Citi Trends (CTRN) PT Lowered to $25 at Craig-Hallum

Craig-Hallum analyst Jeremy Hamblin lowered the price target on Citi Trends (NASDAQ: CTRN) to $25.00 (from $27.00) while maintaining a Hold rating.

The analyst commented: "Citi Trends delivered Q1 results that were in-line with the preliminary update released on May 31st, including slight misses on sales and Adj. EBITDA. We view the results as somewhat disappointing given the fact that the company was lapping the easiest comps of FY24, and that increased importance is placed on Q1 due to the historical seasonality of tax refund impact. No QTD comps were provided but May was below management expectations despite being the softest monthly comp in Q2. Updated FY24 guidance was mixed with SSS expectations lowered, and Adj. EBITDA guidance reiterated as management intends to pull cost reduction levers to preserve profitability. The main narrative for CTRN continues to be that since FY19, total sales have declined about $40M while SG&A is up about $20M over the same time period. We note that higher structural costs on rent following sales-leaseback on DCs along with wage pressure at both the store-level and at corporate will make it unlikely for SG&A expense to return to a $250M base but stronger cost controls are needed to achieve a MSD Adj. EBITDA margin. We reiterate our HOLD rating and lower our Price Target to $25."

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