CATO REPORTS 1Q EARNINGS

CHARLOTTE, N.C., May 19, 2022 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $9.7 million or $0.46 per diluted share for the first quarter ended April 30, 2022, compared to net income of $20.7 million or $0.92 per diluted share for the first quarter ended May 1, 2021. 

Sales for the first quarter ended April 30, 2022 were $204.9 million, or a decrease of 3% from sales of $211.2 million for the first quarter ended May 1, 2021.  The Company's same-store sales for the quarter decreased 2% compared to 2021.

"Our first quarter sales were negatively impacted by cooler weather," said John Cato, Chairman, President and Chief Executive Officer. "As anticipated, we continued to experience late merchandise shipments, a result of the supply chain disruption and overseas COVID restrictions, coupled with the pressure of inflation on consumers' discretionary income and intermittent store closings due to the effects of the tight labor market."

First-quarter gross margin decreased from 41.5% to 35.5% of sales in 2022 due to lower merchandise margins.  Selling, General and Administrative expenses as a percent of sales decreased from 29.9% to 29.5% of sales during the quarter primarily due to decreased incentive compensation expense, partially offset by increased payroll, reflecting more normalized operations, compared to the prior year.  Income tax expense for the quarter was $1.9 million compared to $3.1 million last year. 

"The effects of continued late merchandise shipments, inflation-related increases to our costs and increased pressure on our customers' discretionary income are expected to remain challenging throughout the year," stated Mr. Cato.  "As we move forward, following two years of unpredictable business cycles, we are cautious about the remainder of the year in the face of these ongoing uncertainties."

During the first quarter ended April 30, 2022, the Company opened 4 stores and relocated 1 store.  As of April 30, 2022, the Company operated 1,315 stores in 32 states, compared to 1,325 stores in 32 states as of May 1, 2021. 

The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating three concepts, "Cato," "Versona" and "It's Fashion."  The Company's Cato stores offer exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day.  The Company also offers exclusive merchandise found in its Cato stores at www.catofashions.com.  Versona is a unique fashion destination offering apparel and accessories including jewelry, handbags and shoes at exceptional prices every day.  Select Versona merchandise can also be found at www.shopversona.com.  It's Fashion offers fashion with a focus on the latest trendy styles for the entire family at low prices every day.

Statements in this press release that express a belief, expectation or intention, as well as those that are not a historical fact, including, without limitation, statements regarding the Company's expected or estimated operational financial results, activities or opportunities, and potential impacts and effects of the coronavirus are considered "forward-looking" within the meaning of The Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on current expectations that are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements.  Such factors include, but are not limited to, any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, prevailing social, economic, political and public health conditions and uncertainties, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of credit; changes in laws or regulations affecting our business including but not limited to tariffs; uncertainties regarding the impact of any governmental action regarding, or responses to, the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; our ability to successfully implement our new store development strategy to increase new store openings and the ability of any such new stores to grow and perform as expected; adverse weather, public health threats (including the global coronavirus (COVID-19) outbreak) or similar conditions that may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess inventory at anticipated margins; and other factors discussed under "Risk Factors" in Part I, Item 1A  of the Company's most recently filed annual report on Form 10-K and in other reports the Company files with or furnishes to the SEC from time to time.  The Company does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized. The Company is not responsible for any changes made to this press release by wire or Internet services

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SOURCE The Cato Corporation

Charles D. Knight, Executive Vice President, Chief Financial Officer, InvestorRelations@catocorp.com