CATO REPORTS 1Q EARNINGS

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The Cato Corporation (NYSE: CATO) reported a net income of $9.7 million or $0.46 per diluted share for Q1 ending April 30, 2022, a decline from $20.7 million or $0.92 per diluted share in the same quarter last year. Sales decreased 3% to $204.9 million, with same-store sales down 2%. The gross margin fell from 41.5% to 35.5% due to lower merchandise margins. While SG&A expenses as a percentage of sales improved slightly, challenges from supply chain disruptions, inflation on consumer spending, and labor market issues persist. The company opened 4 new stores, bringing its total to 1,315.

Positive

• Opened 4 new stores during the quarter, expanding retail presence.
• SG&A expenses decreased as a percentage of sales from 29.9% to 29.5%.

Negative

• Net income decreased by 53% compared to the same quarter last year.
• Sales decreased by 3%, with same-store sales declining by 2%.
• Gross margin dropped from 41.5% to 35.5%, indicating reduced profitability.

CHARLOTTE, N.C., May 19, 2022 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $9.7 million or $0.46 per diluted share for the first quarter ended April 30, 2022, compared to net income of $20.7 million or $0.92 per diluted share for the first quarter ended May 1, 2021. 

Sales for the first quarter ended April 30, 2022 were $204.9 million, or a decrease of 3% from sales of $211.2 million for the first quarter ended May 1, 2021.  The Company's same-store sales for the quarter decreased 2% compared to 2021.

"Our first quarter sales were negatively impacted by cooler weather," said John Cato, Chairman, President and Chief Executive Officer. "As anticipated, we continued to experience late merchandise shipments, a result of the supply chain disruption and overseas COVID restrictions, coupled with the pressure of inflation on consumers' discretionary income and intermittent store closings due to the effects of the tight labor market."

First-quarter gross margin decreased from 41.5% to 35.5% of sales in 2022 due to lower merchandise margins.  Selling, General and Administrative expenses as a percent of sales decreased from 29.9% to 29.5% of sales during the quarter primarily due to decreased incentive compensation expense, partially offset by increased payroll, reflecting more normalized operations, compared to the prior year.  Income tax expense for the quarter was $1.9 million compared to $3.1 million last year. 

"The effects of continued late merchandise shipments, inflation-related increases to our costs and increased pressure on our customers' discretionary income are expected to remain challenging throughout the year," stated Mr. Cato.  "As we move forward, following two years of unpredictable business cycles, we are cautious about the remainder of the year in the face of these ongoing uncertainties."

During the first quarter ended April 30, 2022, the Company opened 4 stores and relocated 1 store.  As of April 30, 2022, the Company operated 1,315 stores in 32 states, compared to 1,325 stores in 32 states as of May 1, 2021. 

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 that express a belief, expectation or intention, as well as those that are not a historical fact, including, without limitation, statements regarding the Company's expected or estimated operational financial results, activities or opportunities, and potential impacts and effects of the coronavirus 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, any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, prevailing social, economic, political and public health conditions and uncertainties, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of credit; changes in laws or regulations affecting our business including but not limited to tariffs; uncertainties regarding the impact of any governmental action regarding, or responses to, the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; our ability to successfully implement our new store development strategy to increase new store openings and the ability of any such new stores to grow and perform as expected; adverse weather, public health threats (including the global coronavirus (COVID-19) outbreak) 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 APRIL 30, 2022 AND MAY 1, 2021
(Dollars in thousands, except per share data)
	Quarter Ended
	April 30,		%		May 1,		%
	2022		Sales		2021		Sales
REVENUES
Retail sales	$	204,933	100.0%		$	211,234	100.0%
Other revenue (principally finance,
late fees and layaway charges)		1,788	0			1,851	0.9%
Total revenues		206,721	100.9%			213,085	100.9%
GROSS MARGIN (Memo)		72,690	35.5%			87,559	41.5%
COSTS AND EXPENSES, NET
Cost of goods sold		132,243	64.5%			123,675	58.5%
Selling, general and administrative		60,441	29.5%			63,237	29.9%
Depreciation		2,743	1.3%			3,042	1.4%
Interest and other income		(403)	-0.2%			(663)	-0.3%
Cost and expenses, net		195,024	95.2%			189,291	89.6%
Income (Loss) Before Income Taxes		11,697	5.7%			23,794	11.3%
Income Tax Expense (Benefit)		1,949	1.0%			3,081	1.5%
Net Income (Loss)	$	9,748	4.8%		$	20,713	9.8%
Basic Earnings Per Share	$	0.46			$	0.92
Diluted Earnings Per Share	$	0.46			$	0.92

 

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	April 30,				January 29,
	2022				2022
	(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	25,881			$	19,759
Short-term investments		120,021				145,998
Restricted cash		3,920				3,919
Accounts receivable - net		60,121				55,812
Merchandise inventories		127,576				124,907
Other current assets		6,029				5,273
Total Current Assets		343,548				355,668
Property and Equipment - net		67,079				63,083
Noncurrent Deferred Income Taxes		9,674				9,313
Other Assets		23,192				24,437
Right-of-Use Assets, net		168,537				181,265
TOTAL	$	612,030			$	633,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	$	172,569			$	177,327
Current Lease Liability		63,175				66,808
Noncurrent Liabilities		17,797				17,914
Lease Liability		107,837				117,521
Stockholders' Equity		250,652				254,196
TOTAL	$	612,030			$	633,766

 

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SOURCE The Cato Corporation

FAQ

What were Cato Corporation's earnings for the first quarter of 2022?

Cato Corporation reported net income of $9.7 million, or $0.46 per diluted share, for Q1 2022.

How did Cato Corporation's sales perform in Q1 2022?

Sales for Q1 2022 were $204.9 million, a 3% decrease from $211.2 million in Q1 2021.

What challenges did Cato Corporation face in Q1 2022?

Cato faced challenges from supply chain disruptions, inflation affecting consumer spending, and labor market issues.

What was the change in gross margin for Cato Corporation in Q1 2022?

Gross margin decreased from 41.5% to 35.5% of sales in Q1 2022.

What is the outlook for Cato Corporation for the remainder of 2022?

The company expressed caution for the remainder of the year due to ongoing economic uncertainties.