Greetings, and welcome to the Citi Trends Q2 2021 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 the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Tuesday, March 15th, 2022. I would now like to turn the conference over to Nitza McKee, Senior Associate. Please go ahead.
Thank you, and good morning, everyone. Thank you for joining us on Citi Trends' fourth quarter 2021 earnings call. On our call today is Chief Executive Officer David Makuen, Chief Financial Officer Pamela Edwards, 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.cititrends.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 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 Makuen. David.
Thank you, Nitza. Good morning, everyone, and thanks for joining us today for our fourth quarter and fiscal 2021 earnings call. This morning, I will begin by reviewing the continued transformation of our business and highlight our financial and operational results for the fourth quarter in fiscal 2021 before updating you on our progress related to the evolution of our Citi Master Plan and efforts in support of our strategic growth priorities. Then, Pamela Edwards, our CFO, will elaborate on our financial results and a few other items related to our outlook. Fiscal 2021 was a productive year for Citi Trends, with meaningful progress against our transformation strategies as we remained focused on our underlying goals of expanding the Citi Trends brand to many more underserved African American and Latinx communities.
We achieved strong 2021 financial results reflective of our highly differentiated specialty value store experience and continued discipline and focus on the execution of our strategic priorities. For the year, we grew our top line 26.8%, comparable stores +22%, and increased our earnings per share by nearly 400%. All of these data points are compared to 2019. Highlights of our accomplishments for the year are, we launched and market tested our revolutionized CTx new store format. We opened 27 new stores and remodeled 25 during the year. We navigated and managed this challenging supply chain backdrop while maintaining healthy in stocks and a high level of inventory freshness. We successfully managed store and distribution labor headwinds with prudent leadership and effective staffing solutions.
We kicked off investments in infrastructure that include system enhancements for our buy team and capacity upgrades for our move team. We strengthened our diversity in leadership with two new additions to our board of directors, and we returned value to shareholders through our share repurchase program. Finally, and something that I'm probably most excited about, is we launched Citi Life , which encapsulates our brand, purpose, and values and represents the emotional connection that our customers and associates have with Citi Trends. Our purpose and true north is life is best when you live bold, live proud, respect all. Dedicated to our neighborhoods, Citi Trends welcomes you like a friend and helps you show up for whatever comes your way, empowering you to bring opportunities to life. We make it fresh and fun for the entire family at prices that don't break the bank.
I'm delighted to begin our journey as a purpose-led brand, and I am so proud of our buy, move, sell, and support teams that executed at such a high level in 2021 in the face of what remained a dynamic operating environment. With our current transformation still in the early innings, it is clear that we are really driving positive change across the business. In addition, we feel really good about the underlying health of our business. After a soft January, stemming largely from a decline in traffic felt across retail, attributed to the sharp spike in COVID-19 cases from the Omicron variant, February and early March recovered nicely, fueled by compelling product content and a continuously improving store experience across our fleet.
Our conversion remains high and the average customer spend per visit continues at levels on par with 2021 and well above 2019. As 2022 unfolds, this team is operating like a 75-year-old startup with a modern and agile approach to executing the plan and along the way, becoming excellent operators. This means we are continuing exactly what I have consistently shared with you during every quarter, following the plan in accordance with four strategic priorities. Number one, growing our fleet and expanding our customer base. Number two, optimizing our product mix. Number three, reinvesting in our infrastructure. And number four, making a difference within the communities we serve. I'll take a few moments and share some high-level updates. First, growing our fleet and expanding our customer base is well underway.
The rollout of our new CTx store format is happening as we speak, with eight comp remodel stores going live this week. We expect to open approximately 14 new CTx format stores during the first half of the year and approximately 35 remodels during the first half. Why is this important? Well, it's a major driver of attracting a diverse, multicultural customer by offering an upgraded experience that brings our purpose to life while improving conversion. To quote a portion of our new purpose, "We welcome you like a friend to help you show up for whatever comes your way." Customers really do depend on us and appreciate a better experience. One that, quote, "Gets me, feels welcoming, and respects me for who I am." After all, 70% of our stores represent the primary neighborhood destination for apparel, non-apparel, and home needs for our customers.
As we've always stated, we intend to be the brightest retail light in our strip center, positively affecting so many families on our journey to grow from 600 to 1,000 stores, combined with at least 150 remodels in the next three years. Our second area of focus, optimizing our product mix, is contributing directly to our 2022 plan and long-term growth. The managers of our product categories are diligently developing and expanding curated assortments at values that don't break the bank. Examples include offering Missy sizing for the first time in a decade, building an expanded assortment of dresses after years of slow growth, developing new style choices for our expanding multicultural customer base in our melting pot markets, and so much more.
Lastly, we are in the process of completing an upgrade of our buying, planning, and allocation systems, something we haven't done in a decade. With rich analytics and easy-to-use tools, this system will really advance our capabilities to target specific products to specific store clusters and customers. We can't wait. Our third area of focus, investing in infrastructure, will play an important role in the scaling of our operations and brand. We are taking this more seriously than ever. To this point, I am happy to announce that after many years of consideration, today we announce that we will begin to monetize our owned distribution centers by completing a sale-leaseback for one of our facilities with an option on the second pending additional diligence. More to come from Pam, but the proceeds generated will provide for additional liquidity as part of our ongoing capital allocation decisions, including share repurchases.
We are also on the way to completing upgrades to both of our distribution facilities that will improve the speed of moving goods to stores and increase overall labor productivity. Lastly, making a difference, it's how we bring opportunities to life within our neighborhoods. An example of our commitment is our celebration of Black History Month, which was punctuated by our second annual Black History Program, during which we received applications for a chance to receive one of 10 grants designated for Black entrepreneurs. This year's program garnered over 15,000 applicants, double the amount from last year. Just amazing. I cannot wait to reward the recipients and hear about their businesses.
Looking forward, we recognize that it is difficult to predict the first quarter and the full year of 2022, as we are up against last year's largest government stimulus in March and the lifting of COVID-19 restrictions that led to a surge in consumer demand, particularly in the first quarter of fiscal 2021. Keep in mind that during Q1 2021, we posted our best quarter of a very strong year with a positive 35% comparable store sales increase versus Q1 2019. It's also important to note that the country is currently experiencing unprecedented inflationary pressures that are especially impactful to our core customers and neighborhoods they live in.
Recognizing that these macro factors will create unknowns and uncertainties regarding consumer demand, we are issuing revised guidance that we believe best reflects the tough lap of Q1 2021, combined with an anticipated material acceleration in sales in the second through fourth quarters of the year, driven by our remodel program, the addition of 35 new stores, and the launch of expanded and new product assortments that will engage customers and drive comp store conversion. With that, I'll turn the call over to Pam to discuss our fourth quarter and full year results, as well as a few details around our outlook. Pam?
Thanks, David, and good morning, everyone. In fiscal 2021, we delivered exceptional financial results with both top and bottom-line growth while making meaningful operational progress in all of our core areas of buy, move, sell, and support. In addition, while we certainly saw a benefit from the extraordinary federal stimulus, particularly in the first quarter, we also saw underlying strength from the transformation initiatives we have put in place. While in the early innings, these initiatives are changing how we operate this business. Specifically, we have made significant improvements in our merchandise, our inventory management, our expense management, and the efficiency in which we run the operations of this business. Similar to our second and third quarter calls, before turning to our results, I want to first address the top-of-mind topic, which is supply chain.
We continue to successfully navigate the supply-side environment, which, as you know, remains fluid. We have strategically leveraged opportunistic inventory buys from last season, and we have more effectively procured in-season goods in response to customer demand. As a result, we feel good about the quality and the quantity of our inventory heading into fiscal 2022 to help us remain agile in light of the macro volatility. In addition, while transportation costs are elevated, we have continued to work diligently through what we can control by streamlining and increasing the efficiency of our internal operations and processes. This allowed us in Q4 to manage the impact of disruption to approximately 110 basis points versus 2019. We will continue to monitor this closely as the current environment is expected to persist through at least the remainder of 2022.
