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cato8k1q2017.htm - Generated by SEC Publisher for SEC Filing

 

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

Date of Report (Date of earliest event reported):     May 22, 2017     

 

THE CATO CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

1-31340

56-0484485

(State or Other Jurisdiction of  Incorporation

(Commission

File Number)

(IRS Employer
Identification No.)

 

 

 

8100 Denmark Road, Charlotte, NC

(Address of Principal Executive Offices)

28273-5975
(Zip Code)

 

 

 

(704) 554-8510

(Registrant’s Telephone Number, Including Area Code)

 

 

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

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: 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a‑12) 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 


 
THE CATO CORPORATION

Item 2.02.  Results of Operations and Financial Condition.

On May 18, 2017, The Cato Corporation issued a press release regarding its financial results for the first quarter ending April 29, 2017.  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 May 18, 2017.

3


 
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 thereunto duly authorized.

 

                                                                                    THE CATO CORPORATION

 

 

May 22, 2017

 

/s/ John P. D. Cato

Date

 

John P. D. Cato

Chairman, President and

Chief Executive Officer

 

 

 

 

May 22, 2017

 

/s/ John R. Howe

Date

 

John R. Howe

Executive Vice President

Chief Financial Officer

 

4


 
Exhibit Index

 

 

 

 

 

Exhibit

 

Exhibit  No.

 

 

 

 

 

Press Release issued May 18, 2017.

 

 

99.1

 

 

 

5

exhibit991.htm - Generated by SEC Publisher for SEC Filing

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 DECLINE IN 1Q EPS
Provides Update on Full-Year Guidance

CHARLOTTE, N.C. (May 18, 2017) – The Cato Corporation (NYSE: CATO) today reported net income of $22.2 million or $.85 per diluted share for the first quarter ended April 29, 2017, compared to net income of $35.9 million or $1.29 per diluted share for the first quarter ended April 30, 2016. Net income decreased 38% and earnings per diluted share decreased 34% for the quarter. Sales for the first quarter were $237.7 million, or a decrease of 17% from sales of $285.5 million for the first quarter ended April 30, 2016. The Company’s same-store sales for the quarter decreased 17% to last year.

“Our negative sales trend persisted throughout the first quarter, impacting margins and earnings as we continued 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 the remainder of the year will be impacted. We expect earnings for the year to be below last year.”

Gross margin decreased 390 basis points to 38.7% of sales in the quarter, primarily due to lower merchandise margins and deleveraging of buying and occupancy costs. SG&A expenses as a percent of sales increased 190 basis points to 26.8% during the quarter primarily due to deleveraging of store expenses, offset by lower incentive compensation. The effective tax rate decreased to 14.7% versus the prior year at 28.5% due to reduced earnings, ongoing tax saving initiatives and favorable tax adjustments in the quarter. The Company ended the quarter with cash and short-term investments of $235.0 million.

  8100 Denmark Road  
  P.O. Box 34216  
  Charlotte, NC 28234 5
(704)554-8510  

 


 

During the first quarter, the Company opened three stores and relocated one store. As of April 29, 2017, the Company operated 1,374 stores in 33 states, compared to 1,372 stores in 33 states as of April 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.

# # #

  8100 Denmark Road  
  P.O. Box 34216  
  Charlotte, NC 28234 6
(704) 554-8510  

 


 

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE PERIODS ENDED APRIL 29, 2017 AND APRIL 30, 2016

(Dollars in thousands, except per share data)

        Quarter Ended      
    April 29,   %     April 30,   %  
    2017   Sales     2016   Sales  
REVENUES                    
Retail sales $ 237,655   100.0 % $ 285,497   100.0 %
Other revenue (principally finance,                    
late fees and layaway charges)   2,086   0.9 %   2,476   0.9 %
Total revenues   239,741   100.9 %   287,973   100.9 %
GROSS MARGIN (Memo)   91,872   38.7 %   121,524   42.6 %
COSTS AND EXPENSES, NET                    
Cost of goods sold   145,783   61.3 %   163,973   57.4 %
Selling, general and administrative   63,780   26.8 %   71,071   24.9 %
Depreciation   5,060   2.1 %   5,676   2.0 %
Interest and other income   (942 ) -0.4 %   (2,928 ) -1.0 %
Cost and expenses, net   213,681   89.9 %   237,792   83.3 %
 
Income Before Income Taxes   26,060   11.0 %   50,181   17.6 %
Income Tax Expense   3,827   1.6 %   14,307   5.0 %
Net Income $ 22,233   9.4 % $ 35,874   12.6 %
 
Basic Earnings Per Share $ 0.85       $ 1.29      
Diluted Earnings Per Share $ 0.85       $ 1.29      

 

  8100 Denmark Road  
  P.O. Box 34216  
  Charlotte, NC 28234 7
(704) 554-8510  

 


 

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

    April 29,   January 28,
    2017   2017
  (Unaudited)   (Unaudited)
ASSETS        
Current Assets:        
Cash and cash equivalents $ 52,424 $ 47,234
Short-term investments   178,930   201,233
Restricted cash   3,695   3,691
Accounts receivable - net   32,298   30,336
Merchandise inventories   131,784   145,682
Other current assets   14,571   15,632
Total Current Assets   413,702   443,808
Property and equipment – net   124,650   126,386
Noncurrent Deferred Income Taxes   12,500   13,773
Other assets   22,718   22,357
TOTAL $ 573,570 $ 606,324
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities: $ 144,094 $ 171,912
Noncurrent Liabilities   49,675   51,509
Stockholders' Equity   379,801   383,903
TOTAL $ 573,570 $ 606,324

 

  8100 Denmark Road  
  P.O. Box 34216  
  Charlotte, NC 28234 8
(704) 554-8510