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The Cato Corporation
 

 
 
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):           November 15, 2005          
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) 		  (I.R.S. Employer
Identification Number)
     
8100 Denmark Road, Charlotte, North Carolina   28273-5975
     
(Address of Principal Executive Offices)   (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 (see General Instruction A.2. below):
o        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

THE CATO CORPORATION
Item 2.02. Results of Operations and Financial Condition.
On November 15, 2005, The Cato Corporation issued a press release regarding its financial results for the third quarter ending October 29, 2005. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
     (c) Exhibits
     Exhibit 99.1 – Press Release issued November 15, 2005

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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 hereunto duly authorized.
         
    THE CATO CORPORATION
 		  
November 17, 2005    /s/ John P. Derham Cato    
Date    John P. Derham Cato   
    Chairman, President and
Chief Executive Officer 		  
 
     
November 17, 2005    /s/ Michael O. Moore    
Date    Michael O. Moore   
    Executive Vice President
Chief Financial Officer and Secretary 		  

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Exhibit Index
         
Exhibit   Exhibit No.
Press Release issued November 15, 2005
    99.1  

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Ex-99.1
 

Exhibit 99.1

Cato Logo

     
FOR IMMEDIATE RELEASE
  NEWS RELEASE
 
  CEO Approval ___
 
    
For Further Information Contact:
    
     Michael O. Moore
    
     Executive Vice President
    
     Chief Financial Officer
    
     704-551-7201
    
CATO REPORTS 3Q EARNINGS
Provides 4Q and Full Year Guidance
 
Charlotte, NC (November 15, 2005) — The Cato Corporation (NYSE: CTR) today reported net income of $4.1 million for the third quarter ended October 29, 2005, compared to net income of $1.8 million for the third quarter ended October 30, 2004, an increase of 126%. Earnings per diluted share for the third quarter were $0.13, compared $0.06 last year, an increase of 117%. Sales for the third quarter were $177.8 million, a 9% increase over sales of $163.6 million last year. Comparable store sales for the quarter increased 4%.
For the nine months ended October 29, 2005, the Company earned net income of $33.2 million compared to net income of $26.7 million for the nine months ended October 30, 2004, a 24% increase. Earnings per diluted share were $1.04 compared to $.85 last year, a 22% increase. Sales were $601.1 million for the first nine months of 2005, a 6% increase from sales of $565.9 million last year. The Company’s year-to-date comparable store sales increased 1%.
For the quarter, the gross margin rate increased to 32.6% versus 29.3% last year primarily due to a reduction in markdowns. The SG&A rate increased to 28.8% from 27.2% last year primarily due to increased incentive compensation.
8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

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“Increased sales of regular priced merchandise and higher customer spending in hurricane affected states resulted in increased third quarter earnings,” commented John Cato, Chairman, President, and Chief Executive Officer. “We estimate fourth quarter earnings per diluted share will be in the range of $.28 to $.30 versus $.26 last year, an increase of 8% to 15%. This estimate is based on comparable store sales in the range of down 2% to up 2%. For the year, earnings per diluted share are estimated to be in the range of $1.32 to $1.34 versus $1.11 last year, an increase of 19% to 21%.”
The Company repurchased 148,300 shares during the third quarter at an average cost of $18.93 and has 1,595,000 shares remaining in its repurchase program.
During the third quarter, the Company opened 25 new stores. Year-to-date the Company has opened 52 new stores, relocated 11 stores, and closed seven stores. As of October 29, 2005, the Company operated 1,222 stores in 31 states, compared to 1,149 stores in 29 states as of October 30, 2004.
In the fourth quarter, the Company expects to open 31 stores, which would bring the total number of new stores opened for the year to 83.
The Cato Corporation is a leading specialty retailer of value-priced women’s fashion apparel operating two divisions, “Cato” and “It’s Fashion!”. The Company offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices, every day. Additional information on The Cato Corporation is available at www.catocorp.com.
Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected financial results for the fourth quarter and year and expected plans for fourth quarter store openings 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, the following: general economic conditions; competitive factors and pricing pressures; the Company’s ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand. 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.
# # #
8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

