Citi Trends, Inc.

Ladies and gentlemen, please stand by. The conference will begin momentarily. We thank you for your patience and ask that you please remain on the line. Greetings and welcome to the C-Train 1Q22 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 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, May 24th, 2022. I would now like to turn the conference over to Nitza Miki, Senior Associate. Please go ahead.

Thanks, Malika, and good morning, everyone. Thank you for joining us on CityTrend's first quarter 2022 earnings call. On our call today is our Chief Executive Officer, David McEwen, 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 McEwen. David?

Thank you, Nita. Good morning, everyone, and thanks for joining us today on our first quarter of fiscal 2022 earnings call. This morning, I will begin by reviewing the ongoing transformation of our business and highlight our financial and operational results for the first quarter fiscal 2022, before updating you on our focus on our highest priority, providing for our customers and associates during tough times and how we are doubling down on helping them show up for whatever comes their way. Then Jason Moschner, our VP of finance and principal financial and accounting officer, We'll elaborate on our financial results and a few other items related to our outlook. Before turning to our results, I want to recognize that the macro environment has been difficult for our customers, given a number of factors, including ultra-high inflation that is driving high food prices, rents, and gas prices. These factors coupled with geopolitical instability and lapping the stimulus from last year disproportionately impact our core customers and also our associates who work tirelessly to operate our 600-plus store fleets. While it hasn't been easy for them, they are resilient, strong, and able to weather this storm just like they have for so many other storms during the last 20 years. Importantly, CityTrends will always be dedicated to our neighborhoods and will always be there for our loyal and new customers. Our unique ability to listen to the African-American and Latinx families we serve and respond with the right trends, fashion, and essentials at the right time in the right store has never been stronger. No matter the headwinds, it's our responsibility to keep it fresh and fun for the family each and every day. I want to thank our associates throughout all functions and stores that keep city trends purpose driven and running the best way possible for our customers each and every day. Now, turning to our results. Our first quarter top line results were in line with expectations and our bottom line performance was better than our previously provided guidance. The difficult economic backdrop coupled with third party data suggesting shifts in discretionary shopping behavior is negatively impacting traffic to our stores. However, our core customer metrics are holding up well as we continue to see strong and consistent conversion and basket spend with baskets well above 2019 and very close to 2021 levels. I have shared the stability of our conversion and basket trends now in three consecutive calls with you. And I want to underline the following point. Our content is resonating and our agile buy team is reading, reacting and executing at a high level. Our team is more nimble than ever. And in particular, we are chasing ample available trends that will scoop up and offer a crisis that don't break the bank. Looking back on the quarter, We successfully manage inventory levels and have newness and freshness arriving in stores weekly. The classic extreme value chase is definitely on. With a soft store traffic setup, our store management teams have been intensely focusing on conversion while styling customers from head to toe in our specialty store experience to drive UPTs and healthy baskets. We commenced the early phases of further optimizing our product mix with the gradual rollout of multiple incremental product initiatives across our six cities or categories. We remodeled 20 legacy CityTrend stores in our new CTX format, and they are off to a great start as customers engage with their revitalized neighborhood trend spots. We continue to navigate and manage the challenging supply chain backdrop and labor challenges while diligently managing expenses. We completed the previously announced sale leaseback transaction of our distribution center located in Darlington, South Carolina. We are making substantial progress on our infrastructure initiatives to improve our buy and move teams' ability to procure and move goods. And lastly, we are making great progress on our search for a new CFO. As we look to the remainder of 2022, we expect the macro factors to continue to impact our customer and the broader discretionary shopping landscape. It's therefore prudent that we plan conservatively and thus we are revising our growth targets for the rest of the year while still comparing primarily to pre-pandemic 2019 as a baseline. Additionally, we believe the right step is to take a conservative approach to opening new stores, and therefore, we now intend to open approximately 20 stores during fiscal 2022. With that, I'll turn the call over to Jason to discuss our first quarter results in detail, as well as our updated guidance for the balance of the year.