citi Trends launched a “Joy Looks Good on You” marketing campaign with refreshed social media branding. Seipel said the company has logged over 12 million viral views since launch and described it as the first in a series highlighting “moments of joy.”
He also framed stores as “community anchors,” saying local store teams create trust and connection that extends beyond transactions. Seipel said transaction growth has accounted for most of the company’s comparable sales gains over the past five quarters.
On the physical store base, Seipel said Citi Trends refreshed 62 high-volume stores averaging around $2 million in annual sales, at an average remodel cost of about $100,000 per store. Remodels included updated fixtures, wayfinding and signage, improved lighting, and enhanced presentation standards. Looking forward, he said the company expects to remodel about 50 stores per year as part of ongoing fleet maintenance and market investment.
Store growth plans and AI-driven site selection
Management laid out a multi-year expansion plan. Seipel said Citi Trends expects to open 25 stores in 2026 and then “at least 40” stores per year starting in 2027, reaching approximately 650 stores by the end of 2027.
He described two expansion approaches: backfilling existing markets where the company already has brand awareness, and selectively entering new markets with demographic alignment. Citi Trends piloted the market-backfill approach in Jacksonville, Florida, and Columbia, South Carolina by opening new stores while remodeling existing locations. Seipel said both markets are off to a strong start and are being used as testing and learning models for future expansion.
Seipel also said the company is using AI tools to analyze three years of transaction data from every store, combined with geolocation studies, to understand drivers of success and replicate high-performing store profiles. He said the approach has shown about 90% accuracy in sales prediction. For new stores, management is targeting mature store averages of about $1.5 million in sales and mid-teens gross contribution margins.
Financial position and 2027 targets
Seipel said Citi Trends operates with a debt-free balance sheet. He projected that at year-end the company expects approximately $65 million in cash, no borrowings on its $75 million revolver, and about $140 million in total liquidity. He said this provides flexibility to invest in growth initiatives while maintaining operational stability.
Looking ahead, Citi Trends expects to invest in remodels, new stores, and technology infrastructure, including AI-based systems, with total capital spending of around $45 million in 2026 and 2027.
Seipel framed the company’s progress within a three-phase transformation framework:
- Repair: restoring foundational practices, sharpening clarity on the African-American customer, implementing the three-tier assortment strategy, and rolling out AI-based allocation to improve in-stocks, reduce markdowns, and speed inventory turns.
- Execute: implementing best practices to improve productivity and enable SG&A leverage, while increasing supply chain speed to reduce costs and working capital in the pipeline.
- Accelerate (implied path forward): continuing to refine processes, optimize categories, and build systems to support growth.
He also noted the introduction of a pay-for-performance bonus program linking bonus eligibility to EBITDA and functional KPIs, as well as a long-term incentive program tied to EBITDA objectives.
On longer-term financial goals, Seipel said the company has “clear line of sight” to about $45 million of EBITDA in 2027, which he described as a $16 million increase from 2024. Compared with fiscal 2024, he outlined targets that include:
- Total sales growth: $150 million, reaching about $900 million in fiscal 2027.
- Gross profit rate: expansion of about 400 basis points to 42%.
- SG&A leverage: improvement of 200 basis points.
- EBITDA: approximately $45 million, with a profit margin of around 5% in fiscal 2027.
Seipel said sales growth is expected to be driven by consistent total store sales gains of 6% to 8% annually, ongoing assortment refinement, and category opportunities including footwear, plus sizes, big men’s, young men’s, and missy apparel, while maintaining growth in children’s and family basics. He also said the company added a trend director in 2025 to help merchants develop and procure emerging trends.
On margin drivers, Seipel reiterated the role of AI-based planning and allocation, as well as planned markdown optimization. He also cited opportunities from reduced shrink and lower freight costs. Shrink improvement efforts include stronger internal data accuracy measures and investments in facial recognition surveillance systems, he said.
Concluding, Seipel said Citi Trends remains in the early stages of its transformation, but argued that consistent comparable store sales performance supports management’s view that the strategy is working. He emphasized the company’s debt-free position, expansion plans, and a “tangible, detailed roadmap” intended to drive profitable growth and shareholder value creation.
About Citi Trends (NASDAQ:CTRN)
Citi Trends, Inc (NASDAQ: CTRN) is an off-price retail apparel chain that focuses on value-priced urban fashion apparel and accessories for men, women, and children. Headquartered in Savannah, Georgia, the company offers a broad assortment of merchandise, including denim, sportswear, activewear, and seasonal styles, complemented by footwear, jewelry, cosmetics, and home goods. Through its purchasing model, Citi Trends sources closeouts, overstocks and canceled orders from name-brand vendors, enabling it to offer trending styles at competitive price points.
The company operates more than 500 stores across the Southeastern and Mid-Atlantic regions of the United States, with typical store footprints of approximately 11,000 square feet.
