UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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Form 8-K

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

Date of Report (Date of earliest event reported):  August 19, 2003

THE CATO CORPORATION

Delaware		0-3747		56-0484485
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

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

(704) 554-8510

Not Applicable

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THE CATO CORPORATION

Item 7. Financial Statements and Exhibits.

(c)

The following exhibit is filed as part of this report.

	Exhibit 99.1 – Press Released issued August 19, 2003

Item 9. Regulation FD Disclosure; and

Item 12. Results of Operations and Financial Condition.

On August 19, 2003, The Cato Corporation issued a press release regarding its financial results for the second quarter of 2003. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. The information is being furnished in this report (including Exhibit 99.1) is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any filing under the Securities Act of 1933.

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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
August 20, 2003		/s/ John P. Derham Cato
Date		John P. Derham Cato President, Vice Chairman of the Board and Chief Executive Officer
August 20, 2003		/s/ Michael O. Moore
Date		Michael O. Moore Executive Vice President Chief Financial Officer and Secretary

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Exhibit Index

Exhibit		Exhibit No.
Press Release issued August 19, 2003			99.1

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Exhibit 99.1

[CATO LOGO]

NEWS RELEASE

FOR IMMEDIATE RELEASE

CEO Approval ________

For Further Information Contact:
    Michael O. Moore
    Executive Vice President
    Chief Financial Officer
    704-551-7201

CATO REPORTS 2Q EARNINGS
Provides 2nd Half Guidance

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Charlotte, N.C. (August 19, 2003) – The Cato Corporation (NYSE: CTR) today reported net income of $7.7 million or $.30 per diluted share for the second quarter ended August 2, 2003, compared to net income of $12.3 million or $.47 per diluted share for the second quarter ended August 3, 2002. Net income decreased 37% and earnings per diluted share decreased 36% from last year. Sales for the second quarter were $188.2 million, an increase of 1% over sales of $186.9 million last year. The Company’s second quarter comparable store sales decreased 7%.

For the six months ended August 2, 2003, the Company earned net income of $25.2 million or $.98 per diluted share, compared with net income of $30.6 million or $1.18 per diluted share for the six months ended August 3, 2002, a net income decrease of 18% and a per diluted share decrease of 17%. Sales were $385.5 million for the first half of 2003, a 1% increase over sales of $383.5 million last year. Comparable store sales decreased 7% for the first half.

“Second quarter results were unfavorably impacted by lower than planned sales and additional markdowns taken to bring inventory levels in line with current sales trends”, said John Cato, President, Vice Chairman and Chief Executive Officer.

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

 

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During the first half, the Company opened 29 stores and relocated 12 stores. The Company is moving forward with its plan to open 90 new stores for the year.

On July 22, the Company announced its intention to repurchase approximately 5.1 million Class B shares from affiliates of the Company’s founders for $18.50 per share, or a total purchase price of $95 million. The Company intends to fund the transaction with a combination of $65 million of cash and a new $30 million five year term loan. The transaction is expected to close on August 22.

As previously reported, the Compensation Committee of the Board of Directors is in discussions with the Company’s founders regarding their retirement. These discussions are not related to the stock repurchase and have not yet been completed. However, the Company expects to reach an agreement with each of them in the third quarter. If so, the Company expects to take a charge in the third quarter related to the retirement agreements.

If current sales trends continue through the second half, the Company projects second half operating results to be below last year in the range of 25% to 30%. In addition, the Company expects second half net income and earnings per diluted share to be affected by the share repurchase and retirement agreements.

The Cato Corporation is a leading specialty retailer of value-priced women’s fashion apparel operating two divisions, “Cato” and “It’s Fashion!”. The Company primarily offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices, everyday. As of August 2, 2003, The Cato Corporation operated 1,051 stores in 26 states, compared to 972 stores in 24 states as of August 3, 2002. Additional information on The Cato Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature 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

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

 

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Company’s ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand. 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

# # #

 

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THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED AUGUST 2, 2003 AND AUGUST 3, 2002
(Dollars in thousands, except per share data)

				Quarter Ended																Six Months Ended
				August 2,				%				August 3,				%				August 2,				%				August 3,				%
				2003				Sales				2002				Sales				2003				Sales				2002				Sales
REVENUES
	Retail sales			$	188,218				100.0	%		$	186,900				100.0	%		$	385,522				100.0	%		$	383,517				100.0	%
	Other income (principally finance, late fees and layaway charges)				3,775				2.0	%			3,815				2.0	%			7,681				1.9	%			7,689				2.0	%
		Total revenues			191,993				102.0	%			190,715				102.0	%			393,203				101.9	%			391,206				102.0	%
GROSS MARGIN (Memo)					55,602				29.5	%			61,046				32.7	%			125,908				32.6	%			133,203				34.7	%
COSTS AND EXPENSES, NET
	Cost of goods sold				132,616				70.5	%			125,854				67.3	%			259,614				67.4	%			250,314				65.3	%
	Selling, general and administrative				44,565				23.7	%			44,061				23.6	%			88,010				22.8	%			89,444				23.3	%
	Depreciation				4,562				2.4	%			3,254				1.7	%			9,013				2.3	%			6,362				1.6	%
	Interest and other income, net				(1,887	)			-1.0	%			(1,667	)			-0.9	%			(3,014	)			-0.8	%			(2,810	)			-0.7	%
		Cost and expenses, net			179,856				95.6	%			171,502				91.7	%			353,623				91.7	%			343,310				89.5	%
Income Before Income Taxes					12,137				6.4	%			19,213				10.3	%			39,580				10.2	%			47,896				12.5	%
Income Tax Expense					4,406				2.3	%			6,955				3.7	%			14,368				3.7	%			17,338				4.5	%
Net Income				$	7,731				4.1	%		$	12,258				6.6	%		$	25,212				6.5	%		$	30,558				8.0	%
Basic Earnings Per Share				$	0.30							$	0.48							$	0.99							$	1.20
Basic Weighted Average Shares					25,478,008								25,516,138								25,458,696								25,397,580
Diluted Earnings Per Share				$	0.30							$	0.47							$	0.98							$	1.18
Diluted Weighted Average Shares					25,888,333								26,020,122								25,850,621								25,948,550

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

				August 2,				August 3,				February 1,
				2003				2002				2003
				(Unaudited)				(Unaudited)
ASSETS
Current Assets
	Cash and cash equivalents			$	59,836			$	73,517			$	32,065
	Short-term investments				66,255				37,474				74,871
	Accounts receivable — net				53,092				51,973				54,116
	Merchandise inventories				79,998				86,372				93,457
	Other current assets				7,181				5,858				6,382
Total Current Assets					266,362				255,194				260,891
Property and Equipment — net					113,131				107,666				113,307
Other Assets					9,617				9,128				9,212
		TOTAL		$	389,110			$	371,988			$	383,410
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities				$	88,014			$	100,086			$	98,282
Noncurrent Liabilities					15,010				13,520				14,964
Stockholders’ Equity					286,086				258,382				270,164
		TOTAL		$	389,110			$	371,988			$	383,410

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