CHARLOTTE, N.C., May 21, 2020 /PRNewswire/ -- The Cato
Corporation (NYSE: CATO) today reported net loss of $28.4 million or ($1.19) per diluted share for the first quarter
ended May 2, 2020, compared to net
income of $21.3 million or
$.87 per diluted share for the first
quarter ended May 4, 2019.
Sales for the first quarter were $98.8
million, or a decrease of 57% from sales of $228.1 million for the first quarter ended
May 4, 2019. The
Company's same-store sales for the quarter decreased 56% to last
year.
"With the health and safety of our associates and customers in
mind, Cato closed its stores on March
19th, along with most non-essential
retailers. We were able to reopen approximately 700 of our
1,300 stores May 1st and
hope to have the rest reopened by early June," stated John Cato, Chairman, President, and Chief
Executive Officer. "As noted in recent business updates in
regards to the coronavirus pandemic, Cato has had to make difficult
decisions in an effort to sustain our business and safeguard the
long-term health of our company by cutting costs across the
organization, preserving cash by reducing capital expenditures,
delaying or cancelling non-leased, planned new store development
and suspending the quarterly dividend."
Gross margin decreased 24.9% to 15.4% of sales in the quarter,
due to a reduction in merchandise contribution, combined with the
effects of deleveraging resulting from the sales decline related to
the store closures. SG&A expenses as a percent of sales
increased 24.2% to 53.1% during the quarter primarily due to the
effects of deleveraging, and a store impairment charge of
$5.3 million, partially offset by
reduced incentive compensation. A pre-tax loss, coupled with
the beneficial effects of the CARES Act has resulted in a
$9.1 million tax benefit versus a
$4.3 million expense in the prior
year. The Company ended the quarter with unrestricted cash
and short-term investments of $147.8
million, including $30 million
drawn on its revolving line of credit.
During the first quarter ended May 2,
2020, the Company opened 24 new stores and permanently
closed 5 stores. At the time of this press release, the
Company has reopened approximately 1,175 stores in compliance with
state and local health and safety guidelines, with the remainder
expected to be reopened by early June. As of May 2, 2020, the Company has 1,300 stores in 31
states, compared to 1,302 stores in 31 states as of May 4, 2019.
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 and potential impact 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 tariffs; 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; our ability to successfully open new stores as
planned and our 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 MAY 2, 2020 AND MAY 4, 2019
|
(Dollars in
thousands, except per share data)
|
|
|
Quarter
Ended
|
|
|
|
|
|
|
|
|
|
May
2,
|
%
|
|
May 4,
|
%
|
|
2020
|
Sales
|
|
2019
|
Sales
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
Retail
sales
|
$
|
98,813
|
100.0%
|
|
$
|
228,066
|
100.0%
|
Other revenue
(principally finance, late fees and layaway charges)
|
|
1,919
|
1.9%
|
|
|
2,285
|
1.0%
|
|
|
|
|
|
|
|
|
Total revenues
|
|
100,732
|
101.9%
|
|
|
230,351
|
101.0%
|
|
|
|
|
|
|
|
|
GROSS MARGIN
(Memo)
|
|
15,216
|
15.4%
|
|
|
91,983
|
40.3%
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES, NET
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
83,597
|
84.6%
|
|
|
136,083
|
59.7%
|
Selling,
general and administrative
|
|
52,511
|
53.1%
|
|
|
65,990
|
28.9%
|
Depreciation
|
|
4,006
|
4.1%
|
|
|
3,843
|
1.7%
|
Interest and
other income
|
|
(1,851)
|
-1.9%
|
|
|
(1,136)
|
-0.5%
|
|
|
|
|
|
|
|
|
Cost and expenses, net
|
|
138,263
|
139.9%
|
|
|
204,780
|
89.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes
|
|
(37,531)
|
-38.0%
|
|
|
25,571
|
11.2%
|
|
|
|
|
|
|
|
|
Income Tax (Benefit)
Expense
|
|
(9,114)
|
-9.2%
|
|
|
4,316
|
1.9%
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
$
|
(28,417)
|
-28.8%
|
|
$
|
21,255
|
9.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
(1.19)
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
$
|
(1.19)
|
|
|
$
|
0.87
|
|
THE CATO
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
|
|
May
2,
|
|
|
February
1,
|
|
2020
|
|
|
2020
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
29,809
|
|
|
$
|
11,824
|
Short-term
investments
|
|
118,020
|
|
|
|
200,387
|
Restricted
cash
|
|
3,915
|
|
|
|
3,896
|
Accounts
receivable - net
|
|
30,462
|
|
|
|
26,088
|
Merchandise
inventories
|
|
122,767
|
|
|
|
115,365
|
Other current
assets
|
|
6,131
|
|
|
|
5,237
|
|
|
|
|
|
|
|
Total Current
Assets
|
|
311,104
|
|
|
|
362,797
|
|
|
|
|
|
|
|
Property and
Equipment - net
|
|
84,151
|
|
|
|
88,667
|
|
|
|
|
|
|
|
Noncurrent Deferred
Income Taxes
|
|
8,413
|
|
|
|
8,636
|
|
|
|
|
|
|
|
Other
Assets
|
|
22,759
|
|
|
|
24,073
|
|
|
|
|
|
|
|
Right-of-Use Assets,
net
|
|
214,527
|
|
|
|
200,803
|
|
|
|
|
|
|
|
TOTAL
|
$
|
640,954
|
|
|
$
|
684,976
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
$
|
123,518
|
|
|
$
|
136,153
|
|
|
|
|
|
|
|
Current Lease
Liability
|
|
61,019
|
|
|
|
63,149
|
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
22,754
|
|
|
|
21,976
|
|
|
|
|
|
|
|
Lease
Liability
|
|
162,011
|
|
|
|
147,184
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
271,652
|
|
|
|
316,514
|
|
|
|
|
|
|
|
TOTAL
|
$
|
640,954
|
|
|
$
|
684,976
|
View original
content:http://www.prnewswire.com/news-releases/cato-reports-1q-net-loss-301063106.html
SOURCE The Cato Corporation