Greetings. Welcome to Citi Trends, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants will be in listen-only mode. The question-and-answer session will follow the formal presentation. Please note that this conference is being recorded. At this time, I will hand the conference over to Nitza McKee, Senior Associate at ICR. Nitza, you may begin.

Thank you, and good morning, everyone. Thank you for joining us on Citi Trends, Inc. fourth quarter and full year 2025 earnings call. On our call today is Chief Executive Officer, Kenneth Seipel, and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 6:45 a.m. Eastern Time. If you have not received a copy of the release, it is available on the company's website under the Investor Relations section at www.cititrends.com. You should be aware that prepared remarks made today during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance. Therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10-K and other filings with the Securities and Exchange Commission for a more detailed discussion of the factors that can cause actual results to differ materially from those described in the forward-looking statements. I will now turn the call over to our Chief Executive Officer, Kenneth Seipel. Ken?

Thank you, Nitza.

Good morning, everyone, and thank you for joining us today on our fourth quarter and full year fiscal 2025 earnings call. I am proud to report that our fourth quarter performance caps an exceptional year of transformation at Citi Trends, Inc. The progress we delivered in 2025 reflects the disciplined execution across the organization and a renewed focus on serving our customer with style, value, and authenticity. Our team has worked incredibly hard this year to strengthen the foundation of this business. As a result, we are entering 2026 with growing momentum, a clear strategic direction, and increased confidence in our long-term growth trajectory. Let me begin with our fourth quarter results. Citi Trends, Inc. delivered 8.9% comparable store sales growth in Q4, representing 15.3% growth on a two-year basis and marking our sixth consecutive quarter of positive comparable sales. In the quarter, I am also pleased to report that we achieved EBITDA of $11.9 million, which is a 67% increase over Q4 of the prior year. What is particularly encouraging about our fourth quarter performance is the broad-based nature of the growth. We saw strength across all store volume tiers, all geographic regions, and both apparel and non-apparel categories. Customer traffic drove the majority of our growth. Transaction counts grew mid to upper single digits during the quarter; we also saw continued improvement in our basket size, demonstrating that our merchandising strategy is resonating. More customers visit our stores, and once inside, they continue to respond to our improving merchandise assortment and our value proposition. Our customers are telling us when we deliver compelling product at great value, they show up and they purchase. Encouragingly, that momentum has continued into fiscal 2026. Quarter-to-date, Q1 comparable store sales are trending in the high single digits supported by increased traffic and…

Thank you, Ken, and good morning, everyone. I am excited to walk you through our financial results for the fourth quarter and for fiscal 2025, a highly transformational year for Citi Trends, Inc. We have accomplished a lot in a short period of time, but as we say, we are just getting started. Our momentum will continue through 2026, and the guidance I will share with you shortly will demonstrate that our objective of increasing shareholder return remains at the core of our transformation. Our performance in the fourth quarter demonstrates significant progress in our business transformation. We achieved robust top- and bottom-line results with comparable store sales increasing 8.9% and adjusted EBITDA of $11.9 million, both at the high end of our guidance range, confirming that our turnaround strategies continue to gain traction. Total sales for the fourth quarter increased 9.1% compared to Q4 2024 to $230.4 million. Comparable store sales increased 8.9%, with about two-thirds of comp sales growth from increased transactions and the remaining third from a higher average basket. On a two-year stack basis, comps increased 15.3%. As Ken said, this marks our sixth consecutive quarter of positive comp growth. Gross margin increased 20 basis points versus last year to 39.9%, driven by lower markdowns reflecting the impact of our improved merchandise assortment and value proposition, upgraded allocation process, and our inventory efficiency efforts. While we are pleased with our gross margin rate, it did fall a bit short of our expectations for the quarter due to slightly higher than expected freight expense and slightly higher markdowns to ensure we exited the quarter clean. Fourth quarter adjusted SG&A expenses totaled $80.0 million compared to $76.7 million a year ago. The increase to last year is due to increased store and DC expenses to support higher sales,…

Thank you, Heather. Now let me turn to our business initiatives for fiscal 2026. As we enter 2026, we are firmly in the Execute phase of our growth plan, focused on delivering the customer brand promise. Our brand promise is clear: styles that see you, prices that amaze you, and trends that tell your story. Every one of our internal team members is acutely focused on bringing the brand promise to life for every customer, every store, every day. In support, we developed three priorities for 2026, which are consistent execution, sales flow-through to profit, and accelerated growth. The first is consistent execution. With established practices now in place, we have identified several very specific product opportunities to continue our comparable store sales growth. A key focus for 2026 will be repositioning our Women's business to fully capture the style, trend, and sizing opportunities we see in the market. We are updating our product offerings across Juniors, Plus, and Missy categories to ensure trend-right merchandise is front and center for our female customers. This represents a significant opportunity to drive traffic and sales growth. Throughout 2026, we will maintain our disciplined focus on improved style, trend, and value across all product categories. The success we have seen in Children’s and Men’s demonstrates what is possible when we execute consistently, and we are applying those learnings company-wide. Our creative director has significantly improved our focus on key trends in the market and is working with our buyers to curate a refined assortment of styles. From opening price points to premium branded fashion, our merchant team translates these trends into compelling styles that deliver exceptional value to our customers. We have opportunity to grow our off-price buying strategy to ensure continuous flow of exciting brands and products at incredible value. The off-price…

Thank you. We will now be conducting a question-and-answer session. In the interest of time, we ask you to please limit yourself to one question and one follow-up. If you would like to ask a question at this time, please press 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. Participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from the line of Michael Baker with D.A. Davidson. Please proceed with your questions.

