Cato Reports 1Q EPS 16%

CHARLOTTE, N.C., May 19, 2016 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $35.9 million or $1.29 per diluted share for the first quarter ended April 30, 2016, compared to net income of $31.1 million or $1.11 per diluted share for the first quarter ended May 2, 2015.  Net income increased 15% and earnings per diluted share increased 16% for the quarter.  Sales for the first quarter were $285.5 million, or an increase of 1% from sales of $281.6 million for the first quarter ended May 2, 2015.   The Company's same-store sales for the quarter were flat to last year.

"Although same-store sales for the first quarter were flat, our earnings per diluted share increased over last year primarily due to higher gross margins, change in recognition of unredeemed gift cards and favorable adjustments to the effective tax rate as a result of tax initiatives," stated John Cato, Chairman, President, and Chief Executive Officer.  "Our expectations for the second quarter remain unchanged from what was included in the original guidance for the full year and reflect same store sales in the range of down 2% to flat and earnings per diluted share in the range of $.50 to $.53 versus $.56 last year.  After adjusting our original 2016 guidance for first quarter actual results, our estimate of earnings per diluted share for the full year is now a range of $2.25 to $2.38 versus $2.39 last year."

Gross margin increased 30 basis points to 42.6% of sales primarily due to higher merchandise margin in the quarter.  SG&A expenses as a percent of sales increased 50 basis points to 24.9% during the quarter primarily due to increased store expenses.  The effective tax rate decreased 670 basis points to 28.5% versus the prior year at 35.2% due to favorable adjustments to the effective tax rate as a result of tax initiatives.  The Company ended the quarter with cash and short-term investments of $298.4 million.

During the first quarter, the Company opened one store, relocated two stores and closed one store.  As of April 30, 2016, the Company operated 1,372 stores in 33 states, compared to 1,352 stores in 32 states as of May 2, 2015.

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.  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 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 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.

 

 

 

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SOURCE The Cato Corporation

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