Citi Trends, Inc.

Greetings and welcome to the City Trends 2Q21 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded Tuesday, August 24, 2021. I would now like to turn the conference over to Nitza Miki, Senior Associate. Please go ahead.

Thank you, Malika, and good morning, everyone. Thank you for joining us on CityTrend's second quarter 2021 earnings call. On our call today is our Chief Executive Officer, David McKeown, Chief Financial Officer, Pam Edwards, and Vice President of Finance, Jason Moschner. 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's available on the company's website under the investor relations section at www.citytrends.com. You should be aware that prepared remarks today made 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 subsequent 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, David McKeown. David?

Thank you, Nitsa, and good morning, everyone, and thanks for joining us today on our second quarter fiscal 2021 earnings call. This morning, I will review our continued transformation of our business model, highlight our strong financial and operational results for the second quarter, discuss our confidence in the business for the remainder of the year. Now we'll update you on our progress related to the evolution of our city master plan and activity in support of our strategic growth initiatives. In addition, Pam Edwards, our CFO, will elaborate on our financial results and provide details about our guidance for the remainder of the year. I would be remiss if I did not take a moment to once again emphasize my true gratitude to our dedicated teams across our organization. Our industry has faced many challenges since the pandemic emerged, and our teams have never wavered on their passion and dedication to serve our customers and communities. The CityTrends culture is becoming stronger every day, and the root of our culture is our people. Thank you, especially to our internal teams and vendor partners for making CityTrends the sought-after brand experience for our loyal and growing African-American and Latinx families' apparel, accessories, and home lifestyle needs at prices that will never break the bank. Our journey has just begun, and we have a long runway ahead of us as we gear up to expand the CityTrends experience to so many more communities, associates, and business partners. Now, let me discuss the key highlights of our second quarter performance compared to the second quarter of 2019. Total sales increased positive 29.8% versus Q2 2019, supported by an increase in comp sales of positive 25.6% versus Q2 2019. Our strong top-line increase was a result of growth in our average basket size, driven by spending, as we have seen for the last five quarters, from longtime loyalists, lapsed comebacks, and many new customers. In fact, our customers are in better financial position, which we expect will continue as employment levels rise and the economy continues to improve. We are once again very encouraged by the broad-based strengths across our cities or categories. In fact, we registered strong double-digit growth versus 2019 across five of our six cities, including ladies, men, kids, beauty and accessories, and home lifestyle. Our buying, planning, and allocation teams are truly trend masters, showing amazing skills in developing proprietary assortments building relationships with sought-after brands, and scouring the landscape for great values. Our momentum points to the underlying improvement and transformation in our base business when it comes to consistent flow of improved on-trend assortments, fresh receipts at excellent values, and the evolution of our supply chain capabilities. Central to our performance and momentum is our unwavering confidence in the power of our physical stores in underserved communities that really need us. Throughout the quarter, we paid close attention to enhancing our unique specialty value store experience by putting our customers at the center of decision-making, tailored to their needs and desires. As Pam will describe in greater detail, we registered strong results in the middle of the P&L, resulting in significant growth in our gross and operating margins, as well as continued expense leverage. We achieved these results despite macro freight and labor headwinds heading into the quarter. The fact that our operating margin expanded nearly 700 basis points in the second quarter compared to Q2 2019 showcases the diversity and adaptability of our operating model. Earnings per diluted share of $1.36 far exceeded our beginning of period internal expectations. This was another well-executed high performance quarter for CityTrends. And the momentum from Q2 has carried into August with a great start to our back to school and back to dorm seasons. As we look forward to the remainder of 2021, I am pleased to report that based on our strong first half performance, the momentum we are seeing in the third quarter, and confidence in our ability to capitalize on the opportunities that lie ahead, we have increased our full-year total sales and EPS outlook above the high end of previously provided ranges. Our revised outlook now calls for midpoint total sales of $1 billion, which will have us reaching our previously shared long-range top-line target more than a year earlier than planned. Importantly, the base foundation of our business has improved, fueled by improved and expanded trend right assortments, resulting in higher spend per customer, which we believe is sustainable over time. The city trends transformation is on a clear path for many years of meaningful growth. With that, I'll turn to Pam, our CFO, who will provide more details. Pam?