Citi Trends Q2 sales up 10.9% but show $0.9M loss

Rhea-AI Filing Summary

Citi Trends, Inc. (CTRN) reported Q2 2026 net sales of $211.6 million, up 10.9% from $190.8 million, driven by a 10.5% increase in comparable store sales, but recorded a net loss of $0.9 million versus net income of $3.8 million a year earlier, largely reflecting the prior-year gain on a building sale.

For the first twenty-six weeks of 2026, net sales rose to $442.5 million, a 12.7% increase, with comparable store sales up 12.2% and net income of $6.8 million compared with $4.7 million in 2025, helped by improved merchandise margins and lower shrink. Cost of sales and SG&A leveraged as a percentage of sales over the year-to-date period.

Citi Trends ended Q2 with $55.9 million in cash and cash equivalents, no borrowings under its $75 million revolving credit facility, $2.2 million of letters of credit outstanding, inventory of $126.4 million, and $40 million remaining under its share repurchase authorization. A shelf registration on Form S-3 for up to $100 million of common stock was filed to provide additional capital-raising flexibility.

Positive

• Net sales grew 12.7% year to date to $442.5 million, with comparable store sales up 12.2%, indicating strong underlying demand.
• Year-to-date net income increased to $6.8 million from $4.7 million, with lower cost of sales and SG&A as a percentage of sales.
• Citi Trends held $55.9 million in cash, had no borrowings on its $75 million revolver, and maintained $40 million of share repurchase authorization, supporting liquidity and capital allocation flexibility.

Negative

• Q2 2026 swung to a net loss of $0.9 million from net income of $3.8 million in Q2 2025, partly due to the absence of the prior-year $11.0 million gain on a building sale.

Filing Explained

The shelf had not issued shares, while first-half cash declined to $55.9 million alongside $224.8 million of lease liabilities.

The Form 10-Q is an unaudited quarterly report; it states that the August 25 shelf remains potential capacity: no securities had been issued under it and no definitive issuance plans existed as of the report date. Existing common holders therefore face no disclosed share-count increase from that shelf in this filing.

At August 1, 2026, the company reported $224.8 million of present-value operating lease liabilities, including $64.9 million due within 12 months. This is a contractual cash obligation, not an equity issuance.

For the first 26 weeks, operating activities provided $6.7 million, while property and equipment purchases used $15.6 million; cash declined to $55.9 million.

Key Figures

Q2 2026 Net Sales: $211.6 million Year-to-date Net Sales: $442.5 million Year-to-date Net Income: $6.8 million +5 more

8 metrics

Q2 2026 Net Sales $211.6 million Thirteen weeks ended August 1, 2026; up 10.9% from $190.8 million in Q2 2025

Year-to-date Net Sales $442.5 million Twenty-six weeks ended August 1, 2026; up from $392.5 million in 2025

Year-to-date Net Income $6.8 million Twenty-six weeks ended August 1, 2026 versus $4.7 million in the prior-year period

Q2 2026 Net Income (Loss) -$0.9 million Thirteen weeks ended August 1, 2026; compared with net income of $3.8 million in Q2 2025

Comparable Store Sales Growth 10.5% and 12.2% Increase for Q2 2026 and year-to-date 2026, respectively, versus 2025

Cash and Cash Equivalents $55.9 million Balance as of August 1, 2026; up from $50.4 million at prior-year Q2 end

Inventory Balance $126.4 million As of August 1, 2026; described as a 7.5% increase versus $117.6 million a year earlier

Lease Commitments Present Value $224.8 million Total present value of operating lease liabilities as of August 1, 2026

Key Terms

comparable store sales, fixed charge coverage ratio, accordion feature, valuation allowance, +2 more

6 terms

comparable store sales financial

"One of the main performance measures we use is comparable store sales growth."

Comparable store sales measure the change in revenue generated by stores that have been open for a certain period, typically at least one year. It helps assess how well a business is growing by showing whether existing stores are attracting more customers and sales, rather than just counting new store openings. Investors use this figure to gauge the true health and performance of a company's core operations over time.

fixed charge coverage ratio financial

"it contains one financial covenant, a fixed charge coverage ratio, which is applicable"

A fixed charge coverage ratio measures how well a company's operating income can cover its fixed, recurring obligations like interest payments and lease costs. Think of it as a safety margin — the higher the number, the more comfortably a business can pay steady bills from its normal earnings, which matters to investors because it signals financial stability, lower default risk, and greater ability to withstand revenue dips.

accordion feature financial

"provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature"

An accordion feature is a clause in a loan or financing agreement that allows a company to expand the size of a credit line or the amount of securities available under the same contract without drafting a completely new deal. Like a suitcase that can be extended to hold more items, it gives a company quick flexibility to raise extra money, which can help fund growth but may increase debt or dilute existing shareholders—so investors watch it for changes in risk and ownership.

valuation allowance financial

"management believes sufficient negative evidence exists to require a valuation allowance."

A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.

right-of-use asset technical

"If facts and circumstances indicate that a long-lived asset or operating lease right-of-use asset may be impaired"

A right-of-use asset is the value a company records on its balance sheet for the practical use of something it leases — like the benefit of living in a rented office or using leased equipment for a set period. Investors care because it turns many leases into on-balance-sheet assets and matching liabilities, which can change reported leverage, asset base and performance metrics much like taking on a loan would.

ASU 2024-03 regulatory

"the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures (Topic 220)”"

Earnings Snapshot

Q2 Net Sales: $211.6 million

Thirteen and twenty-six weeks ended August 1, 2026

Q2 Net Sales $211.6 million up 10.9% from $190.8 million in Q2 2025

Year-to-date Net Sales $442.5 million up from $392.5 million in the first twenty-six weeks of 2025

Q2 Net Income (Loss) -$0.9 million down from net income of $3.8 million in Q2 2025

Year-to-date Net Income $6.8 million up from $4.7 million in the first twenty-six weeks of 2025

Q2 Basic EPS -$0.11 versus $0.48 basic EPS in Q2 2025

Year-to-date Basic EPS $0.84 versus $0.58 basic EPS in the prior-year period

FAQ

How did CTRN’s Q2 2026 revenue compare to Q2 2025?

