DA Davidson Raises Citi Trends (CTRN) PT to $40, Cites Growth from Closeout Product Strategy

On Tuesday, DA Davidson increased its price target on Citi Trends Inc. (NASDAQ:CTRN) to $40 from $29, while maintaining a Buy rating on the shares. The firm’s optimism is driven by Citi Trends’ strategy of incorporating more extreme value closeout products, which is expected to boost comparable store sales and associated higher-margin flow-through against a relatively stable cost base.

A glossy storefront of a value retailer, filled with fashionable apparel and accessories.

DA Davidson projects this strategy will improve Citi Trends’ financial performance and drive EBITDA to $44 million by 2027. This is substantial recovery from an $8 million loss over the past 12 months. Citi Trends reported total sales of ~$211 million for FQ4 2024, with comparable store sales growing by 6.4% year-over-year, while the inventory was down 6%.

For the full FY2024, total sales were $753.1 million, with comparable store sales increasing by 3.4% on a 52-week to 52-week basis. For FY2025, the company projects low to mid-single-digit comparable sales growth. The company ended FQ4 with a strong cash position of $61 million and no debt, all while operating 591 stores. Citi Trends now plans to open up to 5 new stores and close up to 5 existing stores.

Citi Trends Inc. (NASDAQ:CTRN) is a value retailer of fashion apparel, accessories, and home goods. The company was formerly known as Allied Fashion and changed its name to Citi Trends in 2001.

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Disclosure: None. This article is originally published at Insider Monkey.