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Cato Reports Increase In 1Q Net Income And EPS

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Cato Reports Increase In 1Q Net Income And EPS

PR Newswire

CHARLOTTE, N.C., May 24, 2018 /PRNewswire/ -- The Cato Corporation (NYSE:CATO) today reported net income of $23.4 million or $.94 per diluted share for the first quarter ended May 5, 2018, compared to net income of $22.2 million or $.85 per diluted share for the first quarter ended April 29, 2017.  Net income increased 5% and earnings per diluted share increased 11% for the quarter.  Sales for the first quarter were $236.0 million, or a decrease of 1% from sales of $237.7 million for the first quarter ended April 29, 2017.   The Company's same-store sales for the quarter decreased 1% to last year.

"We are starting to see more favorable sales trends as a result of adjustments to our merchandise strategy," stated John Cato, Chairman, President, and Chief Executive Officer.  "We remain optimistic about our ability to build on this momentum going forward."

Gross margin increased 1.0% to 39.7% of sales in the quarter, primarily due to higher merchandise margins and lower buying and occupancy costs.  SG&A expenses as a percent of sales increased 1.1% to 28.0% during the quarter primarily due to higher incentive compensation and insurance costs offset by lower payroll expenses.  The effective tax rate decreased to 11.9% versus the prior year at 14.7% due to ongoing tax saving initiatives and favorable tax adjustments in the quarter.  The Company ended the quarter with cash and short-term investments of $222.3 million.

As of May 5, 2018, the Company operated 1,351 stores in 33 states, compared to 1,374 stores in 33 states as of April 29, 2017.

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.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company's expected or estimated operational and 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: any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, home values, consumer net worth and the availability of credit; uncertainties regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; adverse weather or similar conditions that may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess inventory at anticipated margins; 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.

THE CATO CORPORATION








CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)




FOR THE PERIODS ENDED MAY 5, 2018 AND APRIL 29, 2017





(Dollars in thousands, except per share data)
















Quarter Ended










May 5,

%


April 29,

%


2018

Sales


2017

Sales









REVENUES








  Retail sales

$

236,025

100.0%


$

237,655

100.0%

  Other revenue (principally finance,








    late fees and layaway charges)


2,275

1.0%



2,086

0.9%









    Total revenues


238,300

101.0%



239,741

100.9%









GROSS MARGIN (Memo)


93,738

39.7%



91,872

38.7%









COSTS AND EXPENSES, NET








  Cost of goods sold


142,287

60.3%



145,783

61.3%

  Selling, general and administrative


65,959

28.0%



63,780

26.8%

  Depreciation


4,224

1.8%



5,060

2.1%

  Interest and other income


(754)

-0.3%



(942)

-0.4%









    Cost and expenses, net


211,716

89.7%



213,681

89.9%

















Income Before Income Taxes


26,584

11.3%



26,060

11.0%









Income Tax (Benefit)/Expense


3,173

1.3%



3,827

1.6%









Net Income

$

23,411

9.9%


$

22,233

9.4%

















Basic Earnings Per Share

$

0.94



$

0.85


















Diluted Earnings Per Share

$

0.94



$

0.85


 

THE CATO CORPORATION







CONDENSED CONSOLIDATED BALANCE SHEETS 





(Dollars in thousands)















May 5,



February 3,


2018



2018


(Unaudited)



(Unaudited)








ASSETS







Current Assets







  Cash and cash equivalents

$

71,481



$

78,047

  Short-term investments


147,133




118,836

  Restricted Cash


3,734




3,722

  Accounts receivable - net


37,065




28,018

  Merchandise inventories


107,892




121,535

  Other current assets


11,550




22,322








Total Current Assets


378,855




372,480








Property and Equipment - net


105,504




109,368








Noncurrent Deferred Income Taxes


12,692




12,570








Other Assets


21,423




21,658








      TOTAL

$

518,474



$

516,076








LIABILITIES AND STOCKHOLDERS' EQUITY












Current Liabilities

$

130,933



$

139,081








Noncurrent Liabilities


46,295




50,642








Stockholders' Equity


341,246




326,353








      TOTAL

$

518,474



$

516,076

Cision View original content:http://www.prnewswire.com/news-releases/cato-reports-increase-in-1q-net-income-and-eps-300654092.html

SOURCE The Cato Corporation

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