SEC Filing | The Cato Corporation

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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): August 20, 2020

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, North Carolina (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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A - Common Stock, par value $.033 per share	CATO	New York Stock Exchange

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 August 20, 2020, The Cato Corporation issued a press release regarding its financial results for the second quarter ending August 1, 2020. 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 August 20, 2020

Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)

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

August 24, 2020		/s/ John P. D. Cato
Date		John P. D. Cato Chairman, President and Chief Executive Officer

August 24, 2020		/s/ John R. Howe
Date		John R. Howe Executive Vice President Chief Financial Officer

Exhibit Index


Exhibit	Exhibit No.

Exhibit 99.1 - Press Release issued August 20, 2020		99.1

Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)		104

exhibit991

 
 
 
 
8100 Denmark Road 
P.O. 
Box 34216 
Charlotte, NC 
28234 
(704) 554-8510 
 
EXHIBIT 99.1 
 
The CATO Corporation 
 
NEWS RELEASE 
FOR IMMEDIATE RELEASE 
 
 
For Further Information Contact: 
 
John R. Howe 
 
Executive Vice President 
 
Chief Financial Officer 
 
704-551-7315 
 
CATO 
REPORTS 2Q NET LOSS 
 
CHARLOTTE, N.C. (August 20, 2020) –– The Cato Corporation (NYSE: CATO) 
today reported a net 
loss of $7.2 million or ($0.30) per diluted share for the second quarter ended August 1, 2020, 
compared to net income of $11.9 
million or $0.48 per diluted share for the second quarter ended 
August 3, 2019. 
Sales for the second quarter were $166.3 million, or a decrease of 21% from sales 
of $210.4 million for the second quarter ended August 3, 2019. 
The Company’s same-store sales for 
the quarter decreased 24% to the same period last year. 
As previously announced Cato closed all stores due to the COVID-19 pandemic beginning March 19, 
2020. 
On May 1, 2020, the Company began reopening stores in a phased approach, with limited 
operating hours, consistent with local health and safety guidelines and regulations. 
As of June 15, 
2020, all stores had reopened. 
For the six months ended August 1, 2020, the Company reported a net loss of $35.6 million or ($1.48) 
per diluted share, compared to net income of $33.1 million or $1.34 per diluted share for the six 
months ended August 3, 2019. 
Sales for the six months ended August 1, 2020 were $265.1 million, 
down 40% to sales of $438.4 million for the six months ended August 3, 2019. 
Year 
-to-date same-
store sales decreased 39%. 
“Sales softened through the quarter and into early August. 
As we 
see this trend continuing, we are 
cautious about the second half of the year,” stated John Cato, Chairman, President, and Chief 
Executive Officer. 
“And we remain committed to protecting our customers, associates and the 
communities we serve, in light of the unprecedented situation regarding the COVID-19 pandemic.” 

 
8100 Denmark Road 
P.O. 
Box 34216 
Charlotte, NC 
28234 
(704) 554-8510 
 
Gross margin decreased to 20.2% from 38.0% of sales in the quarter, due to a reduction in 
merchandise contribution, combined with the effects of deleveraging from the sales decline related to 
the phased reopening of stores and limited operating hours. 
SG&A expenses as a percent of sales 
decreased to 26.4% from 31.4% during the quarter primarily due to company-wide expense reduction 
initiatives and elimination of incentive compensation. 
A pre-tax loss and the beneficial effects of the 
CARES Act resulted in $3.9 million tax benefit versus $2.1 million expense in the prior year. 
During 
the quarter, the Company paid $30 million on its line of credit, bringing the outstanding balance to $0. 
The Company ended the quarter with unrestricted cash and short-term investments of $137.0 million 
and full availability on its $35 million revolving line of credit. 
Year 
-to-date gross margin decreased to 18.4% of sales from 39.2% the prior year primarily due to a 
reduction in merchandise contribution combined with the effects of deleveraging resulting from the 
sales decline. 
The year-to-date SG&A rate was 36.4% versus 30.0% last year primarily due to the 
effects of deleveraging and store impairment charges of $5.3 million, partially offset by company-wide 
expense reductions and the elimination of incentive compensation. 
Income tax benefit for the first 
half was $13.0 million compared to an expense of $6.4 million last year. 
During the second quarter ended August 1, 2020, the Company opened 36 new stores which were 
previously committed, relocated 1 store and permanently closed 3 stores. 
As of August 1, 2020, the 
Company operated 1,333 stores in 31 states, compared to 1,299 stores in 31 states as of August 3, 
2019. 
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
 
i
ncluding, without limitation, statements regarding the Company’s 
expected or estimated operational and financial results 
and potential impact of the coronavirus are considered 
“forward-
looking” within the meaning of The Private Securities Litigation 
Reform Act of 1995. 
Such forward-looking statements are 

