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cato-20230531
FALSE 0000018255 0000018255 2023-05-18 2023-05-18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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):
 
May 18, 2023
 
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.
☐
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
THE CATO
 
CORPORATION
 
Item 2.02. Results of Operations and Financial Condition
On May 18, 2023, The Cato Corporation issued a press release regarding its financial
 
results for the first quarter
ending May 29, 2023. A copy of this press release is hereby incorporated as Exhibit 99.1
 
hereto.
Item 5.07. Submission of Matters to a Vote
 
of Security Holders.
On
 
May
 
18,
 
2023,
 
the
 
Registrant
 
held
 
its
 
Annual
 
Meeting.
 
The
 
following
 
are
 
the
 
voting
 
results
 
on
 
each
 
matter
submitted to the Registrant’s
 
stockholders at the
 
Annual Meeting. The
 
proposals below are described
 
in detail in the
Proxy Statement.
 
At the Annual Meeting, the three nominees for director
 
were elected to the Registrant’s Board
 
of Directors (Proposal
1 below).
 
In
 
addition,
 
management’s
 
proposal
 
regarding
 
the
 
Company’s
 
executive
 
compensation
 
was
 
approved
 
(Proposal
 
2
below).
In addition, to
 
hold an
 
advisory (non-binding)
 
vote on
 
how often
 
a shareholder
 
vote on
 
“say on
 
pay” is
 
held every
one year, two years or three years.
 
 
In
 
addition,
 
management’s
 
proposal
 
regarding
 
the
 
selection
 
of
 
PricewaterhouseCoopers
 
LLP
 
as
 
the
 
Company’s
independent registered public
 
accounting firm for
 
the fiscal year ending
 
January 28, 2023
 
was approved (Proposal
 
3
below).
 
Summary of Voting
 
By Proposal
 
1. To
 
elect Dr. Pamela L.
 
Davies, Thomas B. Henson and
 
Bryan F.
 
Kennedy, each
 
for a term expiring in
 
2026 and
until their successors are elected and qualified. Votes
 
recorded, by nominee, were as follows:
 
 
 
 
 
 
 
 
Nominee
 
 
For
 
 
Abstain
 
Broker
Non-Votes
Dr. Pamela L Davies
 
23,657,559
 
5,244,500
 
5,014,557
Thomas B. Henson
25,137,017
3,765,042
5,014,557
Bryan F. Kennedy
 
23,247,410
 
5,654,649
 
5,014,557
 
2. To
 
approve, on
 
an advisory basis,
 
the Company’s
 
executive compensation.
 
The Company’s
 
shareholders voted
to approve
 
this proposal
 
with 22,466,145
 
for and
 
6,346,566
 
votes against.
 
There
 
were 89,348
 
abstentions and
5,014,557 Broker non-votes.
3.
 
In addition,
 
to
 
hold
 
an advisory
 
(non-binding)
 
vote
 
on
 
how often
 
a
 
shareholder
 
vote
 
on
 
“say on
 
pay”
 
is
 
held
every one
 
year,
 
two
 
years or
 
three
 
years.
 
The
 
Company’s
 
shareholders
 
voted:
 
7,280,231
 
for
 
every one
 
year,
66,409 for every two
 
years, and 22,466,145for
 
every three years.
 
There were 66,887
 
abstentions and 5,014,557
Broker non-votes.
 
In
 
light
 
of
 
the
 
voting
 
results
 
with
 
respect
 
to
 
the
 
frequency
 
of
 
advisory
 
votes
 
on
 
executive
 
compensation,
 
the
Company’s
 
board of
 
directors has
 
determined that
 
the Company
 
currently intends
 
to hold
 
an advisory
 
vote on
the
 
compensation
 
of
 
our
 
named
 
executive
 
officers
 
every
 
three
 
years
 
until
 
the
 
next
 
required
 
vote
 
on
 
the
frequency of advisory votes on executive compensation.
 
 
4. To
 
approve, to
 
ratify the
 
selection
 
of PricewaterhouseCoopers
 
LLP as
 
the Company’s
 
independent
 
registered
public
 
accounting
 
firm
 
for
 
the
 
fiscal
 
year
 
ending
 
February
 
3,
 
2024.
 
The
 
Company’s
 
shareholders
 
voted
 
to
approve this proposal with 33,653,005 for and 102,207 votes against. There
 
were 161,404 abstentions.
 
 
3
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)
 
 
 
 
4
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
May 22, 2023
/s/ John P.
 
