cato8k3q2018.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):     November 21, 2018     

 

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 November 20, 2018, The Cato Corporation issued a press release regarding its financial results for the third quarter ending November 3, 2018.  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 20, 2018.

2


 
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

 

 

November 21, 2018

 

/s/ John P. D. Cato

Date

 

John P. D. Cato

Chairman, President and

Chief Executive Officer

 

 

 

 

November 21, 2018

 

/s/ John R. Howe

Date

 

John R. Howe

Executive Vice President

Chief Financial Officer

3


 
Exhibit Index

 

 

 

 

 

Exhibit

 

Exhibit  No.

 

 

 

 

 

Press Release issued November 20, 2018.

 

 

99.1

 

 

 

4

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 3Q EPS of $0.16

 

 

Charlotte, NC (November 20, 2018) – The Cato Corporation (NYSE: CATO) today reported net income of $3.8 million for the third quarter ended November 3, 2018, compared to net income of $2.7 million for the third quarter ended October 28, 2017.  Earnings per diluted share for the third quarter were $0.16, compared to $0.11 last year.  Sales for the third quarter ended November 3, 2018 were $187.9 million, flat compared to sales of $188.4 million for the third quarter ended October 28, 2017.  Same-store sales for the quarter increased 1% to last year.

 

“While we had positive same-store sales and better merchandise margins than last year due to lower markdown sales the results, excluding favorable litigation settlements, did not meet our expectations,” stated John Cato, Chairman, President, and Chief Executive Officer.  “Also, given our weakening sales trend, we now expect fourth quarter results to be well below our expectations.”

 

For the nine months ended November 3, 2018, the Company earned net income of $33.7 million, compared to net income of $24.0 million for the nine months ended October 28, 2017.  Earnings per diluted share were $1.36 compared to $0.93 last year.  Sales for the nine months ended November 3, 2018 were $630.8 million, flat compared to sales of $631.0 million for the nine months ended October 28, 2017.  Year-to-date same-store sales increased 1% to last year.

 

 

 

5

                   8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 

For the quarter, the gross margin rate increased to 34.5% of sales from 33.9% last year, primarily due to higher merchandise margins and lower buying, distribution and occupancy expenses.  The SG&A rate for the quarter decreased slightly to 32.9% from 33.0% last year primarily due to favorable litigation settlements offset by higher incentive compensation.  Income tax for the quarter was a benefit of $1.3 million compared to a benefit of $2.8 million last year.  The company ended the quarter with cash and short-term investments of $213.7 million.

 

Year-to-date, the gross margin rate increased to 37.4% of sales from 34.8% the prior year primarily due to higher merchandise margins and lower buying, distribution and occupancy expenses.  The year-to-date SG&A rate increased to 31.2% from 30.1% last year primarily due to higher incentive compensation and insurance costs offset by favorable litigation settlements.  Income tax for the year was an expense of $2.9 million compared to a benefit of $0.3 million last year.

 

As of November 3, 2018, the Company operated 1,350 stores in 33 states, compared to 1,370 stores in 33 states as of October 28, 2017.

 

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

 

 

6

8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 

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.

 

# # #

 

7

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 NOVEMBER 3, 2018 AND OCTOBER 28, 2017

(Dollars in thousands, except per share data)

 

 

Quarter Ended

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 3,

%

 

October 28,

%

 

November 3,

%

 

October 28,

%

 

2018

Sales

 

 

2017

Sales

 

2018

Sales

 

 

2017

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Retail sales

$

187,892

100.0%

 

$

188,368

100.0%

 

$

630,765

100.0%

 

$

631,049

100.0%

  Other revenue (principally finance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    late fees and layaway charges)

 

2,120

1.1%

 

 

1,905

1.0%

 

 

6,464

1.0%

 

 

5,926

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total revenues

 

190,012

101.1%

 

 

190,273

101.0%

 

 

637,229

101.0%

 

 

636,975

100.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN (Memo)

 

64,878

34.5%

 

 

63,906

33.9%

 

 

235,663

37.4%

 

 

219,546

34.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES, NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of goods sold

 

123,014

65.5%

 

 

124,462

66.1%

 

 

395,102

62.6%

 

 

411,503

65.2%

  Selling, general and administrative

 

61,765

32.9%

 

 

62,100

33.0%

 

 

196,616

31.2%

 

 

190,162

30.1%

  Depreciation

 

4,094

2.2%

 

 

5,047

2.7%

 

 

12,470

2.0%

 

 

14,989

2.4%

  Interest and other income

 

(1,374)

-0.7%

 

 

(1,200)

-0.6%

 

 

(3,559)

-0.6%

 

 

(3,472)

-0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cost and expenses, net

 

187,499

99.8%

 

 

190,409

101.1%

 

 

600,629

95.2%

 

 

613,182

97.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

2,513

1.3%

 

 

(136)

-0.1%

 

 

36,600

5.8%

 

 

23,793

3.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

(1,287)

-0.7%

 

 

(2,830)

-1.5%

 

 

2,907

0.5%

 

 

(252)

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

3,800

2.0%

 

$

2,694

1.4%

 

$

33,693

5.3%

 

$

24,045

3.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

0.16

 

 

$

0.11

 

 

$

1.36

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

0.16

 

 

$

0.11

 

 

$

1.36

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

818100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 
THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

November 3,

 

February 3,

 

 

2018

 

2018

 

 

(Unaudited)

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

$

26,668

 

$

78,047

 

Short-term investments

 

183,241

 

 

118,836

 

Restricted cash

 

3,768

 

 

3,722

 

Accounts receivable - net

 

37,016

 

 

28,018

 

Merchandise inventories

 

113,046

 

 

121,535

 

Other current assets

 

11,195

 

 

22,322

 

 

 

 

 

 

 

 

Total Current Assets

 

374,934

 

 

372,480

 

 

 

 

 

 

 

 

Property and equipment – net

 

99,308

 

 

109,368

 

 

 

 

 

 

 

 

Noncurrent Deferred Income Taxes

 

11,155

 

 

12,570

 

 

 

 

 

 

 

 

Other assets

 

21,496

 

 

21,658

 

 

 

 

 

 

 

 

     TOTAL

$

506,893

 

$

516,076

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

$

138,113

 

$

139,081

 

 

 

 

 

 

 

 

Noncurrent Liabilities

 

42,580

 

 

50,642

 

 

 

 

 

 

 

 

Stockholders' Equity

 

326,200

 

 

326,353

 

 

 

 

 

 

 

 

     TOTAL

$

506,893

 

$

516,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510