Citi Trends, Inc.

Greetings. Welcome to CityTrend's fourth quarter 2025 earnings conference call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll hand the conference over to Nitsa McKee, Senior Associate at ICR. Thank you, Nitsa. You may begin.

Thank you, and good morning, everyone. Thank you for joining us on CityTrend's fourth quarter and full year 2025 earnings call. On our call today is Chief Executive Officer Ken Seipel 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 made today 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 within 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, Ken Seiple. Ken?

Thank you, Nisa. Well, good morning, everyone, and thank you for joining us today on our fourth quarter and full year fiscal 2025 earnings call. I'm proud to report that our fourth quarter performance caps an exceptional year of transformation at CityTrans. progress we delivered in 2025 really reflects the discipline execution across the organization and a renewed focus on serving our customer with style, value, and authenticity. Our team has worked incredibly hard this year to strengthen the foundation of this business. As a result, we're entering 2026 with growing momentum, a clear strategic direction, and increased confidence in our long-term growth trajectory. Let me begin first with our fourth quarter results. So the study trends delivered an 8.9 comparable store sales growth in Q4, representing a 15.3% growth on a two-year basis and marking our sixth consecutive order of positive comparable sales. And in the quarter, I'm also pleased to report that we achieved EBITDA of 11.9 million, which is a 67% increase over Q4 of the prior year. What's particularly encouraging about our fourth quarter performance is the broad-based nature of the growth. We saw strength across all store volume tiers, all geographic regions, and both apparel and our non-apparel categories. Customer traffic drove the majority of our growth. Transaction counts grew mid to upper single digits during the quarter, and we also saw continued improvement in our basket size, demonstrating that our merchandising strategy is resonating. Our customers visit our stores, and once inside, they continue to respond to our improved merchandise department and our value proposition. Our customers are telling us when we deliver a compelling product at great value, they show up and they purchase. Encouragingly, that momentum has continued into fiscal 2026. Quarter to date, Q1 comparable store sales are trending in the high single digits, supported by increased traffic and basket size during this important tax refund season. In Q4, Children's once again delivered an outstanding quarter, posting high single digit growth and extending consistency and momentum for the year. This business has become a cornerstone of our company and is a model of disciplined execution. The team continues to deliver highly desired styles, consistent value, and improved in-stock positions. As we refine our merchandising strategies in Children's, the category continues to strengthen and remains one of our most reliable traffic drivers. Men's also posted another solid quarter of growth. Our updated strategy balances trend-forward product for younger customers while serving the style preferences of our core male customer. good values, and also improved in stocks. The results validate that a balanced approach and we believe there is a significant runway for continued growth in our men's category. Women's footwear continue to show early signs of progress. The off-price and extreme value strategy is beginning to gain traction in our shoe area, and we're seeing improved customer response. We're also pleased with the progress across the board, and we believe that the broader footwear category represents significant growth potential going forward. Family basics and sleepwear was one of our top growth areas in the quarter. Our merchants introduced better styling and trend to complement the already strong values. The combination of trend-relevant styles and improved inventory positioning generated a strong top-line sales performance and helped drive both traffic and convertible. And from a marketing brand brand perspective this year, this holiday season, we marked an important moment for City Trends with a launch of our Joy Looks Good on You campaign and refreshed social media presence under the at we are City Trends. The results really exceeded our expectations. Our flagship Joy video generated over 55 million views and engagements, demonstrating the power of authentic storytelling that reflects the communities we serve. If you haven't seen it yet, I really kind of encourage you to get to citytrends.com for the original video and original content celebrating real moments of joy across the black community. This campaign represents more than marketing. It brings to life our brand promise, which is styles that see you, prices that amaze you, and trends that tell your story. Going forward, the customer brand promise guides everything we do as we continue to strengthen our relationship with the communities we proudly serve. Now let's turn our attention to the full year 2025 results. In 25, we executed against our three phase strategy framework, repair, execute, and optimize. Our first priority was the repair phase, which is restoring the fundamental and foundational business disciplines required to run a successful retail company. I'm very pleased with the work our team accomplished to strengthen our foundation, sharpen our merchandise strategy, and improve the operational disciplines required to support long-term profitable growth. For the year, comparable store sales increased 9.7%. Two-year comparable growth was 13.1, and net sales reached a total of $820 million. In addition, we achieved more than 200 basis points of gross margin improvement, 120 basis points of SG&A leverage, and EBITDA growth of 