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 March 21, 2024, The Cato Corporation issued a press release regarding its financial results for the fourth quarter
ending February 3, 2024. 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.
March 25, 2024
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
March 25, 2024
/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
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
CATO REPORTS 4Q AND FULL YEAR LOSS
CHARLOTTE, N.C. (March 21, 2024) – The Cato Corporation (NYSE: CATO) today reported a net loss of ($23.4)
million or ($1.14) per diluted share for the fourth quarter ended February 3, 2024, compared to a net loss of ($3.0) million
or ($0.14) per diluted share for the fourth quarter ended January 28, 2023. Full-year fiscal 2023 net loss was ($23.9)
million or ($1.17) per diluted share compared to net income of $0.0 million or $0.00 per diluted share for 2022.
Contributing to the net loss is income tax expense of $10.9 million for the fourth quarter of fiscal 2023 and $10.1 million
for the full year of fiscal 2023. The income tax expense is primarily due to a non-cash valuation allowance recorded
against U.S. federal and state deferred tax assets.
Sales for the fourth quarter ended February 3, 2024 were $172.1 million, or a decrease of 3% from sales of $177.5 million
for the fourth quarter ended January 28, 2023. The Company’s same-store sales for the quarter decreased 5% compared to
the same period in 2022. The gap between sales and same store sales percentages is due to the fourth quarter of 2023
containing fourteen weeks versus thirteen weeks in the fourth quarter of fiscal 2022, as the fiscal year ended February 3,
2024 contains 53 weeks versus 52 weeks in the fiscal year ended January 28, 2023. For the year, the Company's sales
decreased 7% to $700.3 million from 2022 sales of $752.4 million. Same-store sales for the year decreased 6% compared
to 2022.
"Our fiscal 2023 sales trend was negatively impacted by pressure on our customers’ discretionary spending levels
primarily due to higher interest rates and inflation,” said John Cato, Chairman, President and Chief Executive Officer.
“Our full year gross margin rate improved compared to fiscal 2022, as we focused on controlling our inventory. Despite
the challenges experienced throughout 2023, we have continued investing in key capital projects and efficiency initiatives
in support of our long-term growth.”
Fourth-quarter gross margin decreased from 31.3% to 31.0% of sales in 2023 reflecting pressure from increased
markdowns, coupled with higher buying and domestic freight costs. Selling, general and administrative expenses as a
percent of sales increased from 33.8% to 39.2% of sales during the quarter primarily due to increased store operating
expenses, insurance, closed store and impairment expenses. Income tax for the quarter was an expense of $10.9 million
compared to a benefit of $1.2 million last year. The increase in tax expense for the quarter was due primarily to a non-
cash valuation allowance recorded against U.S. federal and state deferred tax assets.
For the full year 2023, gross margin increased from 32.3% of sales in 2022 to 33.7% of sales in part due to lower ocean
freight costs and an increase in regular priced selling of goods, partially offset by higher occupancy and buying costs.
Selling, general and administrative expenses increased to 36.1% of sales compared to 32.3% in the prior year. The
selling, general and administrative rate increase was primarily due to higher payroll costs, insurance and closed store
expenses including impairment expenses. Income tax expense for the year was $10.1 million compared to an expense of
$1.7 million last year. The increase in tax expense for the year was due primarily to a non-cash valuation allowance
recorded against U.S. federal and state deferred tax assets.
“As we look ahead to 2024, we remain cautious in this challenging economic environment with continued high interest
rates and persistent inflation impacting our customers’ disposable income,” stated Mr. Cato. “In 2024, we will continue to
introduce new merchandise offerings, as well as refine our existing merchandise assortments. We will also continue to
invest in our productivity and efficiency initiatives. As always we will continue our strategy of offering great fashion at a
value, with outstanding customer service.”
During 2023, the Company opened seven stores, relocated two stores and permanently closed 109 stores. As of February
3, 2024, the Company operated 1,178 stores in 31 states, compared to 1,280 stores in 32 states as of January 28, 2023.
During 2024, the Company plans to open up to 15 new stores and close up to 75 underperforming 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,
including, without limitation, statements regarding the Company’s expected or estimated operational financial results,
activities or opportunities, and potential impacts and effects of interest rates, inflation or other factors that may affect our
customers’ disposable income or our costs, 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, inflation, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of
credit; changes in laws, regulations or government policies 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;
adverse developments or volatility affecting the financial services industry or broader financial markets; 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 (LOSS) (UNAUDITED)
FOR THE PERIODS ENDED February 3, 2024 AND January 28, 2023
(Dollars in thousands, except per share data)
Quarter Ended
Twelve Months Ended
February 3,
%
January 28,
%
February 3,
%
January 28,
%
2024
Sales
2023
Sales
2024
Sales
2023
Sales
REVENUES
$
172,144
100.0%
$
177,510
100.0%
$
700,318
100.0%
$
752,370
100.0%
2,738
1.6%
1,539
0.9%
7,741
1.1%
6,890
0.9%
174,882
101.6%
179,049
100.9%
708,059
101.1%
759,260
100.9%
GROSS MARGIN (Memo)
53,367
31.0%
55,590
31.3%
236,005
33.7%
242,706
32.3%
COSTS AND EXPENSES, NET
118,777
69.0%
121,920
68.7%
464,313
66.3%
509,664
67.7%
67,433
39.2%
60,042
33.8%
252,777
36.1%
242,648
32.3%
2,500
1.5%
2,662
1.5%
9,871
1.4%
11,080
1.5%
(1,347)
-0.8%
(1,337)
-0.8%
(5,101)
-0.7%
(5,902)
-0.8%
187,363
108.8%
183,287
103.3%
721,860
103.1%
757,490
100.7%
Income Before Income Taxes
(12,481)
-7.3%
(4,238)
-2.4%
(13,801)
-2.0%
1,770
0.2%
Income Tax Expense
10,937
6.4%
(1,246)
-0.7%
10,140
1.4%
1,741
0.2%
Net Income (Loss)
$
(23,418)
-13.6%
$
(2,992)
-1.7%
$
(23,941)
-3.4%
$
29
0.0%
Basic Earnings Per Share
$
(1.14)
$
(0.14)
$
(1.17)
$
-
Diluted Earnings Per Share
$
(1.14)
$
(0.14)
$
(1.17)
$
-
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
February 3,
January 28,
2024
2023
(Unaudited)
(Unaudited)
ASSETS
Current Assets
$
23,940
$
20,005
79,012
108,652
3,973
3,787
29,751
26,497
98,603
112,056
7,783
6,676
Total Current Assets
243,062
277,673
Property and Equipment - net
64,022
70,382
Noncurrent Deferred Income Taxes
-
9,213
Other Assets
25,047
21,596
Right-of-Use Assets, net
154,686
174,276
$
486,817
$
553,140
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
126,900
$
135,597
Current Lease Liability
61,108
67,360
Noncurrent Liabilities
14,475
16,183
Lease Liability
92,013
107,407
Stockholders' Equity
192,321
226,593
$
486,817
$
553,140