Citi Trends returns to profitability on 9% sales surge and margin expansion

Citi Trends (NASDAQ:CTRN) reported a robust recovery for the fourth quarter ended January 31, 2026, marking a pivotal turn for the off-price retailer.

Total sales for the period rose 9.1% to $230.4 million, underpinned by an 8.9% increase in comparable store sales.

Management attributed the growth to a successful implementation of a three-tiered merchandise assortment that resonated with its core customer base, resulting in higher traffic and larger transaction values.

The retailer's bottom line saw a dramatic improvement, posting a net income of $7.4 million, or $7.2 million on an adjusted basis.

This stands in sharp contrast to the adjusted net loss of $12.8 million reported in the fourth quarter of 2024.

The swing to profitability was supported by a gross margin expansion to 39.9%, a 20-basis-point improvement driven by reduced markdowns and enhanced inventory efficiency.

Adjusted EBITDA for the quarter reached $11.9 million, up from $7.1 million in the prior-year period.

Operational discipline remained a central theme of the report, as the company successfully leveraged its selling, general, and administrative (SG&A) expenses.

Despite a slight increase in nominal SG&A costs to $80 million—due to higher sales processing and incentive compensation—the adjusted SG&A rate levered by 160 basis points.

Furthermore, ongoing inventory initiatives led to a 7.4% year-over-year decrease in total merchandise inventory, which stood at $113.5 million at year-end, signaling a leaner and more productive retail footprint.

Meanwhile, Citi Trends maintains a high level of financial flexibility as it enters the new fiscal year.

The company ended the quarter with $66.1 million in cash and remains entirely debt-free, with no borrowings under its $75 million credit facility.