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cato8kq1_2024
FALSE 0000018255 0000018255 2024-05-23 2024-05-23
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 23, 2024
 
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 23, 2024, The Cato Corporation issued a press release regarding its financial
 
results for the first quarter
ending May 4, 2024. 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
 
23,
 
2024,
 
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 two
 
nominees for director
 
were elected to
 
the Registrant’s
 
Board of Directors
 
(Proposal
1 below).
 
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
 
February 1, 2025
 
was approved (Proposal
 
2
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
John P.
 
D. Cato
 
24,769,119
 
3,047,577
 
5,792,278
Bailey W.
 
Patrick
23,905,656
3,911,040
5,792,278
 
2. To
 
approve, to
 
ratify the
 
selection
 
of PricewaterhouseCoopers
 
LLP as
 
the Company’s
 
independent
 
registered
public
 
accounting
 
firm
 
for
 
the
 
fiscal
 
year
 
ending
 
February
 
1,
 
2025.
 
The
 
Company’s
 
shareholders
 
voted
 
to
approve this proposal with 33,293, 856 for and 173,223 votes against. There
 
were 141,895 abstentions.
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
May 28, 2024
/s/ John P.
 
D. Cato
Date
John P.
 
D. Cato
Chairman, President and
Chief Executive Officer
May 28, 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
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 23, 2024) – The Cato Corporation (NYSE: CATO) today reported net income of $11.0 million
or $0.54 per diluted share for the first quarter ended May 4, 2024, compared
 
to net income of $4.4 million or $0.22 per
diluted share for the first quarter ended April 29, 2023.
 
Sales for the first quarter ended May 4, 2024 were $175.3 million, or a decrease
 
of 8% from sales of $190.3 million for
the first quarter ended April
 
29, 2023.
 
The Company’s same-store sales for the quarter decreased 6%.
 
"The pressure on our customers’ discretionary spending
 
levels due to high interest rates and inflation continue to
negatively impact our sales,” said John Cato, Chairman, President and
 
Chief Executive Officer.
“With the pressure on our
customers’ discretionary spending levels, we remain cautious about
 
the remainder of the year
.
”
 
First quarter gross margin as a percentage of sales was 35.8% in both 2024 and
 
2023.
 
Selling, General and Administrative
expense decreased to $56.8 million in 2024 from $61.9 million in 2023 due
 
to decreases in equity compensation,
advertising, and store expenses including payroll, partially offset by increases in
 
insurance expenses.
 
Selling, General and
Administrative expense as a percentage of sales decreased to 32.4%
 
in 2024 compared to 32.5% in 2023.
 
Interest and
other income increased to $5.8 million in 2024 from $0.9 million in 2023 primarily
 
due to a net gain on sale of land of
$3.2 million.
 
Income tax expense for the quarter decreased to $0.6 million
 
in 2024 from
$2.1 million in 2023.
 
The
decrease in tax expense is primarily due to valuation allowances against
 
net deferred tax assets and the impact of the
foreign rate differential and lower state income taxes.
Additionally, the Company bought back 431,415 shares during the quarter.
 
During the first quarter ended May 4, 2024, the Company did not open any
 
stores and permanently closed seven stores.
 
As of May 4, 2024, the Company operated 1,171 stores in 31 states, compared
 
to 1,264 stores in 32 states as of April 29,
2023.
 
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’ discretionary spending 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, or continuation of negative trends 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;
underperformance or other factors that may lead to, or affect the volume
 
of, store closures; adverse weather,
 
public
health threats (including the global coronavirus (COVID-19) outbreak), acts of war or aggression or similar conditions
that may affect our merchandise supply chain, 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 (UNAUDITED)
FOR THE PERIODS ENDED May 4, 2024 AND April 29, 2023
(Dollars in thousands, except per share data)
Quarter Ended
May 4
%
April 29
%
2024
Sales
2023
Sales
REVENUES
 
Retail sales
$
175,272
100.0%
$
190,311
100.0%
 
Other revenue (principally finance,
 
late fees and layaway charges)
1,827
1.0%
1,739
0.9%
 
Total revenues
177,099
101.0%
192,050
100.9%
GROSS MARGIN (Memo)
62,767
32.5%
68,224
35.8%
COSTS AND EXPENSES, NET
 
Cost of goods sold
112,505
64.2%
122,087
64.2%
 
Selling, general and administrative
56,752
32.4%
61,934
32.5%
 
Depreciation
2,040
1.2%
2,357
1.2%
 
Interest and other income
(5,821)
-3.3%
(897)
-0.5%
 
Costs and expenses, net
165,476
94.4%
185,481
97.5%
Income Before Income Taxes
11,623
6.6%
6,569
3.5%
Income Tax Expense
 
649
0.4%
2,141
1.1%
Net Income (Loss)
$
10,974
6.3%
$
4,428
2.3%
Basic Earnings Per Share
$
0.54
$
0.22
Diluted Earnings Per Share
$
0.54
$
0.22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
May 4,
February 3,
2024
 
2024
 
(Unaudited)
(Unaudited)
ASSETS
Current Assets
 
Cash and cash equivalents
$
39,101
$
23,940
 
Short-term investments
66,250
79,012
 
Restricted cash
3,533
3,973
 
Accounts receivable - net
31,716
29,751
 
Merchandise inventories
101,317
98,603
 
Other current assets
7,724
7,783
Total Current Assets
249,641
243,062
Property and Equipment - net
64,568
64,022
Other Assets
23,305
25,047
Right-of-Use Assets, net
139,635
154,686
 
TOTAL
$
477,149
$
486,817
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
127,997
$
126,900
Current Lease Liability
55,800
61,108
Noncurrent Liabilities
14,607
14,475
Lease Liability
81,834
92,013
Stockholders' Equity
196,911
192,321
 
TOTAL
$
477,149
$
486,817