Cato Posts Higher Q4 Earnings, But Issues Weak Outlook

reported better-than-expected earnings for the fourth quarter on Thursday. However, the company issued a weak forecast. The Charlotte, North Carolina-based company reported quarterly net income of $9.2 million, or $0.33 per share, up from $3.8 million, or $0.13 per share, in the year-ago quarter. Its sales rose 11% to $237.8 million from $215.2 million. However, analysts were expecting earnings of $0.27 per share on revenue of $240.1 million. Its same-store sales climbed 8% in the quarter. Gross margin widened to 36.5% in the latest quarter, while selling, general and administrative expenses narrowed to 30.6% of sales from 30.9% in the previous year. For the fiscal year ended January 31, 2015, Cato opened 33 stores, relocated 4 stores and closed 7 stores. "In 2014, Cato delivered its third highest earnings and second highest earnings per diluted share in Company history," commented John Cato, Chairman, President and Chief Executive Officer. "In regard to the fourth quarter, earnings were positively impacted by sales above our trend, primarily due to favorable weather." Cato expects Q1 earnings of $1 to $1.03 per share, versus analysts' estimates of $1.13 per share. The company also expects same-store sales to drop 3% to 4% in the quarter. It also projects FY earnings of $2.03 to $2.19 per share, versus expectations of $2.24 per share. Cato also projects FY same-store sales in a range of flat to down 2%. Cato shares fell 0.25% to $40.30 in pre-market trading.