Citi Trends, Inc.

Greetings and welcome to the CityTrends 3Q21 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will 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, November 30th, 2021. I would now like to turn the conference over to Nitsa McKee, Senior Associate. Please go ahead.

Thank you, Jason. And thank you all for joining us on CityTrend's third quarter 2021 earnings call. On our call today is our Chief Executive Officer, David McEwen, Chief Financial Officer, Pam Edwards, and Vice President of Finance, Jason Moschner. Our earnings release was sent out this morning at 645 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 McEwen. David?

Thank you, Nietzsche. Good morning, everyone, and thanks for joining us today in our third quarter fiscal 2021 earnings call. This morning, I will begin by reviewing the continued transformation of our business and highlight our strong financial and operational results for the third quarter before updating you on our progress related to the evolution of our city master plan and activity in support of our strategic growth priorities. Then, Pam Edwards, our CFO, We'll elaborate on our stellar financial results and provide details of our upwardly revised guidance for the year as we close in on a record $1 billion in sales and record operating results. I want to take a moment to express my sincere gratitude to our high-performance teams across our organization. The superb execution by the entire CityTrends crew was simply amazing. from securing merchandise to successfully managing the significant supply chain disruptions impacting our industry to appropriately staffing our highly differentiated specialty value stores. All of these efforts enabled us to meet the strong broad-based demand for apparel, accessories, and home trends for way less spend, resulting in an excellent third quarter. Our continued focus on elevating the CityTrends in-store experience and expanding our brand to many more underserved African American and Latinx communities has never been stronger. Our people are the heart and soul of the CityTrends culture, and we are aligned to servicing our customers' unique needs each and every day. Supporting our efforts are our ever-expanding vendor partners. From big to small, our vendor partners work closely with our agile merchant teams and enable us to keep it fresh and fun for the entire family, consistently delivering new and exciting products at extraordinary price points that don't break the bank. While we are still in the early innings of our transformation, we have made great progress and are confident that the execution of our strategic priorities will enable us capture additional sales and leverage expenses to sustain our top and bottom line growth. The city trends future is bright and the runway for growth is exceedingly strong. Turning to our results, we are thrilled to report excellent third quarter results that exceeded our internal expectations and continued the positive momentum from the first half of the year. Key highlights of our third quarter performance include the following. Total sales of 228 million increased 14.5% compared to Q3 of 2020 and 24.5% compared to Q3 2019. This growth was supported by a terrific comparable store sales increase of 13.1% versus Q3 of 2020 And that was on top of a positive 6.3% from last year. This is the ninth consecutive quarter of positive open-only comparable store sales for city trends. On top of outstanding sales results, continued many positive KPI trends in the city when comparing to 2019. These hot KPI trends include expanding gross margin, reducing average store inventories, leveraging SG&A, and producing astounding increases in operating income and margin. More details from Pam in just a few minutes. Lastly, we opened 11 new stores during the quarter, including a brand-new city in Wichita, Kansas. We quickly remodeled three stores that were severely damaged by Hurricane Ida, That leaves our store count at the end of the quarter at 600 stores. And better yet, we'll end the year with approximately 611 stores. Moving on, once again, we saw strength across our cities or categories as we continue to enhance the shopping experience in our unique specialty value stores by placing our customer at the center of how we curate trends, fashion, and basics. across an increasingly wider variety of apparel, non-apparel, and even consumables. We registered another quarter of strong double-digit growth versus 19 across five of our six cities, and they are women's, men's, kids', beauty and accessories, and home and lifestyle. Before I pass to Pam, I would like to highlight a handful of progress updates across our buy, move, sell, and support operational pillars that continue to evolve as we scale the business. For BUY, it is, without question, the team's successful navigation of the fluid dynamics of the marketplace we draw from. They are masters of delivering trend, quality, value, and brand, and we are only We are often the only destination in our neighborhoods that does what we do, and combining art with science to deliver a highly differentiated assortment day in and day out is how we shine. This differentiation manifests itself in our strong back-to-school and back-to-dorm seasons, followed by a brisk start to holiday self-purchasing and early gift shopping. For MOVE, or our supply chain team, we embarked on multiple projects to improve throughput and productivity. It's really a combination of quick wins and longer-term projects designed to move goods through the pipe at a faster rate while optimizing processes and labor over time. This showed up in meaningful ways at the onset of the quarter as we fueled stores with fresh goods from either RDCs or via dropship deliveries direct from our most flexible vendor partners, all the while managing freight costs to a smaller than expected headwind. For sell, or our real estate and stores divisions, we are most excited about the results of our lab stores, or CTX store upgrade. Some really big news. we've decided to green light this top to bottom revolution in our store experience to all new stores and remodels. Grand differentiation is everything to us. And being able to impact so many stores in our journey from 600 stores today to 1,000 in the future, combined with higher productivity remodels, is a major new development in our transformation journey. Lastly, our support pillar is is made up of finance, HR, IT, and legal. While sometimes the unsung heroes, these teams are changing the way we work. From our recently launched POS system to our cloud-based analytics platform to our City Cares Council, we are chipping away at countless opportunities to improve internal productivity, unearth fact-based insights, establish new cultural norms, retain and attract the best talent to grow the City Trends experience, and make a difference in the neighborhoods we serve, one city at a time. As we look to the remainder of the year, we feel really good about our positioning for the holiday season and are excited about our Give, Get, Gather holiday campaign, punctuated by plenty of amazing gifts, stocking stuffers, and trend-right looks for the entire family. To that end, we expect to close the year strong and are raising our full year 2021 guidance for both sales and EPS. With that, I'll turn it over to Pam Edwards, our CFO, to discuss our third quarter results as well as our outlook in more detail. Pam?