CATO REPORTS 1Q EARNINGS

CHARLOTTE, N.C., May 18, 2023 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $4.4 million or $0.22 per diluted share for the first quarter ended April 29, 2023, compared to net income of $9.7 million or $0.46 per diluted share for the first quarter ended April 30, 2022. 

Sales for the first quarter ended April 29, 2023 were $190.3 million, or a decrease of 7% from sales of $204.9 million for the first quarter ended April 30, 2022.  The Company's same-store sales for the quarter decreased 6% compared to the same period in 2022. 

"Our customer continues to feel the strain of higher interest rates and inflation on their discretionary income, which has negatively impacted our sales for the first quarter," said John Cato, Chairman, President and Chief Executive Officer. "We are finally experiencing sustained relief from previous supply chain challenges, but the continued volatility in the economy causes us to remain cautious about the remainder of the year."

First-quarter gross margin as a percentage of sales increased from 35.5% in 2022 to 35.8% in 2023. The improved merchandise margin was driven by reduced markdowns attributable to on-time merchandise shipments, coupled with lower freight and distribution costs.  Selling, General and Administrative expenses as a percent of sales increased from 29.5% to 32.5% of sales during the quarter due to increased operating expenses, including higher wages, combined with the effects of deleveraging resulting from sales decline, when compared to the prior year.  Income tax expense for the quarter was $2.1 million compared to $1.9 million last year. 

During the first quarter ended April 29, 2023, the Company opened 4 stores and permanently closed 20 stores.  As of April 29, 2023, the Company operated 1,264 stores in 32 states, compared to 1,315 stores in 32 states as of April 30, 2022. 

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 29, 2023 AND APRIL 30, 2022
(Dollars in thousands, except per share data)
	Quarter Ended
	April 29,		%		April 30,		%
	2023		Sales		2022		Sales
REVENUES
Retail sales	$	190,311	100.0 %		$	204,933	100.0 %
Other revenue (principally finance,
late fees and layaway charges)		1,739	0.9 %			1,788	0.9 %
Total revenues		192,050	100.9 %			206,721	100.9 %
GROSS MARGIN (Memo)		68,224	35.8 %			72,690	35.5 %
COSTS AND EXPENSES, NET
Cost of goods sold		122,087	64.2 %			132,243	64.5 %
Selling, general and administrative		61,934	32.5 %			60,441	29.5 %
Depreciation		2,357	1.2 %			2,743	1.3 %
Interest and other income		(897)	-0.5 %			(403)	-0.2 %
Costs and expenses, net		185,481	97.5 %			195,024	95.2 %
Income Before Income Taxes		6,569	3.5 %			11,697	5.7 %
Income Tax Expense		2,141	1.1 %			1,949	1.0 %
Net Income	$	4,428	2.3 %		$	9,748	4.8 %
Basic Earnings Per Share	$	0.22			$	0.46
Diluted Earnings Per Share	$	0.22			$	0.46

 

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	April 29,				January 28,
	2023				2023
	(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	38,103			$	20,005
Short-term investments		87,750				108,652
Restricted cash		3,826				3,787
Accounts receivable - net		29,731				26,497
Merchandise inventories		106,813				112,056
Other current assets		7,298				6,676
Total Current Assets		273,521				277,673
Property and Equipment - net		74,187				70,382
Noncurrent Deferred Income Taxes		9,938				9,213
Other Assets		21,478				21,596
Right-of-Use Assets, net		155,512				174,276
TOTAL	$	534,636			$	553,140
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	$	135,934			$	135,597
Current Lease Liability		49,707				67,360
Noncurrent Liabilities		16,449				16,183
Lease Liability		105,765				107,407
Stockholders' Equity		226,781				226,593
TOTAL	$	534,636			$	553,140

 

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SOURCE The Cato Corporation