Cato Reports 3Q EPS Up 50%

CHARLOTTE, N.C., Nov. 19, 2015 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $8.3 million for the third quarter ended October 31, 2015, compared to net income of $5.7 million for the third quarter ended November 1, 2014, an increase of 46%.  Earnings per diluted share for the third quarter were $0.30, compared to $0.20 last year, an increase of 50%.  Sales for the third quarter ended October 31, 2015 were $223.3 million, a 4% increase over sales of $213.8 million for the third quarter ended November 1, 2014.  Same-store sales for the quarter increased 2%.

For the nine months ended October 31, 2015, the Company earned net income of $55.0 million, compared to net income of $51.4 million for the nine months ended November 1, 2014, an increase of 7%.  Earnings per diluted share were $1.97 compared to $1.82 last year, an increase of 8%.  Sales for the nine months ended October 31, 2015 were $754.1 million, an increase of 2% from sales of $740.0 million for the nine months ended November 1, 2014.  Year-to-date same-store sales decreased 1%.

For the quarter, the gross margin rate increased to 37.2% of sales from 36.3% last year, primarily due to higher merchandise margin.  The SG&A rate for the quarter of 31.6% was flat to last year.  The Company's effective tax rate for the third quarter was 11.1% versus 20.5% last year.  The low rates for the quarter are primarily due to a favorable tax adjustment in the third quarter which impacted earnings per diluted share by $.06.

Year-to-date, the gross margin rate increased to 39.4% of sales from 39.3% the prior year primarily due to higher merchandise margin offset by higher costs in our buying and merchandising areas .  The year-to-date SG&A rate was 27.4% versus 27.5% last year primarily due to lower accrued incentive compensation expense.  The year-to-date effective tax rate decreased to 33.2% versus 35.9% last year due to a favorable tax adjustment in the third quarter.

"Our third quarter results exceeded our latest guidance," stated John Cato, Chairman, President, and Chief Executive Officer. "This was primarily the result of recent stronger sales trends and a favorable tax adjustment. We expect fourth quarter earnings per diluted share will be at the lower end of our original guidance range of $0.35 to $0.39 (versus $0.33 last year, an increase of 6% to 18%), due to unfavorable comparisons to fourth quarter last year.  For the year, earnings per diluted share are now estimated to be in the range of $2.31 to $2.35 versus $2.15 last year, an increase of 7% to 9%."

Year-to-date, the Company has opened 28 new stores, relocated eight stores, and closed four stores.  The Company now expects to open 31 stores during 2015, down from our last estimate of 40 due to a lack of shopping center development and increased competition for available space.  As of October 31, 2015, the Company operated 1,370 stores in 32 states, compared to 1,343 stores in 32 states as of November 1, 2014.

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