 
8100 Denmark Road 
P.O. 
Box 34216 
Charlotte, NC 
28234 
(704) 554-8510 
 
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, any actual or perceived deterioration 
in the conditions that drive consumer confidence and 
spending, including, but not limited to, prevailing social, 
economic, political and public health conditions and uncertainties, 
levels of unemployment, fuel, energy and food costs, wage rates, 
tax rates, interest rates, home values, consumer net 
worth and the availability of credit; changes in laws or regulations 
affecting our business including tariffs; 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; our ability to 
successfully open new stores as planned and our ability 
of any such new stores to grow and perform as expected; 
adverse weather, public health 
threats (including the global coronavirus (COVID-19) outbreak) 
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 
(704) 554-8510 
 
THE CATO CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 
FOR THE PERIODS ENDED AUGUST 1, 2020 AND AUGUST 
3, 2019
 
(Dollars in thousands, except per share data) 
 
Quarter Ended 
Six Months Ended 
August 1, 
% 
August 3, 
% 
August 1, 
% 
August 3, 
% 
2020 
Sales 
2019 
Sales 
2020 
Sales 
2019 
Sales 
REVENUES 
 
Retail sales 
$ 
166,265 
100.0% 
$ 
210,357 
100.0% 
$ 
265,078 
100.0% 
$ 
438,423 
100.0% 
 
Other revenue (principally finance, 
 
late fees and layaway charges) 
1,905 
1.1% 
2,224 
1.1% 
3,824 
1.4% 
4,510 
1.0% 
 
Total revenues 
168,170 
101.1% 
212,581 
101.1% 
268,902 
101.4% 
442,933 
101.0% 
GROSS MARGIN (Memo) 
33,529 
20.2% 
79,985 
38.0% 
48,745 
18.4% 
171,968 
39.2% 
COSTS AND EXPENSES, NET 
 
Cost of goods sold 
132,736 
79.8% 
130,372 
62.0% 
216,333 
81.6% 
266,455 
60.8% 
 
Selling, general and administrative 
43,957 
26.4% 
66,066 
31.4% 
96,468 
36.4% 
132,056 
30.0% 
 
Depreciation 
3,488 
2.1% 
3,836 
1.8% 
7,494 
2.8% 
7,679 
1.8% 
 
Interest and other income 
(961) 
-0.6% 
(1,693) 
-0.8% 
(2,812) 
-1.1% 
(2,829) 
-0.7% 
 
Cost and expenses, net 
179,220 
107.8% 
198,581 
94.4% 
317,483 
119.8% 
403,361 
92.0% 
Income (Loss) Before Income Taxes 
(11,050) 
-6.7% 
14,000 
6.7% 
(48,581) 
-18.3% 
39,572 
9.0% 
Income Tax (Benefit)/Expense 
(3,880) 
-2.3% 
2,134 
1.0% 
(12,994) 
-4.9% 
6,450 
1.5% 
Net Income (Loss) 
$ 
(7,170) 
-4.3% 
$ 
11,866 
5.6% 
$ 
(35,587) 
-13.4% 
$ 
33,122 
7.6% 
Basic Earnings Per Share 
$ 
(0.30) 
$ 
0.48 
$ 
(1.48) 
$ 
1.34 
Diluted Earnings Per Share 
$ 
(0.30) 
$ 
0.48 
$ 
(1.48) 
$ 
1.34 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8100 Denmark Road 
P.O. 
Box 34216 
Charlotte, NC 
28234 
(704) 554-8510 
 
THE CATO CORPORATION
 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Dollars in thousands) 
August 1, 
February 1, 
2020 
2020 
(Unaudited) 
(Unaudited) 
ASSETS 
Current Assets: 
Cash and cash equivalents 
$ 
36,565 
$ 
11,824 
Short-term investments 
100,391 
200,387 
Restricted cash 
3,917 
3,896 
Accounts receivable - net 
39,037 
26,088 
Merchandise inventories 
88,280 
115,365 
Other current assets 
12,460 
5,237 
Total Current Assets 
280,650 
362,797 
Property and Equipment – net 
84,938 
88,667 
Noncurrent Deferred Income Taxes 
5,911 
8,636 
Other Assets 
23,142 
24,073 
Right-of-Use Assets, net 
201,776 
200,803 
 
TOTAL 
$ 
596,417 
$ 
684,976 
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities: 
$ 
96,149 
$ 
136,153 
Current Lease Liability 
57,878 
63,149 
Noncurrent Liabilities 
23,663 
21,976 
Lease Liability 
152,508 
147,184 
Stockholders' Equity 
266,219 
316,514 
 
TOTAL 
$ 
596,417 
$ 
684,976 
 