Cato Reports Net Income and EPS for 4Q and 2009
Sales for fiscal fourth quarter ended January 30, 2010 were $217.7 million, a 4% increase over sales of $209.1 million for the fourth quarter ended January 31, 2009. For the quarter, same-store sales increased 2%. The Company's sales for 2009 increase 3% to $872.1 million from 2008 sales of $845.7 million. For the year, same-store sales increased 1%.
"Cato again delivered strong results in a difficult economic environment," said John Cato, Chairman, President and Chief Executive Officer. "We continue to manage our inventory and tightly control expenses while offering great fashion and value to our customers."
2009 REVIEW
For 2009, gross margin increased 320 basis points to 36.7%of sales due to higher merchandise margin as a result of lower markdowns. Selling, general and administrative expenses increased 130 basis points to 28.2%of sales primarily due to incentive compensation partially offset by a reduction in store closing costs. The Company's effective income tax rate decreased to 33.6% from 36.1% last year primarily due to lower state taxes. Net income was 5.2% of sales vs. 4.0 % last year.
"Cato's balance sheet remains strong with approximately $200 million in cash and short-term investments and no debt," stated Mr. Cato. During 2009, the Company returned $19.5 million in dividends to shareholders. The Company's annualized dividend of $.66 per share represents a yield of approximately 3% based on the March 17 closing price of $21.66.
For the fiscal year ended January 30, 2010, the Company opened 35 stores (including the conversion of 14 existing It's Fashion stores to It's Fashion Metro), relocated one store and closed 45 stores including the 14 conversions.
2010 OUTLOOK
The Company believes that 2010 will continue to be impacted by the uncertainty surrounding the country's difficult economy. The Company estimates same-store sales will be in a range of down 3% to flat and its gross margin rate will decrease slightly to 36.0% resulting in net income in a range of $44.8 million to $48.8 million. The Company estimates earnings per diluted share will be in a range of $1.51 to $1.64, a 3% decrease to a 6% increase over 2009.
The Company estimates first quarter net income to be in a range of $20.9 million to $22.1 million, or $.71 to $.75 per diluted share, an increase of 11% to 17%. This estimate is based on same-store sales of down 3% to flat.
The Company's net income estimates for 2010 also reflect the following items:
- The Company expects to open 55 new stores during 2010. The expected new store openings include 15 new Cato stores and 40 new It's Fashion Metro stores (including the conversion of approximately 20 existing It's Fashion stores).
- The Company anticipates closing up to 40 stores by year end, including the 20 conversions mentioned above. At this time, one specific store has been identified for closure.
- Capital expenditures are projected to be approximately $25 million, including $12 million for store development.
- Depreciation is expected to be approximately $21 million for the year.
- The effective tax rate is expected to be approximately 36.6%.
The Cato Corporation is a leading specialty retailer of value-priced women's fashion apparel and accessories 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. As of February 27, 2010, the Company operated 1,271 stores in 31 states, compared to 1,282 stores in 31 states as of February 28, 2009. 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 fiscal 2010 and the first quarter of 2010, including various components of net income, same-store sales, expected capital expenditures, and store openings and closings 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, as well as such other factors and considerations contained in the Company's Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. 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.
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED JANUARY 30, 2010 AND JANUARY 31, 2009
(Dollars in thousands, except per share data)
Quarter Ended
-------------
January 30, % January 31, %
2010 Sales 2009 Sales
---------- ----- --------- -----
REVENUES
Retail sales $217,743 100.0% $209,091 100.0%
Other income (principally
finance late fees and
layaway charges) 3,139 1.4% 3,147 1.5%
----- --- ----- ---
Total revenues 220,882 101.4% 212,238 101.5%
------- ----- ------- -----
GROSS MARGIN (Memo) 75,644 34.7% 63,846 30.5%
COSTS AND EXPENSES, NET
Cost of goods sold 142,099 65.3% 145,245 69.5%
Selling, general and
administrative 63,906 29.4% 56,894 27.2%
Depreciation 5,362 2.4% 5,691 2.7%
Interest and other income (1,435) -0.7% (1,426) -0.7%
------ ---- ------ ----
Cost and expenses, net 209,932 96.4% 206,404 98.7%
------- ---- ------- ----
Income Before Income Taxes 10,950 5.0% 5,834 2.8%
Income Tax Expense 3,639 1.7% 1,968 0.9%
----- --- ----- ---
Net Income $7,311 3.3% $3,866 1.9%
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Basic Earnings Per Share $0.25 $0.13
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Diluted Earnings Per Share $0.25 $0.13
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Twelve Months Ended
-------------------
January 30, % January 31, %
2010 Sales 2009 Sales
---- ----- ---- -----
REVENUES
Retail sales $872,132 100.0% $845,676 100.0%
Other income (principally
finance, late fees and
layaway charges) 11,863 1.4% 12,042 1.4%
------ --- ------ ---
Total revenues 883,995 101.4% 857,718 101.4%
------- ----- ------- -----
GROSS MARGIN (Memo) 320,116 36.7% 283,620 33.5%
COSTS AND EXPENSES, NET
Cost of goods sold 552,016 63.3% 562,056 66.5%
Selling, general and
administrative 245,549 28.2% 227,698 26.9%
Depreciation 21,829 2.5% 22,572 2.7%
Interest and other income (4,313) -0.5% (7,218) -0.9%
------ ---- ------ ----
Cost and expenses, net 815,081 93.5% 805,108 95.2%
------- ---- ------- ----
Income Before Income Taxes 68,914 7.9% 52,610 6.2%
Income Tax Expense 23,149 2.7% 18,976 2.2%
------ --- ------ ---
Net Income $45,765 5.2% $33,634 4.0%
======= === ======= ===
Basic Earnings Per Share $1.55 $1.14
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Diluted Earnings Per Share $1.55 $1.14
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THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
January 30, January 31,
2010 2009
(Unaudited)
-----------
ASSETS
Current Assets
Cash and cash equivalents $50,385 $42,262
Short-term investments 147,955 93,452
Restricted Cash 2,575 9,089
Accounts receivable - net 40,154 44,136
Merchandise inventories 118,628 112,290
Other current assets 11,070 14,140
------ ------
Total Current Assets 370,767 315,369
Property and Equipment - net 102,769 116,262
Other Assets 7,454 3,722
----- -----
TOTAL $480,990 $435,353
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $168,702 $150,730
Noncurrent Liabilities 21,210 22,810
Stockholders' Equity 291,078 261,813
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TOTAL $480,990 $435,353
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SOURCE The Cato Corporation