Late Tuesday, discount clothing retailer Citi Trends (US:CTRN) said in a U.S. Securities & Exchange Commission form 4 filing that its Chief Executive Officer David Makuen bought 4,000 shares of company stock on Oct. 6, worth about $75,000.
The transaction, spotted on Fintel’s latest CEO purchases page, showed he paid $18.64 a share. The buy lifted his stake by 20% to just under 25,000 shares.
The company also reported to the SEC that its Executive Vice President of Human Resources, Ivy Council, bought 3,000 shares on Oct.7 at $18.25 per share, or about $55,000. Council owns about 74,000 shares.
Citi Trends fell 80% this year through this week after reaching highs during the worst of the pandemic. It trades now at levels last seen in August 2020.
The company released second quarter results August, missing revenue expectations by about 8% and said same-store sales fell 25%. The firm’s adjusted EBITDA fell more than 90% year over year, to $1.9 million from $21.4 million in 2021. Analysts expected about $7 million in EBITDA.
It posted a $2.5 million loss, compared to a $12.5 million year-ago profit.
CEO Makuen said in August that “the first half of 2022 was a challenging period as our customers, particularly those in the lowest income bracket, were under extraordinary pressure from widespread inflation, reducing their visits to stores for discretionary apparel and accessory purchases.”
Makuen said it’s hard to gauge the demand cycle and unveiled a 10% companywide layoff and other cost-cutting measures. He said the cuts would save $10 million in SG&A costs and another $10 million with capital spending cuts.
Craig-Hallum Capital Analyst Jeremy Hamblin believes CTRN’s strong balance sheet should limit the shares’ downside. However, he thinks the company is among the most challenged by the deteriorating economy.
Hamblin said it would be hard to see an upside until inflationary pressures abate.
Hamblin noted after the August results that the updated guidance implies trends consistent with the first half. However, he cautioned that a lack of management discipline on share buybacks had created a long-term drag on earnings power.
The analyst maintains a ‘hold’ rating on the stock with a $34 price target.
A chart from Fintel’s financial metrics and ratios page for CTRN shows the revenue and profitability trends for the company over the previous five years.
CTRN has a consensus ‘hold’ recommendation and a $32.30 average target price.
Fintel’s quant platform has also identified CTRN as a short squeeze candidate with an 83.7 short squeeze score that puts it in the top 5% of 5,228 companies screened.
This article originally appeared on Fintel
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