Citi Trends up on 1Q results, upbeat analyst note

After the closing bell Wednesday, the company reported a quarterly profit of $5.2 million, or 36 cents per share, besting Wall Street's forecast by 2 cents per share, according to Thomson Financial.

The company -which sells such items as sportswear, handbags and footwear, and focuses primarily on the African-American market -also backed its full-year guidance.

In a note to investors, Piper Jaffray & Co. analyst Jeffrey P. Klinefelter noted the company's quarterly results were consistent with expectations, and said he is "incrementally encouraged" by a 4 percent rise in same-store sales in the first two weeks of May.

Same-store sales, or sales at stores open at least a year, are a key measure of retailer or restaurant performance, because they measure growth at existing stores rather than from newly opened ones.

Klinefelter also forecast the company's sales would get a boost after consumers receive their tax rebate checks, citing Bureau of Labor Statistics which said the typical African American customer spends more on apparel by about 120 basis points.

The government's economic stimulus checks, aimed at jump-starting the economy by spurring consumer spending, have begun arriving in mailboxes this month.

"We believe CitiTrends is in good position to capture incremental sales from the rebate due to its focus on lower income consumers and its core shopper's higher propensity to spend on apparel items than the average American household," Klinefelter said.

The analyst holds a "Buy" rating on Citi Trends and a $22 price target, implying growth of 23 percent over the stock's closing price Wednesday of $17.87.

Oppenheimer & Co. analyst Roxanne Meyer was more cautious on the company's prospects, saying in a client note she remains concerned about inflationary cost pressures on low income customers, and is less optimistic the rebate checks will boost sales.