Thanks, guys. I will run through a couple real quick. First, just weather/cadence—looks like maybe a little bit of a slowdown in January, but a better February. A lot of retailers saw weather issues in January. Can you talk about that? And then I presume February was helped by tax refunds. That is the first question. Secondly, if you could talk about closeouts percent of sales, where you are in that, how much that can grow. And then third, if you could touch on the last thing you said there, the synergistic acquisitions, a little bit more detail, and then exactly what that could be. Is that a real estate play? Is that a different concept? If you could help us there. Thanks.

Thanks, Mike. In terms of weather, a couple of comments on that. As we all know, the January weather got a little bit tough toward the tail end, and we tracked an impact that last 10 days or so that probably impacted our comp line a little bit more. It was a little bit offset—we should be honest about that—and say that we did have a bit of an advantage in early January of a non-comparable weather event for the prior year. So there is a little bit of an offset there, but there was a bit of an impact. I believe at one point, and I may be wrong on this—Heather, correct me—but I think we had nearly half of our stores closed for multiple days. All of that was really part of it. Interestingly enough, beyond the snow, the trends picked right back up immediately, and as you point out, February and early March have been running through our past trends. Anything you would add there, Heather? No? The next question is on closeouts. The answer to that is a little complicated to give you because it varies a bit by category. I called out that our shoe team has a pretty high penetration of closeouts, so they are working deals and finding some pretty exceptional deals out there, and it is one of the reasons that business is really starting to turn around nicely. So it is a high penetration in shoes; a little less penetration that we are seeing in our Men's category, which has been in and out of closeouts, and we had a really good Q4, but part of their Q4 success was driven by closeouts. From a percentage point of view, it depends on the category itself. The point I am making is…

Mike, the only thing I would add is that the reason we have added it to the script and started talking about it is to keep with our goal of always being very transparent with our investors about what is on our mind and what is the longer term for Citi Trends, Inc. We are keeping our focus on the stated goal of EBITDA growth of $60.0 million versus 2024, but, oh, by the way, what is around the corner. It is a testament to what Ken talks about as bifocal vision. We are looking at what is in front of us and then what is longer term. Just wanted to call that out.

That makes perfect sense. Thank you. Thanks, Mike. Thanks, Mike.

Our next question is from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions.

Hey. This is Will on for Jeremy. Thanks for taking my questions. Off to an impressive start. I just wanted to start by going back to the comp trends in Q1. Lapping the plus 10% from last year, could you give us any color on how the rest of the quarter shapes up in terms of the April lap from last year?

For sure. As I mentioned in the script, we are anticipating high single digits at this stage. April this year, as you would expect, is a little tricky. There is a bit of a calendar shift with Easter coming out of April and so forth. We are looking at it in a combined quarter, plus the addition of tax refunds and a lot of moving parts in Q1 this year. That is why we are confident in our guide and the trend right now of high single digits. As you point out—thank you for mentioning—that is on top of our 10% last year, so it is a really nice two-year stack trend.

Got it. And then it sounds like unit growth plans remain on track. What are you thinking on expected cadence for the 25 openings this year, and any color on your visibility into the 40 openings expected for next year and how that pipeline is shaping up?

I will take 2026, and I will turn that back to Ken for the longer term. We have already opened two stores in February, so our goal to get to 25 stores this year is well underway. We anticipate about 10 more stores opening in the July timeframe, and then the balance—13—opening in October. We will consider 2026 a bit of a transition year, and I will ask Ken to describe the 2027 cadence.

Thank you. Going forward, strategically, we will be grouping all of our store openings around three time periods throughout the year, so it will be fairly easy to model. We will be opening a block of stores in the spring period, typically around March; that leads into the tax refund time and into Easter. The other opening period will be mid-July; that preps the block of stores to move right into the back-to-school period. The third opening period will be mid-October, to get ready for holiday and open into peak. You can see the rhyme or reason here: we are strategically opening stores going into peak periods. That allows us to have some of our best product out there, and the customer reason to shop is stronger. Over time, it will help us introduce our stores successfully to new marketplaces. We do not have an exact cadence worked out for 2027 yet, but in my mind, you could divide that by three and get pretty close. We are trying to have a balanced attack, and you will not be far off if you take the 40 divided by three across those time periods I mentioned.

Got it. That is super helpful. Last one for me. Could you share any update on the rollout of the loyalty program and some of the ways you are planning to leverage that program in the near and longer term?

Thanks for asking. We are very excited about the loyalty program. It is in testing right now in a few stores. We ran into a couple of hiccups, to be honest. We were not excited about some of the messaging and marketing; we have been busy doing some things and did not give that the right energy. I put that on pause for a bit. We want to get the messaging and marketing correct and make sure the consumer reason to shop is very strong. We have to build a great value proposition around CRM. There is no question this will be a fantastic success for us. I have seen it in the past, and we are already seeing high engagement in this program. But I want to be careful; I do not want to do it just to do it. I want to do it really well. Our teams are working on that, and I expect in the back half of the year we will have a full-blown rollout of CRM and, of course, all the data that flows from those programs.

Appreciate the color. Best wishes. Thank you.

Thank you. At this time, I will turn the floor back over to Kenneth Seipel for closing comments.

Thank you, everyone. We appreciate you joining us today, and we look forward to giving you an update in June. Take care now.

Thank you. Ladies and gentlemen, thank you for your participation. This concludes today’s conference. You may disconnect your lines at this time, and have a wonderful day.