Why Citi Trends Shares Jumped

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Citi Trends were looking fashionable today, climbing 18% after a better-than-expected second-quarter earnings report.

So what: The retail chain still posted a loss for the quarter at $0.37 a share, but that was better than expectations of a $0.42 loss. Revenue moved up 4.2% to $137.8 million, though that was shy of the analyst consensus at $138.2 million. Comparable sales ticked up a modest 1.7% as the company closed two stores in the quarter, leaving it with a count of 506. There was no management statement in the report, but Citi Trends seems to be moving in the right direction after two earnings misses as gross margin improved from 33.5% a year ago to 35.9%. Its per-share loss improved from $0.54 a year ago.

Now what: Coming during a quarter in which many retailers have come up well short of estimates, the earnings beat was especially encouraging even if Citi Trends finished with a considerable loss. The purveyor of urban brands still has work to do to get back to profitability, but shares are up 70% since May and could move higher if this trend continues. I'd expect analysts to raise their estimates following this report.

You're not stupid. You know that the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names a group of stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Citi Trends Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading