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Cato Reports Increase in 2Q Net Income and EPS

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Cato Reports Increase in 2Q Net Income and EPS

PR Newswire

CHARLOTTE, N.C., Aug. 23, 2018 /PRNewswire/ -- The Cato Corporation (NYSE:CATO) today reported net income of $6.5 million or $.26 per diluted share for the second quarter ended August 4, 2018, compared to a net loss of $0.9 million or a loss of $.03 per diluted share for the second quarter ended July 29, 2017.  Sales for the second quarter were $206.8 million, or an increase of 1% from sales of $205.0 million for the second quarter ended July 29, 2017.   The Company's same-store sales for the quarter increased 4% to last year.

"We had a solid performance in the second quarter and first half of 2018 mainly due to positive same-store sales and strong merchandise margins, as a result of much lower markdown sales versus last year," commented John Cato, Chairman, President, and Chief Executive Officer.  "However, again we are cautious about our second half merchandise margin improvement as markdown sales were not as significant in the second half of 2017."

For the six months ended August 4, 2018, the Company earned net income of $29.9 million, compared to net income of $21.4 million for the six months ended July 29, 2017.  Earnings per diluted share were $1.20 compared to $0.82 last year.  Sales for the six months ended August 4, 2018 were $442.9 million, flat compared to sales of $442.7 million for the six months ended July 29, 2017.  Year-to-date same-store sales increased 1%.

Gross margin increased 610 basis points to 37.2% 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 190 basis points to 33.3% during the quarter primarily due to higher incentive compensation.  Income tax for the quarter was an expense of $1.0 million compared to a benefit of $1.2 million last year.  The Company ended the quarter with cash and short-term investments of $228.6 million.

Year-to-date, the gross margin increased to 38.6% of sales from 35.2% the prior year primarily due to higher merchandise margins and lower buying and occupancy costs.  The year-to-date SG&A rate was 30.4% versus 28.9% last year primarily due to higher incentive compensation and insurance costs.  Income tax was an expense of $4.2 million compared to an expense of $2.6 million last year.

As of August 4, 2018, The Cato Corporation operated 1,350 stores in 33 states, compared to 1,374 stores in 33 states as of July 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 AUGUST 4, 2018 AND JULY 29, 2017









(Dollars in thousands, except per share data)





























Quarter Ended


Six Months Ended


















August 4,

%


July 29,

%


August 4,

%


July 29,

%


2018

Sales


2017

Sales


2018

Sales


2017

Sales

















REVENUES
















  Retail sales

$

206,848

100.0%


$

205,026

100.0%


$

442,873

100.0%


$

442,681

100.0%

  Other revenue (principally finance,
















    late fees and layaway charges)


2,069

1.0%



1,935

0.9%



4,344

1.0%



4,021

0.9%

















    Total revenues


208,917

101.0%



206,961

100.9%



447,217

101.0%



446,702

100.9%

















GROSS MARGIN (Memo)


77,047

37.2%



63,768

31.1%



170,785

38.6%



155,640

35.2%

















COSTS AND EXPENSES, NET
















  Cost of goods sold


129,801

62.8%



141,258

68.9%



272,088

61.4%



287,041

64.8%

  Selling, general and administrative


68,892

33.3%



64,280

31.4%



134,851

30.4%



128,062

28.9%

  Depreciation


4,152

2.0%



4,882

2.4%



8,376

1.9%



9,942

2.3%

  Interest and other income


(1,431)

-0.7%



(1,329)

-0.7%



(2,185)

-0.5%



(2,272)

-0.5%

















    Cost and expenses, net


201,414

97.4%



209,091

102.0%



413,130

93.3%



422,773

95.5%

































Income Before Income Taxes


7,503

3.6%



(2,130)

-1.0%



34,087

7.7%



23,929

5.4%

















Income Tax (Benefit)/Expense


1,021

0.5%



(1,249)

-0.6%



4,195

1.0%



2,578

0.6%

















Net Income

$

6,482

3.1%


$

(881)

-0.4%


$

29,892

6.8%


$

21,351

4.8%

































Basic Earnings Per Share

$

0.26



$

(0.03)



$

1.20



$

0.82


































Diluted Earnings Per Share

$

0.26



$

(0.03)



$

1.20



$

0.82


















 

 

THE CATO CORPORATION







CONDENSED CONSOLIDATED BALANCE SHEETS 





(Dollars in thousands)















August 4,



February 3,


2018



2018


(Unaudited)



(Unaudited)








ASSETS







Current Assets







  Cash and cash equivalents

$

37,849



$

78,047

  Short-term investments


187,050




118,836

  Restricted Cash


3,750




3,722

  Accounts receivable - net


34,745




28,018

  Merchandise inventories


104,470




121,535

  Other current assets


10,521




22,322








Total Current Assets


378,385




372,480








Property and Equipment - net


102,320




109,368








Noncurrent Deferred Income Taxes


12,594




12,570








Other Assets


21,832




21,658








      TOTAL

$

515,131



$

516,076








LIABILITIES AND STOCKHOLDERS' EQUITY












Current Liabilities

$

138,407



$

139,081








Noncurrent Liabilities


45,408




50,642








Stockholders' Equity


331,316




326,353








      TOTAL

$

515,131



$

516,076








 

Cision View original content:http://www.prnewswire.com/news-releases/cato-reports-increase-in-2q-net-income-and-eps-300701275.html

SOURCE The Cato Corporation

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