Now, let's turn to the specifics of our Q4 financial results. As mentioned in our earnings press release, we are reporting operating results for Q4 2021 relative to Q4 2019 to provide a more normalized comparison of performance due to the uniquely challenging operating environment in Q4 of 2020. Total sales of $241 million in the fourth quarter grew by 14.2% compared to Q4 of 2019. In terms of the cadence of the quarter, as announced in January at the ICR conference, we set a strong nine-week holiday sales result that included a comparable store sales increase of 14.8% when compared to 2019. However, following the strong holiday selling period, we experienced a decline in traffic attributed to the sharp spike in COVID-19 cases from the Omicron variant.
Our sales softened, our conversion, basket, and units per transaction held up thanks to the strength of our assortment and our store experience. Specifically, growth in the quarter versus 2019 was driven by an increase in the average basket size, the results of growth in both units, retail selling price, and higher units per transaction. We achieved gross margin in the quarter of 40.4%, an increase of 70 basis points compared to 39.7% in the fourth quarter of 2019. A solid increase in our quarterly gross margin rate was primarily the result of strong full price selling and fewer markdowns, offset partially by increased freight expense.
SG&A deleveraged 140 basis points versus 2019 to 33.2%, primarily due to increased performance-based compensation related to our outsized performance, increased insurance premiums, and increased professional fees in support of marginality investments in cloud subscriptions. Operating income, $12.6 million, grew by $1.3 million versus Q4 of 2019. Net income of $9.8 million compared to $9.4 million in Q4 of 2019. Earnings per diluted share of $1.16 increased by 38% compared to $0.84 in Q4 of 2019. Turning to a review of our strong fiscal 2021 results, which are also being compared to the full year fiscal 2019. Total sales for the year were $991.6 million, an increase of 26.8% compared to fiscal 2019.
We delivered very strong comparable sales for the year of 22% versus 2019. Gross margin was 41.1%, an increase of 310 basis points over fiscal 2019. Operating income, $79.5 million compared to $18.5 million in 2019. Operating margin expanded to 8% compared to 2.4% in 2019. Earnings per diluted share of $6.91 grew 390% compared to $1.41 in the same period of 2019. Turning to our balance sheet. Full year-end inventory decreased 10% versus year-end of 2019. Inventory increased versus year-end 2020 by 19%, largely a factor of the depleted inventory levels experienced at the end of Q4 last year, aligned with the opportunistic reserve inventory buys made during the fourth quarter.
We continue to experience record churn as our inventory management has improved markedly year-on-year, giving us agility and resulting in a record level of product freshness. The company repurchased approximately 95,000 shares of its common stock at an aggregate cost of approximately $8.1 million in the fourth quarter. In total, for the year, we repurchased close to 1.4 million shares at an aggregate cost of $115 million. We ended the year with approximately $30 million remaining on the existing buyback authorization. Lastly, today, we announced in our earnings release that the company has undergone an extensive review of its owned real estate. As a result, we have entered into an agreement to execute a sale-leaseback for our Darlington, South Carolina distribution center for a purchase price of approximately $45 million, subject to due diligence and other customary closing conditions.
In addition, we also retained an option to enter into a similar agreement for our Roland, Oklahoma distribution center for a purchase price of approximately $35 million, pending the results of a network optimization study. It's the company's intent to use net proceeds from these transactions to provide additional liquidity, including share repurchase, as determined by our board. In connection with the sale leaseback transactions, the company's board announced the authorization of an additional $30 million for share repurchases, bringing our total authorization outstanding to $60 million. As it relates to our outlook, we remain confident in the underlying health of the business as we are seeing our transformation initiatives take hold. However, as mentioned in our press release, we are up against last year's extraordinary government stimulus, particularly in the first quarter of 2021, as well as current unprecedented inflation.
Specifically, inflation is the highest it's been in 40 years, with soaring food prices, historically high gasoline prices, and significant rent increases. These macro factors disproportionately impact our core customer. As a result, we are providing updated guidance, which excludes the impact from the aforementioned sale leaseback events and to-be-determined share repurchases. First, we are planning for a first quarter total sales decrease of 25%-30% compared to the significant increase of 39% Q1 of last year versus 2019. This translates to an expected first quarter EPS of approximately $0.15-$0.40. Combined second through fourth quarter total sales are expected to increase low- to mid-single-digit on top of the 22% increase in the same period in 2021 versus 2019. At the midpoint, this represents a 25% increase versus 2019.
EPS for the second through the fourth quarter combined is expected to be $3.90-$4.20. That brings our fiscal 2022 EPS expectation to $4.05-$4.60 compared to $1.41 in 2019. In summary, we're pleased with our 2021 financial and operational performance. While we are currently operating under many uncertainties and unknowns, we're confident in the strategies and the initiatives we have put in place, and we're so proud of the excellent execution by the entire Citi Trends team, who remain agile and nimble amidst a dynamic backdrop. With that, I'll turn the call back to David for closing comments. David.
Thanks, Pam. As you can hear from today's call, the Citi Master Plan is really getting traction. With change maker initiatives in flight, we will not only excite our customers, but also importantly, evolve our diverse organization to be excellent operators. Turning our attention to our longer term opportunities, I can assure you that our three-year growth plan and assumptions are fully intact. In 2023 and 2024, we are confident that the business will generate low single-digit annual comp growth and double-digit operating income and EPS growth. Once again, we are very proud of our team's execution in 2021 and very pleased with the results for the year. We're entering 2022 in a strong position, and we are confident in our ability to continue to execute against our transformation strategy.
We look forward to building on our progress and capitalizing on the opportunity we see for our brand. This year and beyond. Before I close, I would like to acknowledge the announcement made on February second that Pam Edwards has decided to retire and leave the company on April first. I wanna thank Pam for her commitment and dedication to Citi Trends over the past 15 months. She has built a strong, capable finance organization and helped drive our retail transformation. We wish Pam all the best in her future endeavors, and we're knee-deep in a search for Pam's replacement. In closing, I wanna reiterate my gratitude to the entire Citi Trends team for their hard work and dedication to our brand purpose and mission of driving long-term profitable growth while continuing to make a difference in the communities we serve. We appreciate your interest in our exciting growth story.
Join us to bring our purpose to life, live bold, live proud, and respect all. With that, Malika, we're ready to take questions.
Thank you. Ladies and gentlemen on the phone lines, if you would like to register for a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Once again, ladies and gentlemen on the phone lines, you can press one four on your telephone. Our first question is from the line of Jeremy Hamblin with Craig-Hallum. Please go ahead. Your line is open.
Thank you. I wanted to start by getting in a little bit more details around the Q1 guidance. In terms of the same-store sales figure that's embedded within that, you know, I don't know if you're kind of looking at a, you know, kinda down 30% type of figure. I wanted to see if you could clarify that as well as the share count that's implied in that Q1 EPS guidance range. Then, you know, we also note that in Q4, your gross margins came in significantly better than, you know, what you had guided to and where the street was and was up about 70 basis points versus 2019. I wanted to get an understanding of, you know, what was in implied in your Q1 guide on, from a gross margin perspective and your outlook for 2022 as a whole. Thanks.
Hey, Jeremy. Thanks for joining. Great questions. I'll take a kind of 50% crack at things, and then I'll turn it over to Pam. You know, from a high level guidance standpoint on the top and comp line, you're right in the zone. You know, we guided -25% to 30% for Q1 on a total sales basis, and that equates to roughly a 28%-33% range for comp store sales. You're right there. Then I'll turn it over to Pam to highlight our share count and a little bit of knowledge and background around the better margin for Q4. Pam?
Yes. For the share count, we ended the year at roughly 8.6 million shares outstanding. As we mentioned, we repurchased shares at the beginning of the quarter. For the Q4 perspective, I mean, we stick to our high 30s-low 40s% guidance for our overall gross profit and margin. Really, that came through being able to manage the freight expenses to that low end of the range that we've given out before, around that 110 basis points result. We also had fewer markdowns than what we expected in the quarter. That also helped drive the gross profit better as well.
