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 22, 2008

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 May 22, 2008, The Cato Corporation issued a press release regarding its financial results for the first quarter ending May 3, 2008. A copy of this press release is furnished as Exhibit 99.1 hereto.

Item 9.01.		Financial Statements and Exhibits.

          (d) Exhibits

          Exhibit 99.1 — Press Release issued May 22, 2008.

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.

Exhibit Index

Exhibit		Exhibit No.
Press Release issued May 22, 2008		99.1

Exhibit 99.1

		NEWS RELEASE
FOR IMMEDIATE RELEASE
		CEO Approval ____________

For Further Information Contact:
     Stuart L. Uselton
     Executive Vice President
     Chief Administrative Officer
     704-940-7832

CATO REPORTS 1Q EPS DOWN 2%
Provides 2Q and Updates 2008 Guidance

Charlotte, NC (May 22, 2008) — The Cato Corporation (NYSE: CTR) today reported net income of $16.9 million or $.58 per diluted share for the first quarter ended May 3, 2008, compared to net income of $18.7 million or $.59 per diluted share for the first quarter ended May 5, 2007. Net income decreased 10% and earnings per diluted share decreased 2%. The favorable comparison between the net income change and the earnings per diluted share change is due to last year’s repurchase of over 3 million shares. Sales for the first quarter were $225.8 million, a 1% increase over sales of $224.1 million for the first quarter last year. The Company’s first quarter comparable store sales decreased 2%.

“Gross margin was above expectations due to tight inventory management and somewhat offset the impact of the 2% decrease in comp store sales,” said John Cato, Chairman, President, and Chief Executive Officer. “We continue to see weakness in the women’s specialty apparel segment, and still expect comparable store sales to be in the range of down 3% to flat for the second quarter and for the balance of the year. We remain comfortable with our original guidance for the balance of the year including our estimate of second quarter earnings per diluted share in the range of $.28 to $.33 versus $.39 last year. After adjusting our original guidance for first quarter results, our estimate of earnings per diluted share for the full year is now a range of $.80 to $.95 versus $1.03 last year.”

The Company’s effective tax rate for the first quarter was above expectations due to FIN 48

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

adjustments which unfavorably impacted earnings per diluted share by approximately $.02. The Company still estimates its effective tax rate for the year will be 35.3%.

During the first quarter, the Company opened 19 stores and closed 11 stores. As of May 3, 2008, the Company operated 1,326 stores in 32 states, compared to 1,286 stores in 31 states as of May 5, 2007.

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 second quarter and year 2008 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. Additional information concerning these and other important factors can be found in Item 1A. “Risk Factors” of the Company’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. 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

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED MAY 3, 2008 AND MAY 5, 2007
(Dollars in thousands, except per share data)

		Quarter Ended
		May 3,				%				May 5,				%
		2008				Sales				2007				Sales
REVENUES
Retail sales		$	225,791				100.0	%		$	224,134				100.0	%
Other income (principally finance, late fees and layaway charges)			3,037				1.4	%			3,094				1.4	%
Total revenues			228,828				101.4	%			227,228				101.4	%
GROSS MARGIN (Memo)			84,171				37.3	%			80,712				36.0	%
COSTS AND EXPENSES, NET
Cost of goods sold			141,620				62.7	%			143,422				64.0	%
Selling, general and administrative			56,317				24.9	%			51,136				22.8	%
Depreciation			5,610				2.5	%			5,391				2.4	%
Interest and other income			(1,901	)			-0.8	%			(1,893	)			-0.8	%
Cost and expenses, net			201,646				89.3	%			198,056				88.4	%
Income Before Income Taxes			27,182				12.1	%			29,172				13.0	%
Income Tax Expense			10,329				4.6	%			10,502				4.7	%
Net Income		$	16,853				7.5	%		$	18,670				8.3	%
Basic Earnings Per Share		$	0.58							$	0.60
Basic Weighted Average Shares			29,095,913								31,352,592
Diluted Earnings Per Share		$	0.58							$	0.59
Diluted Weighted Average Shares			29,163,031								31,897,676

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

		May 3,				May 5,				February 2,
		2008				2007				2008
		(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	42,091			$	21,164			$	21,583
Short-term investments			85,138				132,450				92,995
Accounts receivable — net			45,570				45,287				45,282
Merchandise inventories			116,869				117,037				118,679
Other current assets			14,496				14,429				14,511
Total Current Assets			304,164				330,367				293,050
Property and Equipment — net			122,936				126,809				123,190
Other Assets			4,548				4,361				4,552
TOTAL		$	431,648			$	461,537			$	420,792
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities		$	147,616			$	137,464			$	148,936
Noncurrent Liabilities			24,106				32,115				24,486
Stockholders’ Equity			259,926				291,958				247,370
TOTAL		$	431,648			$	461,537			$	420,792