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

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 20, 2008, The Cato Corporation issued a press release regarding its financial results for the third quarter ending November 1, 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 November 20, 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.

		THE CATO CORPORATION
November 21, 2008		/s/ John P. D. Cato
Date		John P. D. Cato
		Chairman, President and
		Chief Executive Officer
November 21, 2008		/s/ John R. Howe
Date		John R. Howe
		Executive Vice President Chief Financial Officer

Exhibit Index

Exhibit		Exhibit No.
Press Release issued November 20, 2008			99.1

The CATO Corporation

NEWS RELEASE

FOR IMMEDIATE RELEASE

CEO Approval                     

For Further Information Contact:

John R. Howe
Executive Vice President
Chief Financial Officer
704-551-7315

CATO REPORTS 3Q EARNINGS
Reconfirms 4Q and Updates Full Year Guidance

Charlotte, NC (November 20, 2008) – The Cato Corporation (NYSE: CTR) today reported net income of $0.8 million for the third quarter ended November 1, 2008, compared to net income of $2.9 million for the third quarter ended November 3, 2007, a decrease of 72%. Earnings per diluted share for the third quarter were $0.03, compared to $0.09 last year, a decrease of 67%. Sales for the third quarter were $179.8 million, a decrease of 1% from sales of $181.9 million last year. Comparable store sales for the quarter decreased 2%.

The Company earned net income of $29.8 million for the nine months ended November 1, 2008, compared to net income of $34.1 million for the nine months ended November 3, 2007, a decrease of 13%. Earnings per diluted share were $1.02 compared to $1.07 last year, a 5% decrease. Sales were $636.6 million for the first nine months of 2008, a 2% increase over sales of $625.0 million last year. Year-to-date comparable store sales decreased 1%.

For the quarter, the gross margin rate decreased to 29.3% versus 30.7% last year, primarily due to increased markdowns. The SG&A rate for the quarter increased slightly to 28.3% from 28.2% last year. Increases in operating costs from new stores, higher bad debt expense and costs associated with store closings were offset by the reversal of incentive compensation accrued in the first half of the year. The Company’s effective tax rate was

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

35.4% as the net effect of quarterly adjustments was lower than previously expected.

Year-to-date, the gross margin rate increased to 34.5% versus 33.3% last year due to better merchandise margins in the first half of the year which were somewhat offset by the increased markdowns in the third quarter mentioned above. The year-to-date SG&A rate increased to 26.8% from 24.8% last year primarily as a result of increased operating costs from new stores, higher medical and worker’s compensation costs, accrued incentive compensation, increased bad debt expense and the costs associated with store closings.

“Third quarter results reflect that our business remains very difficult,” commented John Cato, Chairman, President, and Chief Executive Officer. “Our results were slightly above our expectations due to non-operational items and better than expected October sales due to a favorable weather comparison. We continue to expect fourth quarter earnings per diluted share will be in the range of ($0.01) to $0.04 per diluted share versus ($0.06) last year. This estimate is based on comparable store sales in the range of down 3% to flat for the quarter. For the year, earnings per diluted share are estimated to be in the range of $1.01 to $1.06 versus $1.03 last year.”

Year-to-date, the Company has opened 57 new stores, relocated four stores, and closed 70 stores. As of November 1, 2008, the Company operated 1,305 stores in 31 states, compared to 1,321 stores in 31 states as of November 3, 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 Cato division offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day. The It’s Fashion division offers fashion with a focus on the latest trendy styles and nationally recognized urban brands for the entire family 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 or estimated financial results for the fourth quarter and full year and any related assumptions are considered “forward-looking” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current

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

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 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, as amended or supplemented, 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.

# # #

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 NOVEMBER 1, 2008 AND NOVEMBER 3, 2007
(Dollars in thousands, except per share data)

		Quarter Ended																Nine Months Ended
		November 1,				%				November 3,				%				November 1,				%				November 3,				%
		2008				Sales				2007				Sales				2008				Sales				2007				Sales
REVENUES
Retail sales		$	179,838				100.0	%		$	181,870				100.0	%		$	636,585				100.0	%		$	624,977				100.0	%
Other income (principally finance, late fees and layaway charges)			2,947				1.6	%			2,968				1.6	%			8,895				1.4	%			9,024				1.4	%
Total revenues			182,785				101.6	%			184,838				101.6	%			645,480				101.4	%			634,001				101.4	%
GROSS MARGIN (Memo)			52,666				29.3	%			55,790				30.7	%			219,774				34.5	%			207,962				33.3	%
COSTS AND EXPENSES, NET
Cost of goods sold			127,172				70.7	%			126,080				69.3	%			416,811				65.5	%			417,015				66.7	%
Selling, general and administrative			50,908				28.3	%			51,303				28.2	%			170,804				26.8	%			154,903				24.8	%
Depreciation			5,614				3.1	%			5,684				3.1	%			16,881				2.6	%			16,698				2.6	%
Interest and other income			(2,183	)			-1.2	%			(2,176	)			-1.2	%			(5,792	)			-0.9	%			(6,385	)			-1.0	%
Cost and expenses, net			181,511				100.9	%			180,891				99.4	%			598,704				94.0	%			582,231				93.1	%
Income Before Income Taxes			1,274				0.7	%			3,947				2.2	%			46,776				7.4	%			51,770				8.3	%
Income Tax Expense			451				0.2	%			1,011				0.6	%			17,009				2.7	%			17,654				2.8	%
Net Income		$	823				0.5	%		$	2,936				1.6	%		$	29,767				4.7	%		$	34,116				5.5	%
Basic Earnings Per Share		$	0.03							$	0.09							$	1.02							$	1.08
Basic Weighted Average Shares			29,108,130								31,891,308								29,105,686								31,713,755
Diluted Earnings Per Share		$	0.03							$	0.09							$	1.02							$	1.07
Diluted Weighted Average Shares			29,223,218								31,988,081								29,188,880								32,020,584

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

		November 1,				November 3,
		2008				2007				February 2,
		(Unaudited)				(Unaudited)				2008
ASSETS
Current Assets
Cash and cash equivalents		$	35,959			$	20,187			$	21,583
Short-term investments			99,869				126,797				92,995
Accounts receivable — net			43,267				44,470				45,282
Merchandise inventories			110,282				114,066				118,679
Other current assets			14,684				14,623				14,511
Total Current Assets			304,061				320,143				293,050
Property and Equipment — net			120,859				125,377				123,190
Other Assets			4,317				4,617				4,552
TOTAL		$	429,237			$	450,137			$	420,792
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities		$	144,523			$	126,955			$	148,936
Noncurrent Liabilities			22,771				32,083				24,486
Stockholders’ Equity			261,943				291,099				247,370
TOTAL		$	429,237			$	450,137			$	420,792