Citi Trends reported Q2 2026 net sales of $211.6 million, an increase of $20.9 million or 10.9% from $190.8 million in Q2 2025, with comparable store sales up 10.5%.

What were Citi Trends (CTRN) earnings for the first twenty-six weeks of 2026?

For the first twenty-six weeks of 2026, Citi Trends generated net income of $6.8 million on net sales of $442.5 million, compared with $4.7 million of net income on $392.5 million of net sales in the same period of 2025.

Why did CTRN have a net loss in Q2 2026?

Citi Trends reported a Q2 2026 net loss of $0.9 million versus net income of $3.8 million in Q2 2025, largely because the prior-year quarter included an $11.0 million gain on the sale of the corporate office building, which did not recur.

What is Citi Trends’ liquidity position as of August 1, 2026?

As of August 1, 2026, Citi Trends had $55.9 million of cash and cash equivalents, no borrowings under its $75 million revolving credit facility, $2.2 million of letters of credit outstanding, and $40.0 million remaining under its stock repurchase authorization.

Did Citi Trends (CTRN) repurchase any stock in the first twenty-six weeks of 2026?

No. Citi Trends did not repurchase any shares in the first twenty-six weeks of fiscal 2026, compared with $6.3 million of share repurchases in the same period of fiscal 2025. $40.0 million remains available under the authorization.

What new capital markets step did Citi Trends take in 2026?

On August 25, 2026, Citi Trends filed a Form S-3 registration statement for the potential offer and sale of up to $100 million of common stock, intended to provide additional flexibility for potential future capital needs. No securities had been issued under it as of the report date.

How many stores does Citi Trends (CTRN) operate and what was inventory at quarter-end?

As of August 1, 2026, Citi Trends operated 594 stores in 33 states. Quarter-end inventory was $126.4 million, up from $117.6 million at the end of the prior-year second quarter, reflecting inventory investments to support demand.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Available on EDGAR 09/09/2026 - 01:59 PM Accepted by SEC EDGAR 09/09/2026 - 01:58 PM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

Form 10-Q

(Mark One)

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​	​
​	​
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended August 1, 2026

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OR

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​	​
​	​
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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Commission File Number 000-41886

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CITI TRENDS, INC.

(Exact name of registrant as specified in its charter)

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​	​	​
​	​	​
Delaware	​	52-2150697
(State or other jurisdiction of	​	(I.R.S. Employer
incorporation or organization)	​	Identification No.)
​	​	​
17 Park of Commerce Boulevard, Suite 200	​	​
Savannah, Georgia	​	31405
(Address of principal executive offices)	​	(Zip Code)

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Registrant’s telephone number, including area code (912) 236-1561

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Securities registered pursuant to Section 12(b) of the Act:

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​	​	​	​	​
Title of each class	​	Trading symbol	​	Name of each exchange on which registered
Common Stock, $0.01 par value	​	CTRN	​	NASDAQ Stock Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer ☐ Accelerated Filer ☒	Non-Accelerated Filer ☐
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Smaller Reporting Company ☐	Emerging Growth Company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒

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As of August 28, 2026, the registrant had 8,339,447 outstanding shares of common stock, $0.01 par value per share.

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Table of Contents

CITI TRENDS, INC.

FORM 10-Q

TABLE OF CONTENTS

​	​
​	​	PAGE
​	​	NUMBER
PART I	FINANCIAL INFORMATION	​
​	​	​
Item 1	Financial Statements (unaudited)	​
​	​	​
​	Condensed Consolidated Balance Sheets	3
​	​	​
​	Condensed Consolidated Statements of Operations	4
​	​	​
​	Condensed Consolidated Statements of Cash Flows	6
​	​	​
​	Condensed Consolidated Statements of Stockholders’ Equity	7
​	​	​
​	Notes to the Condensed Consolidated Financial Statements	8
​	​	​
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
​	​	​
Item 3	Quantitative and Qualitative Disclosures About Market Risk	19
​	​	​
Item 4	Controls and Procedures	19
​	​	​
PART II	OTHER INFORMATION	​
​	​	​
Item 1	Legal Proceedings	20
​	​	​
Item 1A	Risk Factors	20
​	​	​
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	20
​	​	​
Item 3	Defaults Upon Senior Securities	20
​	​	​
Item 4	Mine Safety Disclosures	20
​	​	​
Item 5	Other Information	20
​	​	​
Item 6	Exhibits	21
​	​	​
​	SIGNATURES	22

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2

Table of Contents

PART I - FINANCIAL INFORMATION

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Item 1. Financial Statements.

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Citi Trends, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)

​

​	​	​	​	​	​	​	​	​
​	​ ​ ​	August 1,		​ ​ ​	January 31,		​ ​ ​
​	​ ​ ​	2026		​ ​ ​	2026		​ ​ ​
Assets	​	​	​	​	​	​	​	​
Current assets:	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	55,892	​	$	66,092	​	​
Inventory	​		126,385	​		113,515	​	​
Prepaid and other current assets	​		19,798	​		12,254	​	​
Income tax receivable	​		1,217	​		1,187	​	​
Total current assets	​		203,292	​		193,048	​	​
Property and equipment, net of accumulated depreciation of $311,640 and $301,921 as of August 1, 2026 and January 31, 2026, respectively.	​		58,761	​		54,384	​	​
Operating lease right of use assets	​	​	222,781	​	​	221,775	​	​
Other assets	​		2,174	​		1,964	​	​
Total assets	​	$	487,008	​	$	471,171	​	​
​	​	​	​	​	​	​	​	​
Liabilities and Stockholders’ Equity	​	​	​	​	​	​	​	​
Current liabilities:	​	​	​	​	​	​	​	​
Accounts payable	​	$	106,205	​	$	100,693	​	​
Operating lease liabilities	​	​	44,466	​	​	44,397	​	​
Accrued expenses	​		17,328	​		15,134	​	​
Accrued compensation	​		9,970	​		12,800	​	​
Layaway deposits	​		1,510	​		383	​	​
Total current liabilities	​		179,479	​		173,407	​	​
Noncurrent operating lease liabilities	​		180,383	​		178,921	​	​
Deferred Tax Liability	​	​	287	​	​	245	​	​
Other long-term liabilities	​		2,213	​		2,278	​	​
Total liabilities	​		362,362	​		354,851	​	​
​	​	​	​	​	​	​	​	​
Stockholders’ equity:	​	​	​	​	​	​	​	​
Common stock, $0.01 par value. Authorized 32,000,000 shares; 16,527,405 shares issued as of August 1, 2026 and 16,545,723 shares issued as of January 31, 2026; 8,327,599 shares outstanding as of August 1, 2026 and 8,345,917 shares outstanding as of January 31, 2026.	​		164	​		163	​	​
Paid in capital	​		113,854	​		112,352	​	​
Retained earnings	​		287,931	​		281,108	​	​
Treasury stock, at cost; 8,199,806 shares held as of August 1, 2026 and January 31, 2026	​		(277,303)	​		(277,303)	​	​
Total stockholders’ equity	​		124,646	​		116,320	​	​
​	​	​	​	​	​	​	​	​
Commitments and contingencies (Note 7)	​	​	​	​	​	​	​	​
Total liabilities and stockholders’ equity	​	$	487,008	​	$	471,171	​	​