26 million on a year-over-year basis to 11.8 million. Our EBITDA growth was achieved while also funding an above-target annual bonus for our team for the first time in several years. These results represent a significant achievement in a relatively short period of time and reflect the early success of our transformation strategy. Our fiscal 2025 growth was really driven by four factors, a sharper focus on core black customer, stronger merchandising assortments, better value communication, and a more engaging in-store experience. As I've shared previously, our rapid turnaround is enabled by CityTrain's clear points of differentiation. First, our laser focus on serving black customers, a customer segment that we understand deeply. Second, a strategic advantage of neighborhood-based locations that put us in the heart of the communities we serve. CityTrans holds a unique position as the only off-price retailer dedicated to Black consumers, and its cultural relevance is a significant competitive advantage. Black customers are trendsetters, they're early adopters of fashion, which enables us to curate assortments with immediate authentic appeal. Our connection to this customer has been strengthened through the comprehensive consumer insights study we conducted, combined with the expertise of our trend director, who identifies and translates current and relevant trends into actionable merchandising strategies. This dual approach allows us to not only reflect our customer style preferences with greater precision, but also anticipate emerging trends before they hit the mainstream of popularity. This work is a key reason that we generated consistent comp story increases for the past 19 months. Transaction counts grew mid to upper single digits year over year every quarter in fiscal 2025, while basket size expanded throughout the year. We're attracting more customers and they're sending more per visit. Powerful evidence that our updated product assortment strategy is resonating. Our customers are discerning shoppers who recognize that true value extends beyond price alone. When we deliver on-trend fashion, the right style, and quality merchandise, they're willing to invest more, and this on-site guides our merchandising strategy. But beyond merchandising, we've also made some major strides operationally in 25. We leveraged SG&A by 120 basis points through foundational business practices that drove better execution. The inventory management reached new levels of efficiency this quarter. We supported pump store sales growth with less average store inventory than last year, which is a testament to our improved buying processes, supply chain improvements, and smarter allocation. This efficiency creates a powerful flywheel effect, optimizing working capital, greater flexibility to respond to emerging trends, and protecting our gross margins. Speed improvements in our supply chain allowed us to maintain optimal in-store inventory while reducing overall inventory levels. enhanced work processes, productivity standards, and day-to-day management enable us to significantly reduce the in-process inventory. In the late second half of this year, we implemented the AI-based allocation system across all of our merchandising categories. The results have exceeded our expectations. We're now deploying AI-based planning systems to streamline sales and inventory planning for our merchant teams and further enhancing their effectiveness. Throughout 2025, we fundamentally transformed how we operate. We now run the business through standardized KPIs, real-time dashboards, structured business reviews, and performance-linked incentives. As I often say, retail is detailed, and execution without management is just guesswork. So our KPI data-driven approach provides visibility that keeps teams aligned and drives continuous improvement, which is the cornerstone of our execution strategy. In 2025, we also executed a strategic expansion and modernization program that positions us well for accelerated store growth. Our stores are embedded in communities where we built trust over the many, many years. The combination of the convenient proximity and strong word of mouth recommendations creates powerful and sustainable traffic drivers. We opened three new locations and remodeled 62 stores in 2025, bringing approximately 30% of our fleet to an updated format. These refresh stores inspire our teams, elevate brand perception, and signal our commitment to investing in local neighborhoods. Our late fall openings in Jacksonville, Florida, Columbia, South Carolina, and Bainbridge, Georgia exemplified our pilot market backfill approach, strategically opening new stores while simultaneously remodeling existing locations to capture greater market share. We remodeled nine additional stores across these markets, five in Columbia and four in Jacksonville, and amplified our presence through local marketing initiatives, including branded city bus wraps. After a full holiday season, these new locations have performed well above our expectations, validating that our David-driven site selection methodology and giving us confidence to scale and accelerate our store growth. Before I turn the call over to Heather for a little bit more information on 2025, I do want to take a moment to recognize the CityTrains team. You know, a turnaround of this nature is just hard work. There's a lot of speed and a lot of dedication that's required here. So I'm really proud of our team to a person that's highly engaged, very focused on our customer, and focused on building a better and more profitable company. I simply want to say thank you to everybody for all the long hours. the consistent energy, the unwavering dedication, and the commitment to continuous improvement. I'll now turn the call over to Heather to review Q4 F25 business results in more detail, and then I'll return to talk more about 2026 outlook. Heather?