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Citi Trends Inc. (NASDAQ:CTRN), a retail apparel and accessory company with a market capitalization of $165 million, has amended its credit agreement to extend the maturity date and adjust certain terms, as per a recent SEC filing. According to InvestingPro analysis, the company currently appears fairly valued and operates with a significant debt burden. The agreement, initially established in October 2011, has been modified through a Fourth Amendment, effective April 10, 2025.
The amendment extends the maturity of the credit facility by nearly five years, moving the date from August 15, 2026, to April 10, 2030. It also includes modifications to covenants and fees associated with the credit line. The facility maintains its $75 million limit with an additional $25 million uncommitted "accordion" feature, which could potentially expand the facility to $100 million under certain conditions. InvestingPro data reveals the company’s total debt stands at $220.4 million, with a concerning debt-to-equity ratio of 1.95.
Interest rates for borrowings under the new terms will be based on Term SOFR plus a margin of 1.5% to 2%, or for Base Rate Loans, a rate composed of the highest of the prime rate, Federal Funds Rate plus 0.5%, or Term SOFR plus 1.0%, with an additional margin of 1.5% to 2%.
The collateral securing the credit facility includes the company’s inventory and accounts receivable, excluding real estate, fixtures, and equipment. A single financial covenant, the fixed charge coverage ratio, is stipulated in the Fourth Amendment and is only tested under specific circumstances.
This strategic financial move provides Citi Trends with continued access to capital and financial flexibility for the coming years. The information reported is based on the company’s latest 8-K filing with the SEC.
In other recent news, Citi Trends reported a mixed performance for the fourth quarter of 2025. The company experienced a significant earnings per share (EPS) miss, reporting -1.71 against a forecast of 0.18, while revenue slightly exceeded expectations at $211.17 million. Despite the earnings shortfall, Citi Trends is projecting mid to high-single-digit growth in comparable store sales for the first quarter of 2025, attributed to increased customer traffic and larger basket sizes. Analyst firms DA Davidson and Craig-Hallum have maintained Buy ratings on Citi Trends, with price targets set at $29 and $32, respectively, reflecting a positive outlook despite recent challenges. Additionally, Citi Trends announced significant board changes, with CEO Ken Seipel taking on the role of Chairman, and the appointment of new directors as part of a strategic realignment with major shareholder Pleasant Lake Partners. The retailer is also focusing on strategic initiatives, including store remodels and inventory optimization, to enhance future performance. Citi Trends plans to open up to five new stores and remodel approximately 50 locations in 2025, signaling cautious expansion amid broader economic uncertainties. These developments indicate a strategic shift aimed at improving operational effectiveness and long-term growth for the company.
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