UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street NW
Washington, D.C. 29549
Form
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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2
THE CATO CORPORATION
Item 2.02. Results of Operations and Financial Condition.
On November 19, 2020, The Cato Corporation issued a press release regarding its financial
results for the third quarter ending October 31, 2020. A copy of this press release is furnished as
Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL
document)
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.
November 20, 2020
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
November 20, 2020
/s/ John R. Howe
Date
John R. Howe
Executive Vice President
Chief Financial Officer
4
Exhibit Index
Exhibit
Exhibit
No.
99.1
Exhibit 104 – Cover Page Interactive Data File
(embedded within Inline XBRL document)
104
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:
CATO REPORTS 3Q NET LOSS
CHARLOTTE, N.C. (November 19, 2020) –– The Cato Corporation (NYSE: CATO) today reported a
net loss of $3.6 million or ($0.15) per diluted share for the third quarter ended October 31, 2020,
compared to net income of $6.0 million or $0.24 per diluted share for the third quarter ended
November 2, 2019. Sales for the third quarter were $149.2 million, or a decrease of 21% from sales
of $189.4 million for the third quarter ended November 2, 2019. The Company’s same-store sales
for the quarter decreased 23% 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 nine months ended October 31, 2020, the Company reported a net loss of $39.2 million or
($1.64) per diluted share, compared to net income of $39.1 million or $1.59 per diluted share for the
nine months ended November 2, 2019. Sales for the nine months ended October 31, 2020 were
$414.3 million, down 34% to sales of $627.8 million for the nine months ended November 2, 2019.
Year -to-date same-store sales decreased 35%.
“Sales in the third quarter reflected continued softening of customer demand as COVID-19 cases
continued to rise throughout our market areas and many people still have not returned to work. As
we see this trend continuing, we anticipate that the remainder of the year will be challenging,” stated
John Cato, Chairman, President, and Chief Executive Officer. “We appreciate our store associates’
diligence in providing a safe shopping environment and our customers' patience as we continue our
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
enhanced cleaning and product handling procedures to make our stores as safe as possible in light of
the COVID-19 pandemic.”
For the quarter, gross margin decreased to 26.7% from 37.4% of sales the prior year due to a
reduction in merchandise contribution, combined with the effects of deleveraging from the sales
decline. SG&A expenses as a percent of sales increased to 34.8% from 34.2% during the quarter
primarily due to the effects of deleveraging, and an impairment charge of $2.3 million, partially offset
by company-wide expense reductions and reduction of incentive compensation compared to prior
year. A pre-tax loss and the beneficial effects of the CARES Act resulted in $9.7 million of tax benefit
versus $0.1 million of expense in the prior year. The Company ended the quarter with unrestricted
cash and short-term investments of $151.4 million and full availability of its $35 million revolving line
of credit.
Year -to-date gross margin decreased to 21.4% of sales from 38.7% 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 35.8% versus 31.2% last year primarily due to the
effects of deleveraging and impairment charges of $7.6 million, partially offset by company-wide
expense reductions and the reduction of incentive compensation. Income tax benefit for the nine
months was $22.7 million compared to an expense of $6.5 million last year.
During the third quarter ended October 31, 2020, the Company opened 16 new stores, which had
leases prior to the COVID-19 pandemic and permanently closed 2 stores. As of October 31, 2020,
the Company operated 1,347 stores in 33 states, compared to 1,298 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.
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
Statements in this press release not historical in nature
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
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 OCTOBER 31, 2020 AND NOVEMBER 2, 2019
(Dollars in thousands, except per share data)
Quarter Ended
Nine Months Ended
October 31,
%
November 2,
%
October 31,
%
November 2,
%
2020
Sales
2019
Sales
2020
Sales
2019
Sales
REVENUES
$
149,205
100.0%
$
189,357
100.0%
$
414,283
100.0%
$
627,780
100.0%
1,586
1.1%
2,166
1.1%
5,410
1.3%
6,676
1.1%
150,791
101.1%
191,523
101.1%
419,693
101.3%
634,456
101.1%
GROSS MARGIN (Memo)
39,801
26.7%
70,733
37.4%
88,545
21.4%
242,701
38.7%
COSTS AND EXPENSES, NET
109,404
73.3%
118,624
62.7%
325,738
78.6%
385,079
61.3%
51,885
34.8%
64,681
34.2%
148,353
35.8%
196,737
31.2%
3,619
2.4%
3,844
2.0%
11,113
2.7%
11,523
1.8%
(791)
-0.5%
(1,662)
-0.9%
(3,603)
-0.9%
(4,491)
-0.7%
164,117
110.0%
185,487
98.0%
481,601
116.2%
588,848
93.8%
Income (Loss) Before Income Taxes
(13,326)
-8.9%
6,036
3.2%
(61,908)
-14.9%
45,608
7.3%
Income Tax (Benefit)/Expense
(9,704)
-6.5%
51
0.0%
(22,698)
-5.5%
6,501
1.0%
Net Income (Loss)
$
(3,622)
-2.4%
$
5,985
3.2%
$
(39,210)
-9.5%
$
39,107
6.2%
Basic Earnings Per Share
$
(0.15)
$
0.24
$
(1.64)
$
1.59
Diluted Earnings Per Share
$
(0.15)
$
0.24
$
(1.64)
$
1.59
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
October 31,
February 1,
2020
2020
(Unaudited)
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
18,812
$
11,824
Short-term investments
132,574
200,387
Restricted cash
3,917
3,896
Accounts receivable - net
47,725
26,088
Merchandise inventories
84,281
115,365
Other current assets
7,185
5,237
Total Current Assets
294,494
362,797
Property and Equipment – net
81,853
88,667
Noncurrent Deferred Income Taxes
7,464
8,636
Other Assets
22,722
24,073
Right-of-Use Assets, net
184,338
200,803
$
590,871
$
684,976
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
$
122,489
$
136,153
Current Lease Liability
54,250
63,149
Noncurrent Liabilities
19,799
21,976
Lease Liability
138,196
147,184
Stockholders' Equity
256,137
316,514
$
590,871
$
684,976