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​

See accompanying notes to the condensed consolidated financial statements (unaudited).

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3

Table of Contents

Citi Trends, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

​

​	​	​	​	​	​	​	​
​	​	Thirteen Weeks Ended					​
​	​	August 1,		​	August 2,		​
​	​ ​ ​	2026		​ ​ ​	2025
Net sales	​	$	211,632	​	$	190,750	​
​	​	​	​	​	​	​	​
Cost of sales (exclusive of depreciation)	​	​	(125,743)	​	​	(114,477)	​
Selling, general and administrative expenses	​	​	(82,296)	​	​	(78,905)	​
Depreciation	​	​	(5,446)	​	​	(4,548)	​
Asset impairment	​	​	—	​	​	(263)	​
Gain on sale of building	​	​	—	​	​	10,960	​
Gain on insurance related to operating activities	​	​	146	​	​	—	​
Income (loss) from operations	​	​	(1,707)	​	​	3,517	​
Interest income	​	​	541	​	​	389	​
Interest expense	​	​	(89)	​	​	(88)	​
Income (loss) before income taxes	​	​	(1,255)	​	​	3,818	​
Income tax benefit	​	​	324	​	​	—	​
Net income (loss)	​	$	(931)	​	$	3,818	​
​	​	​	​	​	​	​	​
Basic net earnings (loss) per common share	​	$	(0.11)	​	$	0.48	​
Diluted net earnings (loss) per common share	​	$	(0.11)	​	$	0.46	​
​	​	​	​	​	​	​	​
Weighted average number of shares outstanding	​	​	​	​	​	​	​
Basic	​	​	8,183	​	​	8,033	​
Diluted	​	​	8,183	​	​	8,314	​

​

​

4

Table of Contents

Citi Trends, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

​

​	​	​	​	​	​	​
​	​	Twenty-Six Weeks Ended
​	​	August 1,		​	August 2,
​	​ ​ ​	2026		​ ​ ​	2025
Net sales	​	$	442,490	​	$	392,478
​	​	​	​	​	​	​
Cost of sales (exclusive of depreciation)	​	​	(264,373)	​	​	(236,395)
Selling, general and administrative expenses	​	​	(162,041)	​	​	(153,792)
Depreciation	​	​	(10,554)	​	​	(8,918)
Asset impairment	​	​	—	​	​	(327)
Gain on sale of building	​	​	—	​	​	10,960
Gain on insurance related to operating activities	​	​	146	​	​	—
Income (loss) from operations	​	​	5,668	​	​	4,006
Interest income	​	​	1,188	​		847
Interest expense	​	​	(175)	​		(164)
Income (loss) before income taxes	​	​	6,681	​	​	4,689
Income tax benefit	​	​	142	​		—
Net income (loss)	​	$	6,823	​	$	4,689
​	​	​	​	​	​	​
Basic net earnings (loss) per common share	​	$	0.84	​	$	0.58
Diluted net earnings (loss) per common share	​	$	0.80	​	$	0.57
​	​	​	​	​	​	​
Weighted average number of shares outstanding	​	​	​	​	​	​
Basic	​	​	8,155	​	​	8,033
Diluted	​	​	8,477	​	​	8,242

​

See accompanying notes to the condensed consolidated financial statements (unaudited).

​

​

5

Table of Contents

Citi Trends, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

​

​	​	​	​	​	​	​	​
​	​	Twenty-Six Weeks Ended					​
​	​	August 1,		​	August 2,		​
​	​ ​ ​	2026		​ ​ ​	2025
Operating activities:	​	​	​	​	​	​	​
Net income (loss)	​	$	6,823	​	$	4,689	​
Adjustments to reconcile net income (loss) to net cash used in operating activities:	​	​	​	​	​	​	​
Depreciation	​	​	10,554	​	​	8,918	​
Asset impairment	​	​	—	​	​	327	​
Non-cash operating lease costs	​	​	24,392	​	​	24,340	​
Loss on disposal of property and equipment	​	​	35	​	​	158	​
Deferred income taxes	​	​	43	​	​	—	​
Insurance proceeds related to operating activities	​	​	515	​	​	—	​
Non-cash stock-based compensation expense	​	​	2,755	​	​	2,451	​
Gain on sale of building	​	​	—	​	​	(10,960)	​
Gain on insurance related to operating activities	​	​	(146)	​	​	—	​
Changes in assets and liabilities:	​	​	​	​	​	​	​
Inventory	​	​	(12,870)	​	​	5,074	​
Prepaid and other current assets	​	​	(7,913)	​	​	(9,419)	​
Other assets	​	​	(210)	​	​	(416)	​
Accounts payable	​	​	6,242	​	​	(7,125)	​
Accrued expenses and other long-term liabilities	​	​	(21,787)	​	​	(29,602)	​
Accrued compensation	​	​	(2,830)	​	​	1,996	​
Income tax receivable/payable	​	​	(30)	​	​	1,513	​
Layaway deposits	​	​	1,127	​	​	942	​
Net cash provided by (used in) operating activities	​	​	6,700	​	​	(7,114)	​
Investing activities:	​	​	​	​	​	​	​
Purchases of property and equipment	​	​	(15,647)	​	​	(7,705)	​
Proceeds from sale of building	​	​	—	​	​	11,206	​
Net cash provided by (used in) investing activities	​	​	(15,647)	​	​	3,501	​
Financing activities:	​	​	​	​	​	​	​
Cash used to settle withholding taxes on the vesting of restricted stock	​	​	(1,253)	​	​	(760)	​
Repurchases of common stock	​	​	—	​	​	(6,315)	​
Net cash used in financing activities	​	​	(1,253)	​	​	(7,075)	​
Net decrease in cash and cash equivalents	​	​	(10,200)	​	​	(10,688)	​
Cash and cash equivalents:	​	​	​	​	​	​	​
Beginning of period	​	​	66,092	​	​	61,085	​
End of period	​	$	55,892	​	$	50,397	​
​	​	​	​	​	​	​	​
Supplemental disclosures of cash flow information:	​	​	​	​	​	​	​
Cash paid for interest	​	$	108	​	$	98	​
Cash (refunds) payments of income taxes	​	$	(155)	​	$	(1,453)	​
Supplemental disclosures of non-cash investing activities:	​	​	​	​	​	​	​
Accrual for purchases of property and equipment	​	$	(681)	​	$	1,688	​

