UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

450 Fifth Street NW
Washington, D.C. 29549

 

Form 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

THE CATO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		1-31340		56-0484485
(State or Other Jurisdiction		(Commission		(I.R.S. Employer
of Incorporation)		File Number)		Identification Number)

8100 Denmark Road, Charlotte, North Carolina		28273-5975
(Address of Principal Executive Offices)		(Zip Code)

(704) 554-8510

Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

THE CATO CORPORATION

Item 2.02. Results of Operations and Financial Condition.

On November 19, 2009, The Cato Corporation issued a press release regarding its financial results for the third quarter ending October 31, 2009. A copy of this press release is furnished as Exhibit 99.1 hereto.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits

     Exhibit 99.1 — Press Release issued November 19, 2009.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

				THE CATO CORPORATION
November 24, 2009 Date				/s/ John P. D. Cato   John P. D. Cato
				Chairman, President and
				Chief Executive Officer
November 24, 2009 Date				/s/ John R. Howe   John R. Howe
				Executive Vice President
				Chief Financial Officer

Exhibit Index

Exhibit		Exhibit No.
Press Release issued November 19, 2009			99.1

Exhibit 99.1

The CATO Corporation

		NEWS RELEASE
FOR IMMEDIATE RELEASE
		CEO Approval
For Further Information Contact:           John R. Howe           Executive Vice President           Chief Financial Officer           704-551-7315

CATO REPORTS 3Q EARNINGS
Reconfirms 4Q and Updates Full Year Guidance

Charlotte, NC (November 19, 2009) — The Cato Corporation (NYSE: CATO) today reported net income of $3.0 million for the third quarter ended October 31, 2009, compared to net income of $0.8 million for the third quarter ended November 1, 2008, an increase of 262% on an unrounded basis. Earnings per diluted share for the third quarter were $0.10, compared to $0.03 last year, an increase of 233%. Sales for the third quarter ended October 31, 2009 were $191.0 million, a 6% increase over sales of $179.8 million for the third quarter ended November 1, 2008. Same-store sales for the quarter increased 4%.

The Company earned net income of $38.5 million for the nine months ended October 31, 2009, compared to net income of $29.8 million for the nine months ended November 1, 2008, an increase of 29%. Earnings per diluted share were $1.31 compared to $1.01 last year, an increase of 30%. Sales for the nine months ended October 31, 2009 were $654.4 million, a 3% increase over sales of $636.6 million for the nine months ended November 1, 2008. Year-to-date same-store sales increased 1%.

For the quarter, the gross margin rate increased to 34.8% versus 29.3% last year primarily due to better merchandise margins and lower freight costs. The SG&A rate for the quarter increased to 31.7% from 28.3% last year primarily as a result of higher accrued incentive

8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510

compensation. The Company’s effective tax rate was 30.2% vs. 35.4% last year as the effect of quarterly adjustments was lower than last year.

Year-to-date, the gross margin rate increased to 37.4% versus 34.5% last year primarily due to better merchandise margins and lower freight costs. The year-to-date SG&A rate increased to 27.7% from 26.8% last year primarily as a result of increased accrued incentive compensation offset by a reduction in store closing costs compared to last year. The year-to-date effective tax rate decreased to 33.7% vs. 36.4% last year.

“We had an unexpectedly strong quarter,” stated John Cato, Chairman, President, and Chief Executive Officer. “However, we recognize that much uncertainty still exists for our customers in this economic environment. Due to this uncertainty, we continue to estimate that same-store sales for the fourth quarter will be in the range of down 3% to flat. Similarly, we are maintaining our original guidance for fourth quarter earnings per diluted share in the range of $0.08 to $0.13 versus $0.13 last year. For the year, earnings per diluted share are estimated to be in the range of $1.38 to $1.43 vs. $1.14 last year, an increase of 21% to 25%.”

Year-to-date, the Company has opened 26 new stores, relocated one store, and closed 16 stores, 10 of which were conversions of It’s Fashion stores to It’s Fashion Metro stores. The Company now expects to open approximately 36 stores during 2009 as compared to its previous guidance of 46 stores. As of October 31, 2009, the Company operated 1,291 stores in 31 states, compared to 1,305 stores in 31 states as of November 1, 2008.

The Cato Corporation is a leading specialty retailer of value-priced women’s fashion apparel and accessories operating two divisions, “Cato” and “It’s Fashion”. The Cato division offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day. The It’s Fashion division offers fashion with a focus on the latest trendy styles and nationally recognized urban brands for the entire family at low prices every day. Additional information on The Cato Corporation is available at www.catocorp.com.

8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected or estimated financial results for the fourth quarter and full year and any related assumptions 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, as amended or supplemented, 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.

# # #

8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008
(Dollars in thousands, except per share data)

		Quarter Ended																Nine Months Ended
		October 31,				%				November 1,				%				October 31,				%				November 1,				%
		2009				Sales				2008				Sales				2009				Sales				2008				Sales
REVENUES
Retail sales		$	190,966				100.0	%		$	179,838				100.0	%		$	654,389				100.0	%		$	636,585				100.0	%
Other income (principally finance, late fees and layaway charges)			2,854				1.5	%			2,947				1.6	%			8,724				1.3	%			8,895				1.4	%
Total revenues			193,820				101.5	%			182,785				101.6	%			663,113				101.3	%			645,480				101.4	%
GROSS MARGIN (Memo)			66,421				34.8	%			52,666				29.3	%			244,472				37.4	%			219,774				34.5	%
COSTS AND EXPENSES, NET
Cost of goods sold			124,545				65.2	%			127,172				70.7	%			409,917				62.6	%			416,811				65.5	%
Selling, general and administrative			60,519				31.7	%			50,908				28.3	%			181,643				27.7	%			170,804				26.8	%
Depreciation			5,441				2.9	%			5,614				3.1	%			16,467				2.5	%			16,881				2.6	%
Interest and other income			(957	)			-0.5	%			(2,183	)			-1.2	%			(2,878	)			-0.4	%			(5,792	)			-0.9	%
Cost and expenses, net			189,548				99.3	%			181,511				100.9	%			605,149				92.4	%			598,704				94.0	%
Income Before Income Taxes			4,272				2.2	%			1,274				0.7	%			57,964				8.9	%			46,776				7.4	%
Income Tax Expense			1,289				0.7	%			451				0.2	%			19,509				3.0	%			17,009				2.7	%
Net Income		$	2,983				1.5	%		$	823				0.5	%		$	38,455				5.9	%		$	29,767				4.7	%
Basic Earnings Per Share		$	0.10							$	0.03							$	1.31							$	1.01
Diluted Earnings Per Share		$	0.10							$	0.03							$	1.31							$	1.01

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

		October 31,				November 1,				January 31,
		2009				2008				2009
		(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	32,636			$	35,959			$	42,262
Short-term investments			147,528				90,878				93,452
Restricted Cash			2,647				8,991				9,089
Accounts receivable — net			40,472				43,267				44,136
Merchandise inventories			101,139				110,282				112,290
Other current assets			11,204				14,684				14,140
Total Current Assets			335,626				304,061				315,369
Property and Equipment — net			108,572				120,859				116,262
Other Assets			7,341				4,317				3,722
TOTAL		$	451,539			$	429,237			$	435,353
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities		$	142,499			$	144,523			$	150,730
Noncurrent Liabilities			20,689				22,771				22,810
Stockholders’ Equity			288,351				261,943				261,813
TOTAL		$	451,539			$	429,237			$	435,353