Shares of Citi Trends Inc. rose on Thursday, after the apparel maker said fourth-quarter profit beat expectations and it offered a strong 2008 forecast.
The company forecast a profit of $1.10 to $1.15 per share, while analysts polled by Thomson Financial predict a profit of $1 per share. Citi Trends said fourth-quarter net income fell 19 percent to $8.4 million, or 59 cents per share, as it increased markdowns to clear inventory. Analysts expected a smaller profit of 44 cents per share.
Shares rose $3.68, or 24 percent, to $19.03.
Wachovia Capital Markets analyst Lyn Rhoads Walther said the company has made a number of changes to help profit, including paring down inventory, installing surveillance cameras to reduce theft and more closely aligning payroll hours with sales.
"Citi Trends appears to be at an inflection point as sales trends are improving thus far in the first quarter, but it is still very early and sales remain choppy (and highly correlated with weather patterns)," Rhoads Walther wrote. "While we are encouraged by the changes management has implemented, we would like to see some stabilization to the business before becoming aggressive with the shares."
She kept her "Market Perform" rating on the stock.
Oppenheimer & Co. analyst Roxanne Meyer said in a note to investors that fourth-quarter results were helped by a lower tax rate and other one-time items.
"We continue to look for fundamentals to stabilize and remain concerned about the impact of inflationary cost pressures (i.e. food) on the low income customer," Meyer wrote. She rates the company "Perform."
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