​

​

See accompanying notes to the condensed consolidated financial statements (unaudited).

​

​

6

Table of Contents

Citi Trends, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Treasury Stock

​

​

​

​

​

Shares

​

Amount

​

Capital

​

Earnings

​

Shares

​

Amount

​

Total

Balances — January 31, 2026

16,545,723

​

$

163

​

$

112,352

​

$

281,108

8,199,806

​

$

(277,303)

​

$

116,320

Grant of restricted shares

19,313

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Forfeiture of restricted shares

(7,675)

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

1,303

​

​

—

​

—

​

​

—

​

​

1,303

Shares withheld for settlement of employee taxes on vesting

(787)

​

​

—

​

​

(34)

​

​

—

​

—

​

​

—

​

​

(34)

Net income (loss)

​

—

​

​

—

​

​

—

​

​

7,754

​

—

​

​

—

​

​

7,754

Balances — May 2, 2026

16,556,574

​

$

163

​

$

113,621

​

$

288,862

8,199,806

​

$

(277,303)

​

$

125,343

Vesting of restricted shares

​

—

​

​

1

​

​

—

​

​

—

​

—

​

​

—

​

​

1

Grant of restricted shares

1,135

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Forfeiture of restricted shares

(3,757)

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

1,452

​

​

—

​

—

​

​

—

​

​

1,452

Shares withheld for settlement of employee taxes on vesting

(26,547)

​

​

—

​

​

(1,219)

​

​

—

​

—

​

​

—

​

​

(1,219)

Net income (loss)

​

—

​

​

—

​

​

—

​

​

(931)

​

—

​

​

—

​

​

(931)

Balances — August 1, 2026

16,527,405

​

$

164

​

$

113,854

​

$

287,931

8,199,806

​

$

(277,303)

​

$

124,646

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Treasury Stock

​

​

​

​

​

Shares

​

Amount

​

Capital

​

Earnings

​

Shares

​

Amount

​

Total

Balances — February 1, 2025

16,497,092

​

$

162

​

$

108,101

​

$

275,901

7,949,251

​

$

(270,988)

​

$

113,176

Grant of restricted shares

​

2,089

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Forfeiture of restricted shares

(19,398)

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

968

​

​

—

​

—

​

​

—

​

​

968

Shares withheld for settlement of employee taxes on vesting

(6,939)

​

​

—

​

​

(141)

​

​

—

​

—

​

​

—

​

​

(141)

Repurchase of common stock

​

—

​

​

—

​

​

—

​

​

—

​

250,555

​

​

(6,315)

​

​

(6,315)

Net income (loss)

​

—

​

​

—

​

​

—

​

​

871

​

—

​

​

—

​

​

871

Balances — May 3, 2025

16,472,844

​

$

162

​

$

108,928

​

$

276,772

8,199,806

​

$

(277,303)

​

$

108,559

Grant of restricted shares

60,357

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Forfeiture of restricted shares

(2,620)

​

​

—

​

​

—

​

​

—

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

1,483

​

​

—

​

—

​

​

—

​

​

1,483

Shares withheld for settlement of employee taxes on vesting

(24,863)

​

​

—

​

​

(620)

​

​

—

​

—

​

​

—

​

​

(620)

Net income (loss)

​

—

​

​

—

​

​

—

​

​

3,818

​

—

​

​

—

​

​

3,818

Balances — August 2, 2025

16,505,718

​

$

162

​

$

109,791

​

$

280,590

8,199,806

​

$

(277,303)

​

$

113,240

​

​

See accompanying notes to the condensed consolidated financial statements (unaudited).

7

Table of Contents

Citi Trends, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

August 1, 2026

​

1. Significant Accounting Policies

Basis of Presentation

Citi Trends, Inc. and its subsidiary (the “Company”) is a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States. As of August 1, 2026, the Company operated 594 stores in urban, suburban, and rural markets in 33 states.

​

The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of January 31, 2026 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “2025 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2025 Form 10-K. Operating results for the first two quarters of 2026 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business, and the current economic uncertainty.

Fiscal Year

The following contains references to fiscal years 2026 and 2025, which represent fiscal years ending or ended on January 30, 2027 and January 31, 2026, respectively. Fiscal 2026 and fiscal 2025 both have 52-week accounting periods.

​

2. Cash and Cash Equivalents/Concentration of Credit Risk

For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits.

​

3. Earnings per Share

Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding because the inclusion of common stock equivalents would be antidilutive.

​

The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. The Company includes the amount of compensation cost attributed to future services and not yet recognized as assumed proceeds. For the second quarter of 2026 and 2025, there were 287,366 shares and no shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution. For the twenty-six weeks ended August 1, 2026 and August 2, 2025, there were no shares of nonvested restricted stock excluded from the calculation of diluted earnings per share because of antidilution.

