Citi Trends Struggling to Utilize Capital Efficiently
May 11, 2023
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Citi Trends ($NASDAQ:CTRN)—a leading value-priced retailer of apparel and home accessories—is struggling to utilize its capital efficiently. With a broad range of merchandise at discounts that are significantly below retail prices, Citi Trends has become a popular destination for budget-conscious shoppers.
However, it appears that Citi Trends might not be utilizing their capital efficiently. For example, the company may be struggling to accurately forecast demand, leading to overstock of items or understocking of items that turn out to be popular.
Additionally, Citi Trends faces stiff competition from other retailers who are able to offer similar products at lower prices. As a result, Citi Trends often has to prioritize discounts and promotions over maintaining their profit margins. Although Citi Trends is actively taking steps to address their capital efficiency woes, the issue remains an ongoing challenge for the company. Citi Trends is continuing to search for ways to more effectively forecast demand, manage inventory levels, and leverage the power of their scale in order to better utilize their resources. Until the company is able to fully address these issues, their ability to realize returns on capital investments is likely to remain limited.
Market Price
On Monday, CITI TRENDS, a retailer of affordable clothing and accessories, experienced a significant drop in their stocks. The stock opened at $16.4 and closed at $15.8, a decrease of 3.0% from the prior closing price of $16.2. This indicates that the company is struggling with their capital efficiency; either their profits are not meeting the expectations set or their costs are exceeding those expectations. Whatever the case may be, CITI TRENDS is having difficulty leveraging capital to its fullest effect. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Citi Trends. More…
| Total Revenues | Net Income | Net Margin |
| 795.01 | 58.89 | 1.2% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Citi Trends. More…
| Operations | Investing | Financing |
| -3.59 | -29.52 | -118.19 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Citi Trends. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 544.26 | 377.81 | 18.96 |
Key Ratios Snapshot
Some of the financial key ratios for Citi Trends are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 0.6% | -16.1% | 9.6% |
| FCF Margin | ROE | ROA |
| -4.0% | 30.1% | 8.8% |
Analysis
GoodWhale has analyzed the financials of CITI TRENDS and determined that it represents a medium risk investment. We have detected one risk warning in the balance sheet of CITI TRENDS, which could mean that the company is not performing as expected. To get more insight and information about this, you should register with us and check out the warning. With GoodWhale, you can be sure your investment decisions are backed by data and analytics. More…
Peers
There is stiff competition among Citi Trends Inc and its competitors PreVu Inc, Buckle Inc, and Vedant Fashions Ltd. All four companies are vying for a share of the market for affordable trendy clothing. Citi Trends Inc has an advantage in that it has over 500 stores in 31 states, while its competitors have fewer stores. However, all four companies are comparable in terms of the quality of their clothing and the prices they charge.
– PreVu Inc ($OTCPK:PRVU)
PreVu Inc is a provider of marketing solutions. The company has a market cap of 159.57k as of 2022 and a return on equity of 20.12%. The company offers a variety of marketing services, including content marketing, social media marketing, and email marketing. The company also provides a variety of tools and resources to help businesses with their marketing needs.
– Buckle Inc ($NYSE:BKE)
Buckle Inc is a leading retailer of apparel and accessories for young men and women in the United States. The company has a market capitalization of 1.77 billion as of 2022 and a return on equity of 55.65%. Buckle Inc operates over 450 stores in 44 states under the Buckle, BKE, and MKL brand names. The company offers a wide variety of clothing, footwear, and accessories for both men and women. Buckle Inc has a strong online presence and offers free shipping on orders over $100. The company is headquartered in Kearney, Nebraska.
– Vedant Fashions Ltd ($BSE:543463)
Vedant Fashions Ltd is an Indian fashion retailer that is based in Mumbai. The company has a market cap of 340.01B as of 2022 and a Return on Equity of 38.43%. The company was founded in 1984 and operates a chain of stores across India. It offers a wide range of products such as clothing, accessories, and home furnishings. The company also has an online store that ships to various international locations.
Summary
Citi Trends is a retail clothing company that has recently been under the microscope of investors and analysts due to its difficulty in managing its capital effectively. This has been reflected in its stock price, which has been declining in the last few days. Analysts have identified several areas of concern within the company such as their debt structure and profitability ratios.
Additionally, they have also identified potential opportunities to improve capital management strategies, such as cost reductions and better inventory management. Investors should assess these issues carefully before making any decisions to invest in Citi Trends.
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