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
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction
of Incorporation
(Commission
File Number)
(IRS Employer
Identification No.)
,
,
(Address of Principal Executive Offices)
(Zip Code)
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
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.
☐
2
THE CATO CORPORATION
Item 2.02. Results of Operations and Financial Condition.
On March 17, 2022, The Cato Corporation issued a press release regarding its financial results
for the fourth quarter ending January 29, 2022. A copy of this press release is furnished as
Exhibit 99.1 hereto.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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.
March 21, 2022
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
March 21, 2022
/s/ Charles D. Knight
Date
Charles D. Knight
Executive Vice President
Chief Financial Officer
4
Exhibit Index
Exhibit
Exhibit
No.
99.1
104 Cover page Interactive Data File (embedded
within Inline XBRL document)
104
EXHIBIT 99.1
The CATO Corporation
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
CATO REPORTS 4Q AND FULL YEAR EARNINGS
CHARLOTTE, N.C. (March 17, 2022)
loss of $6.5 million or ($0.30) per diluted share for the fourth quarter ended January 29, 2022,
compared to a net loss of $8.3 million or ($0.37) per diluted share for the fourth quarter ended
January 30, 2021.
Full-year fiscal 2021 net income was $36.8 million or $1.65 per diluted share
compared to a net loss of $47.5 million or ($2.01) per diluted share for 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,
we will also compare current year results to fiscal 2019 sales, in addition to normal prior year
comparison. Sales for the fourth quarter ended January 29, 2022 were $173.6 million, or an increase
of 13% from sales of $153.2 million for the fourth quarter ended January 30, 2021. Compared to the
same period in 2019, sales decreased 8% from sales of $188.4 million for the quarter ended February
1, 2020. The Company’s same-store sales for the quarter increased 14% compared to 2020 and
decreased 10% when compared to the same period in 2019.
For the year, the Company's sales increased 34% to $761.4 million from 2020 sales of $567.5
million.
February 1, 2020. Same-store sales for the year increased 34% compared to 2020 and decreased
9% compared to 2019.
"We are encouraged by the recovery of our business during 2021, despite ongoing
challenges due to
the lingering effects of the pandemic
,” said John Cato, Chairman, President and Chief Executive
Officer.
“The first half of the year started off strong as a result of stimulus money and pent up
demand, while our second half lagged as a result of
worsening supply chain disruption, a resurgence
of COVID-19, coupled with rising inflation. The strong performance of 2021 afforded us the
opportunity to continue investing in future growth initiatives during the fall, which had been placed on
hold during the pandemic
. We will continue to make these investments in key initiatives in 2022.”
Fourth-quarter gross margin increased from 29.9% to 36.9% of sales in 2021 due to higher
merchandise margins.
Selling, General and Administrative expenses as a percent of sales increased
from 38.1% to 40.5% of sales during the quarter primarily due to increased employee benefit/bonus
expense and store operating expenses, related to increased store operating hours compared to the
prior year.
Income tax for the quarter was an expense of $0.2 million compare
d to a benefit of $2.6
million last year. The tax expense is primarily due to higher than anticipated pre-tax income for the
year.
For 2021, gross margin increased from 23.7% of sales in 2020 to 40.5% of sales
primarily due to
increased merchandise margins
. Selling, general and administrative expenses decreased to
35.1% of sales compared to 36.4% in the prior year. The selling, general and administrative rate
decrease was primarily due to lower impairment charges compared to prior year, coupled with the
effects of the leveraging of expenses, partially offset by
higher employee benefit/bonus expense.
Income tax expense for the year was $2.1 million compared to a benefit of $25.3 million las
t year.
For the year ended January 29, 2022, merchandise inventories increased $40.8 million compared to
the prior year primarily due to planned earlier shipments in anticipation of the calendar shift of
Chinese New Year. This increase also attributed to the increase in current liabilities.
“We anticipate supply chain disruption and inflation-related increases to our costs, as well as
pressure on our customers’ discretionary income to continue through 2022,” stated Mr. Cato.
“However, we view 2022 as a stabilizing year for the Company, following two years of very
unpredictable business cycles.”
During 2021, the Company opened 4 stores, relocated 2 stores and permanently closed 23 stores.
As of January 29, 2022, the Company operated 1,311 stores in 32 states, compared to 1,330 stores
in 33 states as of January 30, 2021. During 2022, the Company plans to open up to 30 new stores
and close up to 25 stores as leases expire. These store closings are anticipated to have minimal
financial impact.
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,
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
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.
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED JANUARY 29, 2022 AND JANUARY 30, 2021
(Dollars in thousands, except per share data)
Quarter Ended
Twelve Months Ended
January
%
January
%
January
%
January
%
2022
Sales
2021
Sales
2022
Sales
2021
Sales
REVENUES
$
173,649
100.0%
$
153,233
100.0%
$
761,358
100.0%
$
567,516
100.0%
2,578
1.5%
2,185
1.4%
7,913
1.0%
7,595
1.3%
176,227
101.5%
155,418
101.4%
769,271
101.0%
575,111
101.3%
GROSS MARGIN (Memo)
64,071
36.9%
45,784
29.9%
308,293
40.5%
134,329
23.7%
COSTS AND EXPENSES,
109,578
63.1%
107,449
70.1%
453,065
59.5%
433,187
76.3%
70,338
40.5%
58,326
38.1%
267,026
35.1%
206,679
36.4%
3,004
1.7%
3,568
2.3%
12,356
1.6%
14,681
2.6%
(422)
-0.2%
(3,027)
-2.0%
(2,141)
-0.3%
(6,630)
-1.2%
182,498
105.1%
166,316
108.5%
730,306
95.9%
647,917
114.2%
Income (Loss) Before Income
Taxes
(6,271)
-3.6%
(10,898)
-7.1%
38,965
5.1%
(72,806)
-12.8%
Income Tax (Benefit)/Expense
192
0.1%
(2,624)
-1.7%
2,121
0.3%
(25,323)
-4.5%
Net Income (Loss)
$
(6,463)
-3.7%
$
(8,274)
-5.4%
$
36,844
4.8%
$
(47,483)
-8.4%
Basic Earnings Per Share
$
(0.30)
$
(0.37)
$
1.65
$
(2.01)
Diluted Earnings Per Share
$
(0.30)
$
(0.37)
$
1.65
$
(2.01)
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
January 29,
January 30,
2022
2021
(Unaudited)
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
19,759
$
17,510
Short-term investments
145,998
126,416
Restricted cash
3,919
3,918
Accounts receivable - net
55,812
52,743
Merchandise inventories
124,907
84,123
Other current assets
5,273
5,840
Total Current Assets
355,668
290,550
Property and Equipment – net
63,083
72,550
Noncurrent Deferred Income
9,313
5,685
Other Assets
24,437
22,850
Right-of-Use Assets, net
181,265
199,817
$
633,766
$
591,452
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
$
177,327
$
118,513
Current Lease Liability
66,808
63,421
Noncurrent Liabilities
17,914
19,705
Lease Liability
117,521
143,315
Stockholders' Equity
254,196
246,498
$
633,766
$
591,452