D. Cato
Date
John P.
 
D. Cato
Chairman, President and
Chief Executive Officer
May 22, 2023
/s/ Charles D. Knight
Date
Charles D. Knight
 
Executive Vice President
Chief Financial Officer
 
 
5
Exhibit Index
 
Exhibit
Exhibit
No.
99.1
104
 
Cover page Interactive Data File (embedded within Inline
XBRL document)
104
exhibit99
 
 
 
 
 
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
 
For Further Information Contact:
 
Charles D. Knight
 
Executive Vice President
 
Chief Financial Officer
 
InvestorRelations@catocorp.com
CATO REPORTS
 
1Q EARNINGS
 
CHARLOTTE, N.C. (May 18, 2023) – The Cato Corporation (NYSE: CATO) today reported net income of $4.4 million
or $0.22 per diluted share for the first quarter ended April 29, 2023, compared
 
to net income of $9.7 million or $0.46 per
diluted share for the first quarter ended April 30, 2022.
 
Sales for the first quarter ended April 29, 2023 were $190.3 million, or
 
a decrease of 7% from sales of $204.9 million for
the first quarter ended April 30, 2022.
 
The Company’s same-store sales for the quarter decreased 6% compared to the
same period in 2022.
 
"Our customer continues to feel the strain of higher interest rates and inflation
 
on their discretionary income, which has
negatively impacted our sales for the first quarter,” said John Cato, Chairman, President and Chief Executive
 
Officer.
“We
are finally experiencing sustained relief from previous supply chain challenges,
 
but the continued volatility in the
economy causes us to remain cautious about the remainder of the year
.
”
 
First-quarter gross margin as a percentage of sales increased from 35.5% in 2022
 
to 35.8% in 2023.
The improved
merchandise margin was driven by reduced markdowns attributable to on-time merchandise
 
shipments, coupled with
lower freight and distribution costs.
 
Selling, General and Administrative expenses as a percent
 
of sales increased from
29.5% to 32.5% of sales during the quarter due to increased operating
 
expenses, including higher wages, combined with
the effects of deleveraging resulting from sales decline, when compared to the prior year.
 
Income tax expense for the
quarter was $2.1 million compare
d to $1.9 million last year.
 
During the first quarter ended April 29, 2023, the Company opened 4
 
stores and permanently closed 20 stores.
 
As of
April 29, 2023, the Company operated 1,264 stores in 32 states, compared
 
to 1,315 stores in 32 states as of April 30, 2022.
 
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, 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 April 29, 2023 AND April 30, 2022
(Dollars in thousands, except per share data)
Quarter Ended
%
%
April 29, 2023
Sales
April 30, 2022
Sales
REVENUES
 
Retail sales
$
190,311
100.0%
$
204,933
100.0%
 
Other revenue (principally finance,
 
late fees and layaway charges)
1,739
0.9%
1,788
0.9%
 
Total revenues
192,050
100.9%
206,721
100.9%
GROSS MARGIN (Memo)
68,224
35.8%
72,690
35.5%
COSTS AND EXPENSES, NET
 
Cost of goods sold
122,087
64.2%
132,243
64.5%
 
Selling, general and administrative
61,934
32.5%
60,441
29.5%
 
Depreciation
2,357
1.2%
2,743
1.3%
 
Interest and other income
(897)
-0.5%
(403)
-0.2%
 
Costs and expenses, net
185,481
97.5%
195,024
95.2%
Income Before Income Taxes
6,569
3.5%
11,697
5.7%
Income Tax Expense
 
2,141
1.1%
1,949
1.0%
Net Income
$
4,428
2.3%
$
9,748
4.8%
Basic Earnings Per Share
$
0.22
$
0.46
Diluted Earnings Per Share
$
0.22
$
0.46
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
April 29, 2023
January 28, 2022
(Unau
dited)
(Unaud
ited)
ASSETS
Current Assets
$
38,103
$
20,005
 
Cash and cash equivalents
87,750
108,652
 
Short-term investments
3,826
3,787
 
Restricted cash
29,731
26,497
 
Accounts receivable - net
106,813
112,056
 
Merchandise inventories
7,298
6,676
 
Other current assets
273,521
277,673
Total Current Assets
Property and Equipment - net
74,187
70,382
Noncurrent Deferred Income Taxes
9,938
9,213
Other Assets
21,478
21,596
Right-of-Use Assets, net
155,512
174,276
 
TOTAL
$
534,636
$
553,140
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
135,934
$
135,597
Current Lease Liability
49,707
67,360
Noncurrent Liabilities
16,449
16,183
Lease Liability
105,765
107,407
Stockholders' Equity
226,781
226,593
 
TOTAL
$
534,636
$
553,140