Citi Trends, Inc.

Total sales were $212 million, up 10.9% from Q2 2025. Comparable store sales increased 10.5%, or 19.7% on a 2-year basis. Gross margin was 40.6%, up 60 basis points year over year, while adjusted SG&A was $80.4 million, or 38% of sales, down 260 basis points. Adjusted EBITDA was $5.5 million, up $6.6 million from last year, and adjusted EBITDA margin was 2.6%, up 23 basis points. For the first half, comparable sales were up 12.2% and adjusted EBITDA was $19.4 million, up $14.1 million, with EBITDA margin improving to 4.4%. Full-year fiscal 2026 guidance now calls for comparable sales growth of 9% to 11%, total sales growth of 10% to 12%, gross margin expansion of about 50 to 70 basis points, adjusted SG&A leverage of 160 to 180 basis points, and adjusted EBITDA of $38 million to $42 million. The company now expects about 20 new stores, 60 to 65 remodels, and 4 closures, with capital expenditures of $35 million to $40 million.

Kenneth Seipel said the quarter reflected consistency in sales, execution, and customer response, and argued that the company’s strategy is working. He emphasized a focus on three priorities: consistent execution, sales flow-through to profit, and accelerated growth. He also highlighted a stronger women’s business, continued momentum in men’s, kids, basics, and shoes, and said the company is seeing a long runway for growth through better product curation, AI-enabled allocation, and a more balanced good-better-best assortment. On strategy, he framed the business as evolving from a transaction-based retailer into a relationship-driven brand through the new Insiders Club CRM.

Heather Plutino said Q2 results showed strong top-line growth, margin expansion, and disciplined expense control. She pointed to 60 basis points of gross margin improvement to 40.6%, 260 basis points of SG&A leverage, and $5.5 million of adjusted EBITDA, while noting freight expense remains pressured by fuel surcharges and is expected to persist through the year. She said inventory efficiency is improving, with quarter-end inventory up 7.5% versus last year against 10.5% comp growth, and the balance sheet remains strong with $55.9 million in cash, no debt, and no revolver borrowings. She also said the company raised full-year guidance, plans to shift capital from new stores to remodels, and still expects year-end cash to be approximately flat to last year’s $66 million.

Analyst Jeremy Hamblin asked what drove the 10%+ comp growth, specifically the split between transactions and basket, and whether Q3 momentum was coming from any particular category. Management said about half of comp growth came from higher transaction count and the rest from basket factors, and described that as especially encouraging because it came during a non-peak period. On category mix, Seipel said momentum carried across most categories and specifically called out a meaningful step-up in women’s business, saying this was the first quarter the women’s team consistently delivered trend modules to stores, which drove better reaction and a more balanced assortment.