You know, really as we started to see the quarter evolve, and you know, come out a little bit lighter than expected starting December week five and through the beginning of the January and started to lap up against the first stimulus from last year, we just started managing the business. We were nimble with our inventory management. Whatever expenses we could manage at that point in time we did, and just managed the business accordingly to account for what we were seeing in the market. Just really maintaining agility across the entire business in light of the slowdown that we saw again in that last month of the quarter.
As a follow-up to that point, it looks like your inventories are down about 11% versus 2019 levels to end the year. Do you feel like you know, obviously, your customer base is really being impacted by inflationary pressures and just the rapid spikes that we've seen in you know, whether it's utilities or gas prices or food prices. Do you feel like you know, you've managed your inventories you know, to the point here for the next couple of quarters that you can maintain that lower markdown certainly versus where you were a couple of years ago in 2019? Is that a fair assumption?
That's a good assumption, Jeremy. Let me give a little context. As you know and a lot of the group knows, we started getting really good at inventory management coming out of the opening in summer of 2020. As I think you might remember one of my quotes, we're never gonna look back. The team has really pressed hard on how to best manage inventory in good times and tough times. Pam mentioned that word agility.
We're getting better and better at buying when it comes to making sure that we're reading the tea leaves and that we have enough dry powder and are open to buy, and that we can, you know, work the best we can with our vendors to move things around and occasionally cancel things and yet still look for opportunities and so on. So it's a multi-variable game, if you will, in terms of how we manage all that. We're really pleased with how it's going and, you know, it's our job to give the customer what they want, but not get over our skis and manage down markdowns and make sure that when it's out of the box and looking good that we sell through it and bring in the next trend.
The last point I'd make is this idea of the life cycle of trend management is just getting better and better. I talked about this when I joined the company. I talked about it in 2021, and I'll tell you about it today. Getting better and better. Our merchandisers are truly becoming masters of trend management, and that helps mitigate perhaps falling into any rabbit holes when it comes to too much inventory. We're excited about what the numbers are telling us, and we'll maintain our normal MO, which is gross margin of high 30s%-low 40s% as we look forward here.
The only thing I-
Great.
Jeremy, just the only thing I would add to that, just from a quarterly cadence standpoint, we do expect that Q1 will be our most difficult comparison from a margin perspective. You know, of that, we're planning high 30s% for the first quarter with a sequential improvement in the rate from Q2 to Q4. Again, that's largely a result of last year. We also had prior year strength favorability in our Q1 number that we're not seeing this year. Then, also, you know, just additional markdowns versus last year.
Great. Last one for me is just the change in the unit development for the year, 35 store openings versus 45 in your prior guidance, seems like a prudent change, given the way the environment has changed. Wanted to understand the cadence of the openings, expected for the year, you know, whether or not, you know, how many are you thinking about in Q1, you know, first half versus back half. As a follow on to that, you know, how are your CTx stores, and I know you only have a handful, but how are those stores performing, versus the rest of the chain? Thanks so much.
Thanks for your questions, Jeremy. Yeah, the 45 to 35, appreciate your point. We think it is prudent. It's just a little breather this year as we get everything in order in terms of rolling out our CTx store format that required a lot of heavy lifting and importing of fixtures from China. The good news is it came in right on time, which is an amazing call out to our real estate and construction team. Kudos to those guys. We just thought, you know what? Back off a few. We'll catch up in 2023 and 2024. That's not an issue. Most importantly, if I can go through the quick cadence, we went from saying in November of last year, 40 remodels in 2022, to January 45, to now 50.
We actually put a little more emphasis, I wanted to make sure you didn't lose that factoid, into the remodel program, which I'll end with your question about how they're doing. It's too early to report on the CTx that are going live as we speak, but I can tell you the ones that we went live with last year continue to outperform the chain at a healthy margin. We're excited about it. It is really representing, you know, a revolution in our experience, and I hope you and others can get into some of these because they're gonna start popping around the country pretty quick here. Thanks for your questions today, Jeremy.
Thanks so much. Best wishes.
Thank you. Our next question is from the line of Dana Telsey with Telsey Advisory Group. Please go ahead. Your line is open.
