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 August 19, 2021, The Cato Corporation issued a press release regarding its financial results
for the second quarter ending July 31, 2021. 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.
August 20, 2021
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
August 20, 2021
/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 2Q NET INCOME
CHARLOTTE, N.C. (August 19, 2021)
income of $14.0 million or $0.62 per diluted share for the second quarter ended July 31, 2021,
compared to a net loss of $7.2 million or ($0.30) per diluted share for the second quarter ended
August 1, 2020.
Sales for fiscal 2020 were significantly impacted by the closure of our stores for six weeks due to the
COVID-19 pandemic, beginning March 19, 2020. Due to the impact of the unprecedented closures,
the Company will report sales compared to the past two years. Sales for the second quarter ended
July 31, 2021 were $206.0 million, or an increase of 24% from sales of $166.3 million for the second
quarter ended August 1, 2020. Compared to the same period in 2019, sales decreased 2% from
sales of $210.4 million for the quarter ended August 3, 2019. The Company’s same-store sales for
the quarter increased 23% compared to 2020 and decreased 5% when compared to the same period
in 2019.
For the six months ended July 31, 2021, the Company reported net income of $34.7 million or $1.54
per diluted share, compared to a net loss of $35.6 million or ($1.48) per diluted share for the six
months ended August 1, 2020. Sales for the six months ended July 31, 2021 were $417.2 million, an
increase of 57% to sales of $265.1 million for the six months ended August 1, 2020. Compared to the
same period in 2019, sales decreased 5% from sales of $438.4 million for the six months ended
August 3, 2019. Year -to-date same-store sales increased 56% to 2020 and decreased 7% compared
to the same period in 2019.
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
availability coupled with pent-up demand, an increase in social events, summer vacation travel and
anticipated return to work for many customers, but were tempered by late merchandise shipments
driven by continued supply chain disruptions,” stated John Cato, Chairman, President, and Chief
Executive Officer. “We anticipate seeing some impact to the business due to increased COVID
cases, however we do not expect to see the same level of impact to the business as experienced in
2020.”
Gross margin increased from 20.2% to 43.9% of sales in the quarter due to higher merchandise
margins. SG&A expenses as a percent of sales increased from 26.4% to 34.5% of sales during the
quarter primarily due to increased employee benefit/bonus expense and store operating expenses as
operating hours have increased substantially compared to prior year’s phased store reopening
following the extended store closure due to COVID. Tax expense for the quarter was $4.6 million
versus a $3.9 million benefit in the prior year due to the pre-tax loss. The Company ended the
quarter with unrestricted cash and short-term investments of $216.9 million. This compares with
$137.0 million for the same period in 2020.
Year -to-date gross margin increased to 42.6% of sales from 18.4% the prior year primarily due to
increased merchandise margins. The year-to-date SG&A rate was 32.2% versus 36.4% primarily due
to leveraging of expenses as a result of normalized sales and a $5.3 million non-cash impairment
charge in the prior year, partially offset by higher employee benefit/bonus expense and store
operating expenses. Income tax expense for the first half was $7.6 million versus a $13.0 million
benefit last year.
As of July 31, 2021, the Company has 1,325 stores in 32 states, compared to 1,333 stores in 31
states as of August 1, 2020.
our mask policy for associates in our stores, DC and Home Office, regardless of vaccination status,”
Mr. Cato said. “As always, our associates’ and customers’ safety remains foremost in our minds as
we continue to navigate this challenging retail environment and strive to offer our customers a safe
place to shop.”
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
As COVID infections continue to rise as a result of the Delta variant, there remains a high level of
uncertainty as to the impact COVID will have on the second half of the year. Additionally, the
continued impact of the supply chain disruption still remains a concern. In light of these uncertainties,
we remain cautiously optimistic about the remainder of the year.
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 that express a belief, expectation or intention, as well as those that are not a historical
fact, including, without limitation, statements regarding the Company’s expected or estimated operational financial results,
activities or opportunities, and potential impacts and effects 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 but not limited to tariffs; uncertainties regarding the
impact of any governmental action regarding, or responses to, 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 implement our new store development strategy to increase new store openings and the 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
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
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 JULY 31, 2021 AND AUGUST 1, 2020
(Dollars in thousands, except per share data)
Quarter Ended
Six Months Ended
July 31,
%
August 1,
%
July 31,
%
August 1,
%
2021
Sales
2020
Sales
2021
Sales
2020
Sales
REVENUES
$
205,962
100.0%
$
166,265
100.0%
$
417,196
100.0%
$
265,078
100.0%
1,784
0.9%
1,905
1.1%
3,635
0.9%
3,824
1.4%
207,746
100.9%
168,170
101.1%
420,831
100.9%
268,902
101.4%
GROSS MARGIN (Memo)
90,375
43.9%
33,529
20.2%
177,934
42.6%
48,745
18.4%
COSTS AND EXPENSES, NET
115,587
56.1%
132,736
79.8%
239,262
57.4%
216,333
81.6%
70,984
34.5%
43,957
26.4%
134,221
32.2%
96,468
36.4%
3,137
1.5%
3,488
2.1%
6,179
1.5%
7,494
2.8%
(515)
-0.3%
(961)
-0.6%
(1,178)
-0.3%
(2,812)
-1.1%
189,193
91.9%
179,220
107.8%
378,484
90.7%
317,483
119.8%
Income (Loss) Before Income Taxes
18,553
9.0%
(11,050)
-6.6%
42,347
10.2%
(48,581)
-18.3%
Income Tax (Benefit)/Expense
4,561
2.2%
(3,880)
-2.3%
7,642
1.8%
(12,994)
-4.9%
Net Income (Loss)
$
13,992
6.8%
$
(7,170)
-4.3%
$
34,705
8.3%
$
(35,587)
-13.4%
Basic Earnings Per Share
$
0.62
$
(0.30)
$
1.54
$
(1.48)
Diluted Earnings Per Share
$
0.62
$
(0.30)
$
1.54
$
(1.48)
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
July 31,
January 30,
2021
2021
(Unaudited)
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
25,354
$
17,510
Short-term investments
191,520
126,416
Restricted cash
3,918
3,918
Accounts receivable - net
51,296
52,320
Merchandise inventories
72,042
84,123
Other current assets
5,421
5,839
Total Current Assets
349,551
290,126
Property and Equipment – net
67,280
72,550
Noncurrent Deferred Income Taxes
5,770
5,685
Other Assets
23,441
22,850
Right-of-Use Assets, net
144,765
199,817
$
590,807
$
591,028
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
$
146,796
$
116,913
Current Lease Liability
54,604
63,421
Noncurrent Liabilities
20,550
19,536
Lease Liability
95,045
143,315
Stockholders' Equity
273,812
247,843
$
590,807
$
591,028