​

8

Table of Contents

The following table provides the weighted average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share:

​

​	​	​	​	​
​	​	Thirteen Weeks Ended
​	​ ​ ​	August 1, 2026	​ ​ ​	August 2, 2025
Weighted average number of common shares outstanding (basic)	​	8,183,389	​	8,033,100
Incremental shares from assumed vesting of nonvested restricted stock	​	—	​	280,741
Weighted average number of common shares and common stock equivalents outstanding (diluted)	​	8,183,389	​	8,313,841

​

​

​	​	​	​	​
​	​	Twenty-Six Weeks Ended
​	​ ​ ​	August 1, 2026	​ ​ ​	August 2, 2025
Weighted average number of common shares outstanding (basic)	​	8,154,770	​	8,033,361
Incremental shares from assumed vesting of nonvested restricted stock	​	322,645	​	208,787
Weighted average number of common shares and common stock equivalents outstanding (diluted)	​	8,477,415	​	8,242,148

​

​

​

4. Revolving Credit Facility

In October 2011, the Company entered a five-year, $50 million credit facility with Bank of America. The facility was amended in August 2015, May 2020 and April 2021 to modify terms and extend the maturity dates. The facility was further amended on April 10, 2025 to extend the maturity date to April 10, 2030. The amended facility provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature that under certain circumstances could allow the Company to increase the size of the facility to $100 million.

​

The facility is secured by the Company’s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of 0.25% and permits the payment of cash dividends subject to certain limitations.

​

Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10% plus either 1.50%, 1.75% or 2.00%, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5% and (iii) the Term SOFR Rate plus 1.0%, plus, in each case either 0.50%, 0.75% or 1.00%, based in any such case on the average daily availability for borrowings under the facility.

​

As of August 1, 2026, the Company had no borrowings under the credit facility and $2.2 million of letters of credit outstanding.

​

5. Impairment of Assets

If facts and circumstances indicate that a long-lived asset or operating lease right-of-use asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value. No impairments were recorded in the twenty-six weeks ended August 1, 2026. In the twenty-six weeks ended August 2, 2025, non-cash impairment expense related to underperforming stores totaled $0.3 million, comprised of $0.2 million for leasehold improvements and fixtures and equipment, and $0.1 million for operating lease right of use assets. 

​

6. Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax

9

Table of Contents

rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. If realization of the deferred tax asset is not considered more likely than not, then a valuation allowance is recorded to reduce the deferred tax asset to its net realizable value.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes sufficient negative evidence exists to require a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized.

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Company expects to utilize the more favorable tax legislation in its corresponding tax filings.

​

7. Commitments and Contingencies

The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, landlords, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, the Company establishes appropriate reserves.

While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.

8. Stock Repurchases

The Company periodically repurchases shares of its common stock under board-authorized repurchase programs. Such repurchases may be made in the open market, through block trades or through other negotiated transactions. Share repurchases were as follows (in thousands, except per share data):

​

​	​	​	​	​	​	​	​	​	​	​	​
​	Thirteen Weeks Ended					​	Twenty-Six Weeks Ended
​	August 1, 2026		​ ​ ​	August 2, 2025		​	August 1, 2026		​ ​ ​	August 2, 2025
Total number of shares purchased	​	—	​	​	—	​	​	—	​	​	251
Average price paid per share (including commissions)	$	—	​	$	—	​	$	—	​	$	25
Total investment	$	—	​	$	—	​	$	—	​	$	6,315

​

At August 1, 2026, $40.0 million remained available under the Company’s stock repurchase authorization.

9. Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvement to Income Tax Disclosures (Topic 740)”, which requires additional disclosures for income tax rate reconciliations, income taxes paid, and certain other tax disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Adoption is required for annual periods beginning after December 15, 2024. In fiscal 2025, the Company adopted the new accounting pronouncement ASU 2023-09 in the respective period and retrospectively. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements as the requirements impact only annual income tax reporting disclosures in the Notes to the Company’s consolidated financial statements. Refer to “Note 5 Income Taxes” for additional information.

10

Table of Contents

In November 2024, the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires public entities to disclose additional information that disaggregates certain expense captions into specified categories in the Notes to the consolidated financial statements. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact the amended guidance will have on its disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which amends the guidance in ASC 350 to revise the criteria for when an entity is required to start capitalizing software costs and requires an entity to consider whether there is significant uncertainty associated with the development activities of the software when evaluating the probable-to-complete recognition threshold. ASU 2025-06 is required to be adopted in the annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025- 11”), which amends the guidance in ASC 270 to clarify the applicability of interim disclosure requirements and enhance the navigability of the existing guidance. ASU 2025-11 provides a comprehensive list of required interim disclosures and establishes a new disclosure principle requiring entities to disclose events that occur after the end of the last annual reporting period. The new standard is effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures.

10. Revenue

Revenue Recognition

The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise.

​

Sales Returns

The Company allows customers to return merchandise for up to 30 days after the date of sale. Expected refunds to customers are recorded based on estimated margin using historical return information.

​

Disaggregation of Revenue

The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products and sell their products to similar classes of customers.

​

11

Table of Contents

In the following table, the Company’s revenue from contracts with customers is disaggregated by Division or product category. It also provides the percentage of net sales for each Division within the merchandise assortment.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	Thirteen Weeks Ended					​	Twenty-Six Weeks Ended					​
​	August 1,		​ ​ ​	August 2,			August 1,		​ ​ ​	August 2,		​
Division	2026		​ ​ ​	2025			2026		​ ​ ​	2025		​
Women's	26	%	​	27	%	​	27	%	​	28	%	​
Children's	22	%	​	22	%	​	23	%	​	22	%	​
Men's	18	%	​	18	%	​	17	%	​	17	%	​
Accessories & Beauty	17	%	​	17	%	​	16	%	​	16	%	​
Home & Lifestyle	9	%	​	9	%	​	10	%	​	10	%	​
Footwear	8	%	​	7	%	​	7	%	​	7	%	​

​

​

11. Leases

The Company leases its retail store locations, distribution centers and certain office space and equipment. Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods.

The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized. Leases with an initial term of 12 months or less and leases with mutual termination clauses are not included on the condensed consolidated balance sheets. The lease liability is measured at the present value of future lease payments as of the lease commencement date.

