Cato Reports 2Q EPS Flat To Last Year

CHARLOTTE, N.C., Aug. 20, 2015 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $15.6 million or $.56 per diluted share for the second quarter ended August 1, 2015, compared to net income of $15.7 million or $.56 per diluted share for the second quarter ended August 2, 2014.  Net income and earnings per diluted share were flat to the prior year.  Sales for the second quarter ended August 1, 2015 were $249.2 million, up 2% from sales of $243.8 million last year.  Second quarter same-store sales were flat to last year.

For the six months ended August 1, 2015, the Company earned net income of $46.7 million or $1.67 per diluted share, compared with net income of $45.7 million or $1.61 per diluted share for the six months ended August 2, 2014.  Net income increased 2% and earnings per diluted share increased 4%.  Sales for the first half were $530.8 million, up 1% to the prior year's first half sales of $526.2 million.  Same-store sales for the first half were down 2% from the prior year.

"Sales continue to be challenging in the current retail environment," said John Cato, Chairman, President, and Chief Executive Officer.  "We expect second half earnings per diluted share will be within our original guidance range of $.46 to $.55."

Second quarter gross margin was 38.0% compared to 39.0% last year due primarily to lower merchandise margins.  Second quarter SG&A costs as a percent of sales decreased to 26.9% from 28.0% last year primarily as a result of lower incentive compensation.  The effective tax rate for the quarter was 37.5% compared to 36.8% last year, primarily due to lower Work Opportunity Tax Credit (WOTC) credits this year.

Our guidance of earnings per diluted share for the second half is unchanged from our original guidance of $.46 to $.55.  By quarter, earnings per share are estimated to be in the range of $.12 to $.16 versus $.20 last year for the third quarter and $.35 to $.39 versus $.33 last year for the fourth quarter.  Comparable store sales for both the third and fourth quarters are estimated to be in the range of down 2% to flat.  Based on year-to-date results and this guidance for the second half, earnings per diluted share are expected to be within the range of $2.10 to $2.23 versus $2.15 last year, a decrease of 2% to an increase of 4%.

During the first half, the Company opened 14 new stores, relocated five stores and closed two stores.  The Company now expects to open 40 stores, down from the original plan of 45.  As of August 1, 2015, The Cato Corporation operated 1,358 stores in 32 states, compared to 1,328 stores in 32 states as of August 2, 2014.

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.  Additional information on The Cato Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company's expected or estimated financial results 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, the following: general economic conditions; competitive factors and pricing pressures; the Company's ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand 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

John R. Howe, Executive Vice President, Chief Financial Officer, 704-551-7315