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THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED OCTOBER 29, 2005 AND OCTOBER 30, 2004
(Dollars in thousands, except per share data)
                                                                 
    Quarter Ended     Nine Months Ended    
    October 29,   %   October 30,   %   October 29,   %   October 30,   %
    2005   Sales   2004   Sales   2005   Sales   2004   Sales
                    (Restated)                           (Restated)
REVENUES
                                                                
Retail sales
   $ 177,762       100.0 %   $ 163,611       100.0 %   $ 601,142       100.0 %   $ 565,873       100.0 %
Other income (principally finance, late fees and layaway charges)
     3,592       2.0 %     3,903       2.4 %     11,103       1.9 %     11,727       2.1 %
 
                                                                
Total revenues
     181,354       102.0 %     167,514       102.4 %     612,245       101.9 %     577,600       102.1 %
 
                                                                
 
                                                                
GROSS MARGIN (Memo)
     57,893       32.6 %     47,971       29.3 %     204,413       34.0 %     181,649       32.1 %
 
                                                                
COSTS AND EXPENSES, NET
                                                                
Cost of goods sold
     119,869       67.4 %     115,640       70.7 %     396,729       66.0 %     384,224       67.9 %
Selling, general and administrative
     51,231       28.8 %     44,402       27.2 %     151,328       25.2 %     137,518       24.3 %
Depreciation
     5,094       2.9 %     5,140       3.1 %     15,158       2.5 %     15,210       2.7 %
Interest expense
     10       0.0 %     183       0.1 %     172       0.0 %     512       0.1 %
Interest and other income
     (1,235 )     (0.7 )%     (676 )     (0.4 )%     (3,247 )     (0.5 )%     (1,838 )     (0.3 )%
 
                                                                
Cost and expenses, net
     174,969       98.4 %     164,689       100.7 %     560,140       93.2 %     535,626       94.7 %
 
                                                                
 
                                                                
Income Before Income Taxes
     6,385       3.6 %     2,825       1.7 %     52,105       8.7 %     41,974       7.4 %
 
                                                                
Income Tax Expense
     2,318       1.3 %     1,025       0.6 %     18,914       3.2 %     15,236       2.7 %
 
                                                                
 
                                                                
Net Income
   $ 4,067       2.3 %   $ 1,800       1.1 %   $ 33,191       5.5 %   $ 26,738       4.7 %
 
                                                                
 
                                                                
Basic Earnings Per Share
   $ 0.13             $ 0.06             $ 1.07             $ 0.87          
 
                                                                
 
                                                                
Basic Weighted Average Shares
     31,126,752               30,913,685               31,139,741               30,832,394          
 
                                                                
 
                                                                
Diluted Earnings Per Share
   $ 0.13             $ 0.06             $ 1.04             $ 0.85          
 
                                                                
 
                                                                
Diluted Weighted Average Shares
     31,771,535               31,451,004               31,798,500               31,376,973          
 
                                                                
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                         
    October 29,   October 30,   January 29,
    2005   2004   2005
    (Unaudited)   (Unaudited)    
    (Restated)
ASSETS
                        
 
                        
Current Assets
                        
Cash and cash equivalents
   $ 18,288     $ 27,560     $ 18,640  
Short-term investments
     75,107       63,323       88,588  
Accounts receivable — net
     47,638       49,404       50,889  
Merchandise inventories
     103,435       101,807       100,538  
Other current assets
     8,694       7,387       7,767  
 
                        
 
                        
Total Current Assets
     253,162       249,481       266,422  
 
                        
Property and Equipment — net
     122,034       116,307       117,590  
 
                        
Other Assets
     10,941       10,110       10,122  
 
                        
 
                        
TOTAL
   $ 386,137     $ 375,898     $ 394,134  
 
                        
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
 
                        
Current Liabilities
   $ 120,138     $ 119,967     $ 132,631  
 
                        
Noncurrent Liabilities
     34,478       34,239       34,328  
 
                        
Long Term Debt
     0       17,000       16,000  
 
                        
Stockholders’ Equity
     231,521       204,692       211,175  
 
                        
 
                        
TOTAL
   $ 386,137     $ 375,898     $ 394,134  
 
                        

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