Total lease cost is comprised of operating lease costs, short-term lease costs and variable lease costs, which include rent paid as a percentage of sales, common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Lease costs consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Thirteen Weeks Ended

​

Twenty-Six Weeks Ended

​

​

August 1, 2026

​

August 2, 2025

​

August 1, 2026

​

August 2, 2025

Operating lease cost

​

$

15,923

​

$

15,219

​

$

31,888

​

$

30,386

Variable lease cost

​

3,695

​

3,205

​

6,854

​

5,815

Short term lease cost

​

241

​

422

​

964

​

998

Total lease cost

​

$

19,859

​

$

18,846

​

$

39,706

​

$

37,199

​

Future minimum lease payments as of August 1, 2026 are as follows (in thousands):

​

​	​	​	​	​	​
Fiscal Year	​ ​ ​	Lease Costs
Remainder of 2026	​ ​ ​	$	33,442	​	​
2027	​	​	60,229	​	​
2028	​		50,410	​	​
2029	​		40,059	​	​
2030	​		29,354	​	​
Thereafter	​		108,947	​	​
Total future minimum lease payments	​	​	322,441	​	​
Less: imputed interest	​	​	(97,592)	(1)	​
Total present value of lease liabilities	​	$	224,849	(2)	​

​

(1) Calculated using the incremental borrowing rate.

(2) Includes short-term and long-term portions of operating lease liabilities.

​

​

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Certain operating leases provide for fixed monthly rents, while others provide for contingent rents computed as a percentage of net sales and others provide for a combination of both fixed monthly rents and contingent rents computed as a percentage of net sales.

​

Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts):

​	​	​	​	​	​	​
​	​ ​ ​	Twenty-Six Weeks Ended
​	​	August 1, 2026		​	August 2, 2025
Cash paid for operating leases	​ ​ ​	$	31,990	​	$	30,578
Right of use assets obtained in exchange for new operating lease liabilities	​	$	25,397	​	$	26,675
​	​		​	​		​
Weighted average remaining lease term (years) - operating leases	​		6.64	​		6.99
Weighted average discount rate - operating leases	​	​	6.28%	​	​	5.87%

​

​

​

​

​

​

12. Segment Reporting

The Company is a leading off-price value retailer of fashion apparel, accessories and home trends primarily for Black families. The retail operations represent a single operating segment based on the way the Company manages its business. The Company’s Chief Executive Officer, as our chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. This enables the Chief Executive Officer to assess the Company’s overall level of available resources and determine how best to deploy these resources across retail stores that are in line with the Company’s long-term company-wide strategic goals. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers. All sales and assets are located within the United States. The CODM assesses performance based on consolidated net (loss) income that is reported on the statement of operations as part of the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel. The CODM does not review assets in evaluating results, therefore such information is not provided.

The following table summarizes the Company’s one reportable segment profit or loss, including significant segment expenses, and includes the reconciliation to consolidated net (loss) income (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​
​	Thirteen Weeks Ended					​	Twenty-Six Weeks Ended
​	August 1, 2026		​	August 2, 2025		​	August 1, 2026		​	August 2, 2025
Net sales	$	211,632	​	$	190,750	​	$	442,490	​	$	392,478
Cost of sales (exclusive of depreciation shown separately below)	​	​	​	​	​	​	​	​	​	​	​
Merchandising and other	​	(113,744)	​	​	(104,204)	​	​	(240,172)	​	​	(216,061)
Freight in and out	​	(11,999)	​	​	(10,273)	​	​	(24,201)	​	​	(20,334)
Selling, general, and administrative expenses	​	​	​	​	​	​	​	​	​	​	​
Store expenses - payroll and related expenses	​	(24,871)	​	​	(23,548)	​	​	(48,778)	​	​	(46,033)
Store expenses - rent	​	(17,739)	​	​	(16,770)	​	​	(35,440)	​	​	(33,097)
Corporate expenses - payroll and related expenses	​	(7,468)	​	​	(7,273)	​	​	(14,600)	​	​	(14,556)
Distribution center expenses - payroll and related expenses	​	(5,112)	​	​	(4,766)	​	​	(9,702)	​	​	(9,321)
Other segment expenses (1)	​	(27,106)	​	​	(26,548)	​	​	(53,521)	​	​	(50,785)
Gain on sale of building	​	—	​	​	10,960	​	​	—	​	​	10,960
Gain on insurance related to operating activities	​	146	​	​	—	​	​	146	​	​	—
Depreciation	​	(5,446)	​	​	(4,548)	​	​	(10,554)	​	​	(8,918)
Asset impairment	​	—	​	​	(263)	​	​	-	​	​	(327)
Interest income	​	541	​	​	389	​	​	1,188	​	​	847
Interest expense	​	(89)	​	​	(88)	​	​	(175)	​	​	(164)
Income tax benefit	​	324	​	​	—	​	​	142	​	​	—
Net Income (loss)	$	(931)	​	$	3,818	​	$	6,823	​	$	4,689

​

⁽¹⁾ Other segment expenses represent other store, corporate and distribution center expenses including utilities, repairs, supplies, insurance, professional fees and other miscellaneous fees.

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​

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, capital allocation expectations or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “could,” “will likely result,” or “will continue” and similar words and expressions generally identify forward-looking statements, although not all forward-looking statements contain such language. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: uncertainties relating to general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other factors; changes in market interest rates and market levels of wages; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions; impact of natural disasters such as hurricanes; uncertainty and economic impact of pandemics, epidemics or other public health emergencies; transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; the Company’s ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Company’s ability to gauge fashion trends and changing consumer preferences; consumer confidence and changes in consumer spending patterns; competition within the industry; competition in our markets; the duration and extent of any economic stimulus programs; changes in product mix; interruptions in suppliers’ businesses; risks related to cybersecurity, data privacy and intellectual property; temporary changes in demand due to weather patterns; seasonality of the Company’s business; the results of pending or threatened litigation; delays and costs associated with building, opening, remodeling, assuming leases and operating new stores; delays and costs associated with building, opening or expanding new or existing distribution centers; changes in regulatory requirements or stackholder’s expectations on environmental, social and sustainability related topics, challenges effectively managing the use of artificial intelligence; strategic transactions that could negatively impact our liquidity, increase our expenses, or present significant distractions to management; debt and equity market conditions, including the ability to access capital markets on favorable terms or at all; and other factors described in the section titled “Item 1A. Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026 and in Part II, “Item 1A. Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.

Executive Overview

We are a leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States. Our high quality and trend-right merchandise offerings at everyday low prices are designed to appeal to the fashion and trend preferences of value-concious customers.