Good morning, everyone. Pam, best of luck on your retirement. In terms of inflation and stimulus, two obvious macro topics of current events, as you think about stimulus, David, you had called out stimulus each quarter of last year and what the impact was. Anything to remind us of as we go forward this year in the upcoming quarters of how you're thinking of the framework of it and the impact given that you're looking for low- to mid-single-digit sales gains Q2 through Q4? Anything we should be mindful of? Then next, just on inflation, what are you seeing in your average price increase? How is that helping to offset wage increases, and does it differ by category and how pricing is occurring?
Hi, Dana. Thanks for your questions. I'll take the first one, and Pam can elaborate on the second one. You know, from an overall stimulus impact across the year, we look at it almost like a curve. Let me describe it more as a ski hill. It starts pretty high in March, even into a little bit of April, meaning the impact of that March drop. It really drops pretty quick on that slope. We look at the impact of CTC or Child Tax Credit that started dropping in July through December. Really the lion's share is what you're hearing reflected in our Q1 guidance. It gets, I won't say easier, but it gets a lot lower in Q2 through Q4.
Importantly, I wanna make sure that you hear this point. Many of our initiatives to impact 2022 begin to go live in Q2. We've got a couple cooking in Q1, but they really start to pump in Q2 and forward. For example, that's when our Missy assortment starts to take hold. That's when our multicultural assortment to capture, for example, more Latinx market share starts to pop into stores. That's when we start to work and show up with a better dress assortment, which is a significant volume opportunity. Most importantly, our remodels start kicking in. You know, we're gonna do almost half, if not more of the 50 remodels by the end of Q2. They provide some really nice comp benefit for the rest of the year.
Obviously on the total top line, building our new stores will start to kick in, and we think we'll build just shy of half of those by the end of Q2 as well. Lots of moving good parts coming for the Citi Trends business. Pam, do you wanna comment on our pricing?
Sure. As we previously shared, our AUR has been steadily increasing due to improvements in quality, trend, curation of assortment, and also the lower markdowns due to our tighter inventory management. We just continue to monitor it closely and look at it very surgically up from our business perspective by category to make sure that we're measuring elasticity as well as providing that right value equation for our customers. While we are seeing, you know, a higher AUR out the door price, some of that is due to lower markdowns than what we've seen historically. It's also due to where we have, you know, inched up the quality and the value in the assortment to match a higher price level that our customer can manage.
Got it. Then on the supply chain side, the 110 basis point impact in the fourth quarter, does that hold similar throughout the rest of the year, or is there differences in the upcoming quarters that you're looking at?
We're pretty much holding. Gosh, Dana, there's so much uncertainty with transportation costs right now and, you know, the rising fuel costs. As David mentioned, we do have some initiatives that will start to take hold in the back half of this year as it relates to our supply chain, you know. At this point, given the level of uncertainty, we're pretty much holding at that, you know, 110-120 basis points versus 2019 as the increase, at least until we get out of 2022 and can see some stability, hopefully.
Got it. Just lastly, David, you had mentioned dresses. I think you had been also looking at other categories like the big boy sizing, the Missy sizing or junior tops or branded collaborations. What are you thinking about product wise as we move through 2022 to drive excitement for your core customer?
Great question, Dana, and great memory. All those things that you cited are also on the list. In terms of how we look at our customer and frankly, the improving and changing landscape to how they're going out, how they're returning to the office in some cases, how they're coming out of this without a mask and being more social and more free and so on, we think those are all really great tailwinds for the Citi Trends business. I also think we have an opportunity to open up some new windows. You know, we have this incredible strength with our loyal and deep customer connections on the casual side of life.
What we haven't done as much in certainly the last two years, but even the last three to five, is dabble and enter into the more sort of, I'll call it, you know, dress casual and opportunities to kinda have those day to evening looks. We'll still do it in a Citi Trends way. It'll still be full of trend, and it will still represent living bold and living proud in the ways you present yourself. It's a belief, and I strongly support this from Lisa, our head of product allocation planning. She sees this happening and we're testing the waters with a number of initiatives right now, and many of them are flying off the shelves and off the hangers. We're encouraged by the change in consumer landscape in terms of their apparel needs.
