7. Commitments and Contingencies

The Company is, from time to time, involved in legal proceedings arising in the ordinary course of business, including claims by customers, employees, or former employees and matters relating to real estate and contractual disputes. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves.

In connection with the January 2023 cyber disruption previously disclosed in the Company’s Form 8-K filed on February 23, 2023, four putative class action lawsuits were filed against the Company in the United States District Court for the Southern District of Georgia (the “Court”). These matters, Matousek et al v. Citi Trends, Inc.; Sienna Thomas v. Citi Trends, Inc.; Yeimy Sambrano v. Citi Trends, Inc.; Sabrina Green-Fogg v. Citi Trends, Inc. were filed in the second half of 2023, and consolidated into one case by the Court on November 8, 2023. The plaintiffs allege harm in connection with the January 2023 cyber disruption and assert a variety of claims seeking unspecified monetary damages and other related relief. A consolidated class action complaint was filed on February 15, 2024, adding an additional plaintiff, Shykira Scott. The Company has successfully settled these class actions without any admission of liability. In addition, the Attorneys General of Alabama, Connecticut, Indiana and Texas sent inquiry letters to the Company regarding the January 2023 cyber disruption, which the Company has answered.

These class actions were resolved in fiscal 2025. The Company is unable to predict whether it may be subject to other lawsuits, claims or inquiries.

While legal proceedings are subject to inherent uncertainties and the outcomes cannot be predicted. Based on currently available information, the Company does not believe that the resolution of any pending or threatened legal matters is reasonably likely to have a material adverse effect on its financial condition, results of operations, or liquidity. However, it is possible that future developments could result in losses that are material in a particular period.

The Company is also party to purchase obligations for open merchandise orders of $161.7 million that is due within 12 months.