As of August 1, 2026, we operated 594 stores in urban, suburban and rural markets in 33 states.

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Uncertainties and Challenges

General Economic Conditions

We are monitoring trends in general economic conditions including inflation, tariffs and changes in consumer sentiment. We also regularly monitor the impacts on our business of unemployment levels, wage inflation, interest rates, inflation rates, housing costs, energy costs, gas prices, consumer confidence, consumer perception of economic conditions, costs to source our merchandise and supply chain disruptions.

Seasonality and Weather Patterns

The nature of our business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. In addition, sales of clothing are directly impacted by the timing of the seasons to which the clothing relates. While we have expanded our product offerings to balance discretionary with non-discretionary product, traffic to our stores is still influenced by weather patterns to some extent.

Basis of Presentation

Net sales consist of store sales and layaway fees, net of returns by customers. Cost of sales consists of the cost of products we sell and associated freight costs. Depreciation is not considered a component of cost of sales and is included as a separate line item in the consolidated statements of operations. Selling, general and administrative expenses are comprised of store costs, including payroll and occupancy costs, corporate and distribution center costs, and advertising costs.

The following discussion contains references to fiscal years 2026 and 2025, which represent fiscal years ending or ended on January 30, 2027 and January 31, 2026, respectively. Fiscal 2026 and fiscal 2025 both have 52-week accounting periods. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto contained in Part I, Item 1 of this Report.

Results of Operations

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year as a result of the seasonality of our business, and the current economic uncertainty.

Key Operating Statistics

We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. We define a comparable store as a store that has been open for at least 14 full consecutive months without closure for more than seven days within the same fiscal month. Remodeled and relocated stores are included in the comparable store sales results if the selling square footage is not changed significantly, the store is not closed for more than five days in any fiscal month and the store remains in the same trade area.

We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability. In addition to sales, we measure cost of sales as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate the overall performance of each individual store. Finally, we monitor corporate and distribution center expenses against budgeted amounts.

15

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Thirteen Weeks Ended August 1, 2026 and August 2, 2025

Net Sales. Net sales increased $20.9 million, or 10.9%, to $211.6 million in the second quarter of 2026 from $190.8 million in the second quarter of 2025. Comparable store sales increased 10.5%, resulting in an increase of $19.8 million in sales. Net store opening and closing activity resulted in a net increase of $1.0 million in sales.

Cost of Sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) increased $11.3 million, or 9.8%, to $125.7 million in the second quarter of 2026 from $114.5 million in the second quarter of 2025. Cost of sales as a percentage of sales was 59.4% in the second quarter of 2026 and 60.0% in the second quarter of 2025. The change was due to higher merchandise margin and lower shrink, partially offset by higher freight expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $3.4 million, or 4.3%, to $82.3 million in the second quarter of 2026 from $78.9 million in the second quarter of 2025. The increase was primarily driven by certain store expenses to support additional sales. As a percentage of sales, selling, general and administrative expenses decreased to 38.9% in the second quarter of 2026 from 41.4% in the second quarter of 2025, primarily driven by the aforementioned items.

Depreciation. Depreciation expense increased $1.0 million, or 19.7%, to $5.4 million in the second quarter of 2026 from $4.5 million in the second quarter of 2025.

Impairment. There were no non-cash impairment expenses related to underperforming stores in the second quarter of 2026 compared to $0.2 million in the second quarter of 2025, comprised of leasehold improvements and fixtures and equipment.

Gain on Sale of Building. Gain on sale of the corporate office building was $11.0 million in the second quarter of 2025.

Income Tax Benefit. Income tax benefit of $.3 million was recognized in the second quarter of 2026. No income tax benefit was recognized in the second quarter of 2025. We used the annual effective tax rate to determine income tax benefit based upon interim period results.

Net Income (Loss). Net loss was $0.9 million in the second quarter of 2026 compared to net income of $3.8 million in the second quarter of 2025 due to the factors discussed above.

Twenty-Six Weeks Ended August 1, 2026 and August 2, 2025

Net Sales. Net sales increased $50.0 million, or 12.7%, to $442.5 million in the first twenty-six weeks of 2026 from $392.5 million in the same period of 2025. Comparable store sales increased 12.2%, resulting in an increase of $47.5 million in sales. Net store opening and closing activity resulted in a net increase of $2.5 million in sales.

Cost of Sales (exclusive of depreciation). Cost of sales (exclusive of depreciation) increased $28.0 million, or 11.8%, to $264.4 million in the first twenty-six weeks of 2026 from $236.4 million in the same period of 2025. Cost of sales as a percentage of sales decreased to 59.7% in the first twenty-six weeks of 2026 from 60.2% in the same period of 2025. The change was due to higher merchandise margin and lower shrink, partially offset by higher freight expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $8.2 million, or 5.4%, to $162.0 million in the first twenty-six weeks of 2026 from $153.8 million in the same period of 2025. The increase was primarily driven by certain store expense to support additional sales. As a percentage of sales, Selling, general and administrative expenses decreased to 36.6% in the first twenty-six weeks of 2026 from 39.2% in the same period of 2025, due to the aforementioned items.

Depreciation. Depreciation expense increased $1.7 million, or 18.3%, to $10.6 million in the first twenty-six weeks of 2026 from $8.9 million in the same period of 2025 primarily due to increase in property and equipment.

Impairment. There were no non-cash impairment expenses related to underperforming stores in the first twenty-six weeks of 2026 compared to $0.3 million in the first twenty-six weeks of 2025, comprised of leasehold improvements and fixtures and equipment. 

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Gain on Sale of Building. Gain on sale of the corporate office building was $11.0 million in the second quarter of 2025.

Income Tax Benefit. Income tax benefit of $.14 million was recognized in the first twenty-six weeks of 2026. No income tax benefit was recognized in the first twenty-six weeks of 2025. We used the annual effective tax rate to determine income tax benefit based upon interim period results.

Net Income (Loss). Net income was $6.8 million in the first twenty-six weeks of 2026 compared to net income of $4.7 million in the same period of 2025 due to the factors discussed above.

