cato-20230824
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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 17, 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 August 17, 2023, The Cato Corporation issued a press release regarding its
 
financial results for the second
quarter ending July 29, 2023. A copy of this press release is hereby incorporated
 
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.
 
THE CATO
 
CORPORATION
August 21, 2023
/s/ John P.
 
D. Cato
Date
John P.
 
D. Cato
Chairman, President and
Chief Executive Officer
August 21, 2023
/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
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
 
2Q RESULTS
CHARLOTTE, N.C. (August 17, 2023) – The Cato Corporation (NYSE: CATO) today reported net income of $1.1
million or $0.06 per diluted share for the second quarter ended July 29, 2023,
 
compared to a net loss of $2.3 million or
($0.11) per diluted share for the second quarter ended July 30, 2022.
 
Sales for the second quarter ended July 29, 2023 were $181.2 million,
 
or a decrease of 7% from sales of $195.0 million
for the second quarter
 
ended July 30, 2022.
 
The Company’s same-store sales for the quarter decreased 5% compared to
2022.
For the six months ended July 29, 2023, the Company reported net
 
income of $5.6 million or $0.27 per diluted share,
compared to net income of $7.4 million or $0.35 per diluted share for the six
 
months ended July 30, 2022.
 
Sales for the
six months ended July 29, 2023 were $371.5 million, a decrease of 7%
 
from sales of $399.9 million for the six months
ended July 30, 2022.
 
Year-to-date same-store sales decreased 5% compared to 2022.
 
“Our year-to-date sales trend continues to be negatively impacted by pressure on our customers’
 
discretionary spending,”
stated John Cato, Chairman, President, and Chief Executive Officer.
 
“Our gross margin improved as we took steps to
right size our inventory.
 
However, we believe the back half of the year will remain challenging.”
 
Gross margin increased to 35.1% from 32.4% of sales in the quarter due to higher
 
merchandise margins and decreased
freight expense.
 
SG&A expenses as a percent of sales increased from
 
31.2% to 34.0% of sales during the quarter
primarily due to increased payroll and insurance expense. Tax expense for the quarter was $1.3 million versus $5.7
million in the prior year, reflecting a more normalized tax rate in the quarter compared to last year.
 
Year
 
-to-date gross margin increased to 35.5% of sales from 34.0% the prior year primarily
 
due to increased merchandise
margins and decreased freight expense.
 
Year-to-date SG&A expenses were 33.3% as a percent of sales versus 30.3% in
the prior year primarily due to increased payroll and insurance expense.
 
Income tax expense for the first half decreased to
$3.5 million versus $7.6 million last year.
During the second quarter ended July 29, 2023, the Company
 
opened two new stores, relocated one store and closed 19
stores.
 
As of July 29, 2023, the Company has 1,247 stores in 31 states,
 
compared to 1,312 stores in 32 states as of July
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 July 29, 2023 AND July 30, 2022
(Dollars in thousands, except per share data)
Quarter Ended
Six Months Ended
July 29,
%
July 30,
%
July 29,
%
July 30,
%
2023
 
Sales
2022
Sales
2023
 
Sales
2022
Sales
REVENUES
 
Retail sales
$
181,181
100.0%
$
195,006
100.0%
$
371,492
100.0%
$
399,939
100.0%
 
Other revenue (principally finance,
 
late fees and layaway charges)
1,690
0.9%
1,858
1.0%
3,429
0.9%
3,646
0.9%
 
Total revenues
182,871
100.9%
196,864
101.0%
374,921
100.9%
403,585
100.9%
GROSS MARGIN (Memo)
63,564
35.1%
63,257
32.4%
131,788
35.5%
135,947
34.0%
COSTS AND EXPENSES, NET
 
Cost of goods sold
117,617
64.9%
131,749
67.6%
239,704
64.5%
263,992
66.0%
 
Selling, general and administrative
61,618
34.0%
60,768
31.2%
123,552
33.3%
121,209
30.3%
 
Depreciation
2,510
1.4%
2,811
1.4%
4,867
1.3%
5,554
1.4%
 
Interest and other income
(1,334)
-0.7%
(1,884)
-1.0%
(2,231)
-0.6%
(2,287)
-0.6%
 
Costs and expenses, net
180,411
99.6%
193,444
99.2%
365,892
98.5%
388,468
97.1%
Income Before Income Taxes
2,460
1.4%
3,420
1.8%
9,029
2.4%
15,117
3.8%
Income Tax Expense
 
1,333
0.7%
5,694
2.9%
3,475
0.9%
7,643
1.9%
Net Income (Loss)
$
1,127
0.6%
$
(2,274)
-1.2%
$
5,554
1.5%
$
7,474
1.9%
Basic Earnings Per Share
$
0.06
$
(0.11)
$
0.27
$
0.35
Basic Weighted Average Shares
20,593,949
21,177,321
20,474,142
21,261,405
Diluted Earnings Per Share
$
0.06
$
(0.11)
$
0.27
$
0.35
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
July 29,
January 28,
2023
 
2023
 
(Unaudited)
(Unaudited)
ASSETS
Current Assets
 
Cash and cash equivalents
$
55,977
$
20,005
 
Short-term investments
77,222
108,652
 
Restricted cash
3,877
3,787
 
Accounts receivable - net
26,915
26,497
 
Merchandise inventories
92,718
112,056
 
Other current assets
7,098
6,676
Total Current Assets
263,807
277,673
Property and Equipment - net
73,871
70,382
Noncurrent Deferred Income Taxes
9,888
9,213
Other Assets
21,770
21,596
Right-of-Use Assets, net
138,331
174,276
 
TOTAL
$
507,667
$
553,140
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
127,971
$
135,597
Current Lease Liability
32,431
67,360
Noncurrent Liabilities
16,342
16,183
Lease Liability
105,390
107,407
Stockholders' Equity
225,533
226,593
 
TOTAL
$
507,667
$
553,140