On the non-apparel front, our business remains stronger than ever. As you may remember, a lot of our addition of categories or expansion of categories was on the non-apparel side. I can tell you that our Q-line initiative is expanding into more stores and keep things growing by leaps and bounds. We're working on really interesting stuff like, you know, jewelry for the plus-size woman with a bigger footprint, if you will, on her neck or ear. That's blowing out. I mean, there are just so many things under the covers at Citi Trends that we're excited about and we believe, to your point, will engage the customer and last but not least, generate strong performance with higher store conversion and higher basket.
Thank you.
Thank you. Have a great day.
You too.
Thank you. Our next question is from the line of Chuck Grom with Gordon Haskett. Please go ahead. Your line is open.
Hey, thanks. Good morning. You know, you guys have called out that conversion and basket have stayed relatively the same. I guess I'm curious what you're seeing from a footfall or traffic perspective over the past, say, 100 days, really since the middle of December.
Hey, Chuck, good question. Yeah, you're right. We're encouraged about our conversion levels and our basket levels driven by healthy increases in both our AUR selling price as well as our units per transaction. If I kinda pull back and answer your question from, you know, Q4, you know, holiday to now, you know, it's definitely seesawed. You know, I think we typically end really strong with our December because our customer tends to shop more last minute. We ended the kinda December week three and four, you know, holding really nicely against 2019. Still not positive against 2019, but better than we had seen throughout the year prior. Then, as we know, January got socked in by people being socked in from the COVID-19 Omicron variant.
We saw a pretty big deceleration in our traffic. However, as I reported back then, what we didn't see was any decay in conversion or basket. It was just amazing to see. What that tells us is our content's really strong, and the stories that we're presenting to our customers are strong. As we entered early February, as we also suggested would happen, we saw a pretty nice recovery, meaning our traffic levels started to recover and our basket and conversion stayed true and high. You know, we're still not above 2019. We've had some you know, seesawing weeks based on the cadence of tax refunds and such. You know, overall, we're pleased with the progression that we're seeing in the business. We have that planned to get, as soon as we lap Q1, to get better and better between Q2 and Q4.
Okay, 'cause, you know, January was down, I think, around 32%, and it looks like you're guiding the first quarter to be down about 30%. I'm just trying to understand the degree of conservatism in the guide or if you are trending kind of in this down 30% so far quarter to date. Is there any way you can shake that out for us?
I think I can give a little high level. I think what you're hearing is mainly the March into a little bit of April downturn that'll kind of, you know, if you will, quell some of the increases or improvements we've seen in February and March to date. As a reminder, the stimulus really started hitting last weekend, and it hit last year this week and the following week. What I said is true. We've seen some recovery in February and early March. We'll give some of that back when we lap the stimulus. That's the color I can provide today. I hope that helps.
Yeah. Okay. Then one for Pam. Just, you know, last year in 2021, EBITDA ratio was over 10%, which is I think consistent with the long-term guide that you guys provided earlier in January. It looks like your EBITDA guide for this year is around, you know, call it in the low 7% range. Just wondering, you know, when you think about over the next several years, how long do you think it's gonna take for you guys to get back to the level that you were able to produce in 2021?
Yeah, great question, Chuck. I, you know, do believe that, you know, the underlying conditions of the business, once we get past stimulus and this lapping that we're doing now and some of this inflation, we're gonna start to see the business get back on track to where we projected in our long range goals, and we can see a double-digit EBITDA by 2024. You know, again, I think we believe that this is, you know, temporary from what we're seeing and all stimulus related and feel that's still a good measurement of our transformation.
Okay. My last question is, you know, if you think about the $80 million in potential proceeds from the monetization on the DCs, I guess has the board done any consideration to get more aggressive on buybacks? You know, if your guidance holds and you could do north of $5 in earnings per share in 2023, and your stock's really cheap here, and you know, the time to execute that buyback may be now. I'm just wondering, you know, what the consideration, I guess, would be with those proceeds.
Yeah, I mean, it's an ongoing and active conversation and certainly share repurchase remains an important part or important pillar of our capital allocation strategy. The board owns this and is actively looking at that as part of the considerations for the proceeds of the sale leaseback.
Okay. Congrats again, Pam.