Liquidity and Capital Resources

Capital Allocation

Our capital allocation strategy is to maintain adequate liquidity to prioritize investments in opportunities to profitably grow our business and maintain current operations. Our existing share repurchase authorization also remains in place with $40 million of authorization outstanding. We will deploy or return capital based on the opportunities available to us, market conditions, and ultimately, where we believe we can generate the greatest long term value for our shareholders. Our quarter-end cash and cash equivalents balance was $55.9 million compared to $50.4 million at the end of the second quarter last year. Until required for other purposes, we maintain cash and cash equivalents in deposit or money market accounts.

Our principal sources of liquidity consist of: (i) cash and cash equivalents on hand; (ii) short-term trade credit arising from customary payment terms and trade practices with our vendors; (iii) cash generated from operations on an ongoing basis; and (iv) a revolving credit facility with a $75 million credit commitment.

On August 25, 2026, the Company filed a registration statement on Form S-3 relating to the potential offer and sale from time to time of up to $100 million of its common stock. Once effective, the registration statement will provide the Company with additional flexibility to access the capital markets and support potential future capital needs. The Company currently has no definitive plans to issue securities under the registration statement, and no securities have been issued thereunder as of the date of this report.

Inventory

Our quarter-end inventory balance was $126.4 million, a 7.5% increase compared to $117.6 million at the end of the second quarter last year. The increase was primarily driven by inventory investments to support strong customer demand.

Capital Expenditures

Capital expenditures in the first twenty-six weeks of 2026 were $15.6 million, an increase of $7.9 million over the first twenty-six weeks of 2025, as we increased our investments in new stores and remodels. We anticipate capital expenditures in fiscal 2026 to be in the range of $35 million to $40 million, primarily for new stores and remodeling of existing stores.

​

17

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Share Repurchases

No shares were repurchased in the first tweny-six weeks of fiscal 2026. In the first twenty-six weeks of fiscal 2025, we returned $6.3 million to stockholders through share repurchases. See Part II, Item 2 of this Report and Note 8 to the Financial Statements for more information.

Revolving Credit Facility

We have a revolving credit facility that matures in April 2030 and provides a $75 million credit commitment and a $25 million uncommitted “accordion” feature. Additional details of the credit facility are in Note 4 to the Financial Statements. At the end of the second quarter of 2026, we had no borrowings under the credit facility and $2.2 million in letters of credit outstanding.

Cash Flows

Cash Flows From Operating Activities. Net cash provided by operating activities was $6.7 million in the first twenty-six weeks of 2026 compared to net cash used in operating activities of $7.1 million in the same period of 2025. Significant sources of cash for the first twenty-six weeks of 2026 included net income adjusted for non-cash items totaling $45.0 million compared to net income adjusted for non-cash items of $29.9 million in the first twenty-six weeks of 2025.

Significant uses of cash from operating activities in the first twenty-six weeks of 2026 included (1) a $21.8 million decrease in accrued expenses and other long-term liabilities (compared to a $29.6 million decrease in the first twenty-six weeks of 2025) due primarily to payments of operating lease liabilities; (2) a $7.9 million increase in prepaid and other current assets compared to a $9.4 million dollar increase in the first twenty-six weeks of 2025; (3) a $12.9 million increase in inventory in the first twenty-six weeks of 2026 compared to a $5.1 million decrease in inventory for the same period in 2025 and (4) a $2.8 million decrease in accrued compensation in the first twenty-six weeks of 2026 compared to a $2.0 increase in the same period last year.

Cash Flows From Investing Activities. Cash used in investing activities was $15.6 million in the first twenty-six weeks of 2026 compared to $3.5 million provided in the same period last year. Cash used of $15.6 million in the first twenty-six weeks of fiscal 2026 consisted of purchases of property and equipment. The cash provided of $3.5 million in the first twenty-six weeks of 2025 was from the sale of a building for $11.2 million, offset by $7.7 million used for the purchases of property and equipment.

Cash Flows From Financing Activities. Cash used in financing activities was $1.3 million in the first twenty-six weeks of 2026 compared to $7.1 million in the same period last year. Cash used in the first twenty-six weeks of fiscal 2026 was $1.3 million to settle withholding taxes on the vesting of restricted stock, compared to $0.8 million used to settle withholding taxes on the vesting of restricted stock and $6.3 million for share repurchases in the first twenty-six weeks of fiscal 2025.

Cash Requirements and Commitments

Our principal cash requirements consist of (1) inventory purchases; (2) capital expenditures to invest in our infrastructure; and (3) operational needs, including salaries, occupancy costs, taxes and other operating costs. We may also use cash to fund any share repurchases, make any required debt payments and satisfy other contractual obligations. Historically, we have met these cash requirements using cash flow from operations and short-term trade credit. As of August 1, 2026, our contractual commitments for operating leases totaled $224.8 million (with $64.9 million due within 12 months). See Note 11 to the Financial Statements for more information regarding lease commitments.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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There have been no material changes to the Critical Accounting Policies outlined in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risk during the twenty-six weeks ended August 1, 2026 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Item 4. Controls and Procedures.

We have carried out an evaluation under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 1, 2026 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.

Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 1, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

​

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We are from time to time involved in various legal proceedings incidental to the conduct of our business, including claims by customers, landlords, employees, or former employees. Once it becomes probable that we will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, we establish appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, we are not aware of any legal proceedings pending or threatened against us that we expect to have a material adverse effect on our financial condition, results of operations or liquidity.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors described under the section “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

​

Information on Share Repurchases

The Company did not repurchase any shares in the second quarter of 2026. As of August 1, 2026, $40.0 million remained under the Company’s stock repurchase authorization.

​

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

​

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Item 6. Exhibits.

​

​	​
3.1	​	Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 7, 2018).
​	​	​
3.2	​	Fourth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 31, 2022).
​	​	​
31.1	​	Certification of Principal Executive Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
​	​	​
31.2	​	Certification of Principal Financial Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
​	​	​
32.1	​	Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+†
​	​	​
101	​	Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.+
​	​	​
104	​	Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.+

+      Included herewith.

†      Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934 and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.

​

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, and the undersigned also has signed this report in her capacity as the Registrant’s Chief Financial Officer (Principal Financial Officer).

​

​	​	​
​	CITI TRENDS, INC.
​	​
Date: September 9, 2026	​
​	​	​
​	By:	/s/ Heather Plutino
​	Name:	Heather Plutino
​	Title:	Chief Financial Officer

​

​

​

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