News Releases

View printer-friendly version << Back

Cato Reports 2Q EPS Loss Of $0.03

Aug 17, 2017

CHARLOTTE, N.C., Aug. 17, 2017 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported a net loss of $0.9 million or a loss of $0.03 per diluted share for the second quarter ended July 29, 2017, compared to net income of $15.9 million or $.57 per diluted share for the second quarter ended July 30, 2016.  Sales for the second quarter were $205.0 million, or a decrease of 13% from sales of $236.7 million for the second quarter ended July 30, 2016.   The Company's same-store sales for the quarter decreased 14% to last year.

"Negative sales trends continue to put severe pressure on merchandise margins and profitability as we continue to work through our merchandise missteps," stated John Cato, Chairman, President, and Chief Executive Officer.  "It is taking longer to work through these issues than expected and we expect full year earnings to be significantly below last year."

Gross margin decreased 590 basis points to 31.1% as a percent of sales primarily due to lower merchandise margins.  SG&A expenses as a percent of sales increased 280 basis points to 31.4% during the quarter primarily due to deleveraging of expenses due to large decreases in sales.  Income tax for the quarter was a benefit of $1.2 million compared to an expense of $2.1 million last year.  The Company ended the quarter with cash and short-term investments of $237.3 million.

During the second quarter, the Company opened two stores and relocated one store.  The Company now expects to open six new stores during 2017, down from our last estimate of 13 stores due to the economics of opening stores is not as feasible with current sales trends.  As of July 29, 2017, The Cato Corporation operated 1,374 stores in 33 states, compared to 1,373 stores in 33 states as of July 30, 2016. 

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 not historical in nature including, without limitation, statements regarding the Company's expected or estimated operational and 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: any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, home values, consumer net worth and the availability of credit; uncertainties regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; adverse weather 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.

 

THE CATO CORPORATION
















CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)












FOR THE PERIODS ENDED JULY 29, 2017 AND JULY 30, 2016













(Dollars in thousands, except per share data)
































Quarter Ended


Six Months Ended


















July 29,

%


July 30,

%


July 29,

%


July 30,

%


2017

Sales


2016

Sales


2017

Sales


2016

Sales

















REVENUES
















  Retail sales

$

205,026

100.0%


$

236,654

100.0%


$

442,681

100.0%


$

522,151

100.0%

  Other revenue (principally finance,
















    late fees and layaway charges)


1,935

0.9%



2,233

0.9%



4,021

0.9%



4,709

0.9%

















    Total revenues


206,961

100.9%



238,887

100.9%



446,702

100.9%



526,860

100.9%

















GROSS MARGIN (Memo)


63,768

31.1%



87,595

37.0%



155,640

35.2%



209,119

40.1%

















COSTS AND EXPENSES, NET
















  Cost of goods sold


141,258

68.9%



149,059

63.0%



287,041

64.8%



313,032

60.0%

  Selling, general and administrative


64,280

31.4%



67,555

28.6%



128,062

28.9%



138,626

26.6%

  Depreciation


4,882

2.4%



5,672

2.4%



9,942

2.3%



11,348

2.2%

  Interest and other income


(1,329)

-0.7%



(1,377)

-0.6%



(2,272)

-0.5%



(4,305)

-0.8%

















    Cost and expenses, net


209,091

102.0%



220,909

93.4%



422,773

95.5%



458,701

87.9%

































Income before income taxes


(2,130)

-1.0%



17,978

7.6%



23,929

5.4%



68,159

13.1%

















Income tax (benefit)/expense


(1,249)

-0.6%



2,091

0.9%



2,578

0.6%



16,398

3.1%

















Net (loss)/income

$

(881)

-0.4%


$

15,887

6.7%


$

21,351

4.8%


$

51,761

9.9%

































Basic earnings per share

$

(0.03)



$

0.57



$

0.82



$

1.86


































Diluted earnings per share

$

(0.03)



$

0.57



$

0.82



$

1.86


































































































































THE CATO CORPORATION
















CONDENSED CONSOLIDATED BALANCE SHEETS 














(Dollars in thousands)

































July 29,



January 28,











2017



2017











(Unaudited)



(Unaudited)


























ASSETS
















Current Assets
















  Cash and cash equivalents

$

77,746



$

47,234










  Short-term investments


159,887




201,233










  Restricted Cash


3,703




3,691










  Accounts receivable - net


29,555




30,336










  Merchandise inventories


106,197




145,682










  Other current assets


14,451




15,632


























Total Current Assets


391,539




443,808


























Property and Equipment - net


122,457




126,386


























Noncurrent Deferred Income Taxes


12,386




13,773


























Other Assets


22,657




22,357


























      TOTAL

$

549,039



$

606,324


























LIABILITIES AND STOCKHOLDERS' EQUITY






























Current Liabilities

$

137,525



$

171,912


























Noncurrent Liabilities


48,910




50,509


























Stockholders' Equity


362,604




383,903


























      TOTAL

$

549,039



$

606,324










 

 

 

View original content:http://www.prnewswire.com/news-releases/cato-reports-2q-eps-loss-of-003-300505697.html

SOURCE The Cato Corporation

For Further Information Contact: John R. Howe, Executive Vice President, Chief Financial Officer, 704-551-7315