Citi Trends, Inc. (NASDAQ:CTRN) Q3 2022 Earnings Call Transcript

Jeremy Hamblin: I like that. I just wanted to clarify. Maybe if I put it in more context of — is the environment more promotional in Q4 relative to a normal Q4 as compared to the traditional promotional environment in Q3 relative to a normal Q3. I’m just trying to get a sense for whether versus historical context has gotten — if it’s unchanged, if it’s a little bit more promotional or a little less promotional and what you’re seeing out there?

David Makuen: Yeah. Jeremy. I’ll take that one. I think within our brand positioning and where we’re located, we’re not seeing that big a difference, quite frankly, in the promotional environment. It appears to be relatively consistent again within the neighborhoods that we didn’t. I think if we broaden the lens a little bit to go out to the outer rings, call it, the mall ring and the A&B centers that are kind of a little bit away from our neighborhoods. We’re seeing, I would say, a heightened sense of from a promotional activity. But again, what I’ve learned over the course of many years as Q4 tends to be promotional, no matter what year and no matter what backdrop herein. Black Friday sales have always started earlier for the last few years, Cyber Monday, et-cetera.

And then I can get in the last 15 days, Super Saturday and so on Christmas. Yeah, it’s going to be promotional, but again for us, we tend to find ourselves more insulated from that activity, because where we sit in the neighborhood given our primary destination nature to our customers we don’t feel this much. So I think we’re watching it, we’re looking at it, but it doesn’t really change our behavior of that much, we got to stay focused on just making sure that the right gifts and stocking suffers are in-stock at the hot price points that we planned months ago to be in our stores and that’s all unfolding nicely for us as we speak.

Jeremy Hamblin: Got it. Last one from me and I’ll hop out, but just in terms of store hours for Q4 typically in need of little bit more staffing and sometimes you have a little bit of extended hours, you did less of that maybe in some years, but I wanted to just get a sense for with the addition of the rent expense from the DCs into your SG&A. Is it fair to assume that your Q4 SG&A, even despite the expense management and the savings that you’re going to realize is a little bit higher than what you saw in Q3 on an absolute basis, is that a fair assumption?

Heather Plutino: It’s a fair assumption, Jeremy. I mean, we’ve got — Q4 is typically a higher sales month than Q3. And you’re right, there is extended hours to support that, there is a lot of product flow to support the sales. So yes, on an absolute dollar basis, but we lever better in Q4 than in Q3 as well.

Jeremy Hamblin: Got it. Thanks so much for the color and best wishes.

David Makuen: Thanks, Jeremy.

Operator: Thank you. Our next question is from the line of Chuck Grom with Gordon Haskett. Please go ahead, your line is now open.

Chuck Grom: Hey guys, good morning. Nice quarter. A question for you Heather, just follow up on Jeremy’s question on the implied fourth quarter guide. It looks like it backs into around roughly a 4% or so operating margin, which would be below what you guys posted in the fourth quarter of 2019. So I’m curious what the pressure points would be? In the third quarter you guys showed nice improvement relative to the third quarter of 2019, so maybe just dive into the expectations for the fourth quarter and I guess why relative to €˜19 you expect the compression to occur?