Thanks. Thank you.
Thank you. Our next question is from the line of John Lawrence with Benchmark. Please go ahead, your line is open.
Great. Thanks. First of all, congrats, Pam. Thanks for all the help.
Thank you.
Secondly, David, would you talk a little bit about you talked about some of these investments in the systems and you've talked about those for several quarters. Could you go a little deeper and talk about what you really expect to achieve on the merchandising side with these investments and planning systems maybe that you know you realize you need to more efficiency there?
Hey, John. Sure, happy to do that. You're right, I've been previewing this new system, and what's exciting is it's now kinda right around. We've got many individuals on our teams across buy, move, and sell working hard on testing and developing what the ultimate solution will be come later in the summer. The benefits are vast, truly. This represents really the backbone of how our buy team both places POs all the way through to how they plan and allocate based on the types of stores, the climate of the store, the location of the store, the store, whether it's an African American primary store or an African American or Latinx store, and so forth. If you pull the lens back a bit, it really says to you, "Gosh, this brand has been operating at a pretty high level without this system," which is a testament unto itself.
With this new system, we're gonna give these guys kind of a race, you know, race car to be able to go and chase opportunities, spend less time in a manual system, more time in a system that will provide the right KPIs, the right dashboards, and the right tool set to go in and say, "Hey, I wanna allocate this particular product to these 72 stores because I know that's the right thing to do, and that's how I'll probably maximize sales through markdowns, and most importantly, make the customer happy." So the age-old, "I need more shorts in Florida," which happens almost every year, will largely go away because we'll have the smarts and the analytics to say, "This is when shorts should arrive in Florida.
This is when shorts should peak in Florida, and this is when shorts should go away in Florida." All those conversations we tend to do very manually today and a little bit of crossed fingers, if you know what I mean. Glad you asked. This system enhancement is, it is a change maker for Citi Trends.
David, when would you expect to have that fully implemented and operating?
We are expecting to have that, in play late summer, early fall.
Okay.
I think it has an immediate impact for the rest of 2022, but really when it kicks in is for 2023 and 2024 as the teams get really good at using it.
Right. Can you tell me, digging into the new stores, I know you commented on the new format stores. Can you go into just a little bit of a deeper dive, all of those new presentations, the way Non-apparel was sort of is presented in those new stores that we've seen, can you give a sense of are they stronger than? Are they really leading the charge into those solid comps, that you've presented that merchandise in a different way?
Good question, I think you're referring to our really large change to the layout on our new CTx store format that we'll put into all of our 35 newbies this year and 50 remodels. I would tell you, John, that what pleasantly surprised us is that really all boats rose. We expected-
Okay.
The material or products, excuse me, that we moved to the center of the store to be off the charts. The truth is, most of the box is up. I mean, it's hard to find a business that's not up. It just really presented this whole new feelgood, well-lit, dynamic, easy-to-shop specialty store experience that, you know, we weren't upholding. We weren't respecting that vision in our legacy and older stores. Nobody's fault. It just wasn't something on the agenda for Citi Trends for so long, until me and the team got after it last fall of 2020 into launching in spring of 2021.
At the end of the day, we're loving what we're seeing, and I think I've highlighted a little bit in the past, what we're seeing in the lift out of these stores is what we call a proxy for conversion, meaning we're seeing transactions rise, coupled with, you know, some nice little gains in UPTs and in the basket. But most of the increase is coming from conversion, which tells us, you know, you might have come in and not been as engaged or as excited about the experience, and now you are.
Our goal and job is to just become really good operators in operating these stores, filling them up with the right stuff, using that new system when it comes live to get even better in these stores, and I think the performance will follow.
Thanks. Good luck.
Thanks, John. Take care.
Thank you. No further question. I'll turn it back over to David Makuen. Please go ahead.
Thanks, Malika. Thanks, everybody. I think we can conclude the call for today. Thanks for joining us. We look forward to seeing you next time. Have a great day and week and a great spring. Bye-bye.
Thanks, everyone. Bye. Thank you, ladies and gentlemen. That does conclude today's call. We thank you for your participation, and I'll ask that you please disconnect your lines. Have a good day.