Citi Trends, Inc.

And welcome to the CityTrends first quarter 2023 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, May 23, 2023. I would now like to turn the conference over to Nitsa McKee, Senior Associate. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us on CityTrend's first quarter 2023 earnings call. On our call today is our Chief Executive Officer, David McEwen, and Chief Financial Officer, Heather Platino. 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 meanings 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 to 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, Nitza. Good morning, everyone. And thanks for joining us today on the CityTrends first quarter fiscal 2023 earnings call. I will begin our call with highlights of our first quarter financial and operational performance. Heather Ploutino, our chief financial officer, will then elaborate on our detailed financial results and a few other items related to our outlook. Then we'll open up the call for your questions. Against what remained a challenging macro backdrop for the low-income families that we serve in African American and multicultural neighborhoods, our first quarter results were in line with our previously stated guidance. Our team's execution of the initiatives I shared during our fourth quarter call improved throughout the quarter, and our customers remained remarkably resilient. I will elaborate a bit more in a few minutes. As the first quarter unfolded, we doubled down on offering extreme value basics, fashion, and trends by stocking our stores with more entry price points, which translated to approximately 70% of our units for sale in stores priced $9.99 and under. Additionally, we have great momentum behind continuously improving our store experience from appealing visual merchandising of fresh head-to-toe looks to to welcoming customers we know by name, like a friend. Having visited dozens of stores during the quarter, I can tell you that our experience is getting better and better. During our last call, we mentioned sharpening our focus on trend development as a key lever for the year. I am pleased with our efforts thus far. We have more work to do, but early efforts are providing some strong success indicators across apparel, footwear, beauty and accessories, home, and impulsive snacks, candy, and HBA essentials. Lastly, we've seen solid response to our spring and early summer newness, thanks to our buy team being really on top of our customers' wants and needs. Having said this, the macro pressures we are all keenly aware of have resulted in our customers visiting less and being more selective about what they put in their baskets. as they are still resetting their discretionary spending habits, prioritizing family and everyday life needs, including rent, food, utilities, and more. Now, for a little detail on the cadence of the quarter. As you have heard from other retailers, spring season traffic trends were choppy. From a monthly perspective, February and April sales compared to last year were very similar in trend, while March was much weaker, primarily driven by persistent inflation, lower tax refunds, and the elimination of SNAP benefits. It's important to mention that we continue to see strong shopper conversion throughout the quarter. A clear signal our assortments are resonating and the CityTrend's brand positioning remains strong. As we manage the quarter, I'm pleased to report that our financial position remains strong, as we ended the first quarter with liquidity of approximately 164 million, inclusive of 89 million in cash and no borrowings on our $75 million asset-based lending facility. We are leveraging our strong balance sheet to procure advantageous products to set us up for successful back-to-school and fall selling seasons while remaining laser-focused on controlling what we can control. Now let me take a moment to update you on our progress in support of our four strategic priorities, which are, number one, driving ComStore productivity. Number two, managing inventory and maximizing margin. Number three, controlling SG&A expenses and leveraging our balance sheet. And number four, executing technology enhancements. First up, driving ComStore's productivity. Despite our negative first quarter trend, our buy, move, and sell teams took action to capture targeted demand opportunities. Some important highlights are our customers really came out for their kids during the quarter. Our city mini business was extremely strong. Easter was hopping with sweet, casual dresses for girls and short sets for boys, and the older kids opted for active, inspired brands. Wonky weather patterns drove unexpected but strong momentum in ladies' long denim, lightweight outerwear, and fashion fleece. As the weather normalized, our ladies scooped up casual looks from trendy tees to woven tops, while our guys gravitated to new, curated urban looks. Strong results in commodities, scrubs, basics, and replenishment items for the home, as well as health and beauty, where we offer value and convenience, were definite bright spots. Our customers are definitely choosing how to spend their money carefully, leaning into their needs for work, the household, and sharp price point fashion and fun. Lastly, the rebuild of our footwear business is gaining traction, and new businesses show a promising future with an expanded Missy size assortment strength from our Just One More queue line, and our expanded assortments that target Latinx men and women. Our City Trends Text Club adds another tool to our arsenal in order to broaden our reach with existing customers to drive comp sales. While still early stages of this program, we are pleased with the initial results, and we captured more than 20,000 new members during the quarter. Our second priority is managing inventory and maximizing margin. In controlling what we can control, our buy team effectively managed inventories across all of our product cities or categories with total inventory dollars down nearly 12% to last year. However, as we discussed during last quarter, our in-store inventory levels were on the low side, and we suffered from too many out-of-stocks. Therefore, we intentionally built our in-store inventories during April across targeted year-round and seasonal zip codes or departments within our cities, ending the quarter with 8% more in-store inventory than last year. In total, I feel we are well-positioned to recoup market share and to capitalize on future demand. Rest assured, though, our inventory philosophy remains anchored on ending each season clean and consistently delighting our customers with fresh, exciting products at compelling value prices. Our third priority is controlling SG&A expenses and leveraging our balance sheet. The headline here is all about being prudent in our decision making. Our expense management discipline is consistent and steadfast as we look around every corner to identify cost efficiencies while operating the business in a lean and disciplined manner. As macro headwinds persist, we have ample liquidity to refine assortment as the demand environment evolves. Lastly, our fourth priority is executing technology enhancements. We have numerous good developments on this front. We are making great progress towards the launch of our new ERP platform later this summer, which, as a reminder, will significantly improve our core operational abilities. We are also making considerable progress on improvements in our distribution centers and in our stores. In summary, we have delivered first quarter results in line with our previously stated guidance, but we aren't satisfied. To be clear, we aren't hunkered down per se. Rather, we are running really fast and are deeply committed to improving our operating results. At the center of our efforts is bringing our brand purpose to life as we do everything in our power to improve our trends. Remember our purpose. Live bold, live proud, respect all. We call it City Life. It defines the behaviors we must uphold to ensure our customers find apparel and non-apparel that helps them be ready for whatever comes their way. Our buy team is making bold decisions. using analytics and customer feedback. Our move team is shipping proud, realizing they can really make a difference by getting fresh products to our stores multiple times per week. Our sell team respects all by creating a customer experience that is welcoming and engaging. Keep in mind, we are the rare brand that serves the entire family, within a tight household income range of 15K to 50,000K, with 50% of our customers earning $25,000 or less per year. Our job is to roll with their ups and downs and help bring opportunities to life for them each and every day. We know our customers really well, and we know they are under immense financial pressure, which is showing up. in lower traffic and spending levels. We also know that the macro environment remains uncertain. Therefore, we are prudently adjusting our outlook for the fiscal year, incorporating a continued challenging backdrop through the first half, followed by forecasting a modest improvement in the second half. With that, I'll turn the call over to Heather. She will discuss our first quarter results in detail, as well as a few items related to our outlook. Heather?