CHARLOTTE, N.C., Aug. 20, 2020 /PRNewswire/ -- The Cato
Corporation (NYSE: CATO) today reported a net loss of $7.2 million or ($0.30) per diluted share for the second quarter
ended August 1, 2020, compared to net
income of $11.9 million or
$0.48 per diluted share for the
second quarter ended August 3,
2019. Sales for the second quarter were $166.3 million, or a decrease of 21% from sales
of $210.4 million for the second
quarter ended August 3, 2019.
The Company's same-store sales for the quarter decreased 24% to the
same period last year.
As previously announced Cato closed all stores due to the
COVID-19 pandemic beginning March 19,
2020. On May 1, 2020, the
Company began reopening stores in a phased approach, with limited
operating hours, consistent with local health and safety guidelines
and regulations. As of June 15,
2020, all stores had reopened.
For the six months ended August 1,
2020, the Company reported a net loss of $35.6 million or ($1.48) per diluted share, compared to net income
of $33.1 million or $1.34 per diluted share for the six months ended
August 3, 2019. Sales for the
six months ended August 1, 2020 were
$265.1 million, down 40% to sales of
$438.4 million for the six months
ended August 3, 2019.
Year-to-date same-store sales decreased 39%.
"Sales softened through the quarter and into early August.
As we see this trend continuing, we are cautious about the second
half of the year," stated John Cato,
Chairman, President, and Chief Executive Officer. "And we
remain committed to protecting our customers, associates and the
communities we serve, in light of the unprecedented situation
regarding the COVID-19 pandemic."
Gross margin decreased to 20.2% from 38.0% of sales in the
quarter, due to a reduction in merchandise contribution, combined
with the effects of deleveraging from the sales decline related to
the phased reopening of stores and limited operating hours.
SG&A expenses as a percent of sales decreased to 26.4% from
31.4% during the quarter primarily due to company-wide expense
reduction initiatives and elimination of incentive
compensation. A pre-tax loss and the beneficial effects of
the CARES Act resulted in $3.9
million tax benefit versus $2.1
million expense in the prior year. During the quarter,
the Company paid $30 million on its
line of credit, bringing the outstanding balance to $0. The Company ended the quarter with
unrestricted cash and short-term investments of $137.0 million and full availability on its
$35 million revolving line of
credit.
Year-to-date gross margin decreased to 18.4% of sales from 39.2%
the prior year primarily due to a reduction in merchandise
contribution combined with the effects of deleveraging resulting
from the sales decline. The year-to-date SG&A rate was
36.4% versus 30.0% last year primarily due to the effects of
deleveraging and store impairment charges of $5.3 million, partially offset by company-wide
expense reductions and the elimination of incentive
compensation. Income tax benefit for the first half was
$13.0 million compared to an expense
of $6.4 million last year.
During the second quarter ended August 1,
2020, the Company opened 36 new stores which were previously
committed, relocated 1 store and permanently closed 3
stores. As of August 1, 2020,
the Company operated 1,333 stores in 31 states, compared to 1,299
stores in 31 states as of August 3,
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 AUGUST 1, 2020 AND AUGUST 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August
1,
|
%
|
|
August 3,
|
%
|
|
August
1,
|
%
|
|
August 3,
|
%
|
|
2020
|
Sales
|
|
2019
|
Sales
|
|
2020
|
Sales
|
|
2019
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
sales
|
$
|
166,265
|
100.0%
|
|
$
|
210,357
|
100.0%
|
|
$
|
265,078
|
100.0%
|
|
$
|
438,423
|
100.0%
|
Other revenue
(principally finance,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
late fees and layaway charges)
|
|
1,905
|
1.1%
|
|
|
2,224
|
1.1%
|
|
|
3,824
|
1.4%
|
|
|
4,510
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
168,170
|
101.1%
|
|
|
212,581
|
101.1%
|
|
|
268,902
|
101.4%
|
|
|
442,933
|
101.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
(Memo)
|
|
33,529
|
20.2%
|
|
|
79,985
|
38.0%
|
|
|
48,745
|
18.4%
|
|
|
171,968
|
39.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
132,736
|
79.8%
|
|
|
130,372
|
62.0%
|
|
|
216,333
|
81.6%
|
|
|
266,455
|
60.8%
|
Selling,
general and administrative
|
|
43,957
|
26.4%
|
|
|
66,066
|
31.4%
|
|
|
96,468
|
36.4%
|
|
|
132,056
|
30.0%
|
Depreciation
|
|
3,488
|
2.1%
|
|
|
3,836
|
1.8%
|
|
|
7,494
|
2.8%
|
|
|
7,679
|
1.8%
|
Interest and
other income
|
|
(961)
|
-0.6%
|
|
|
(1,693)
|
-0.8%
|
|
|
(2,812)
|
-1.1%
|
|
|
(2,829)
|
-0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost and expenses, net
|
|
179,220
|
107.8%
|
|
|
198,581
|
94.4%
|
|
|
317,483
|
119.8%
|
|
|
403,361
|
92.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes
|
|
(11,050)
|
-6.7%
|
|
|
14,000
|
6.7%
|
|
|
(48,581)
|
-18.3%
|
|
|
39,572
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax (Benefit)
Expense
|
|
(3,880)
|
-2.3%
|
|
|
2,134
|
1.0%
|
|
|
(12,994)
|
-4.9%
|
|
|
6,450
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
$
|
(7,170)
|
-4.3%
|
|
$
|
11,866
|
5.6%
|
|
$
|
(35,587)
|
-13.4%
|
|
$
|
33,122
|
7.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
(0.30)
|
|
|
$
|
0.48
|
|
|
$
|
(1.48)
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
$
|
(0.30)
|
|
|
$
|
0.48
|
|
|
$
|
(1.48)
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CATO
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August
1,
|
|
|
February
1,
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
36,565
|
|
|
$
|
11,824
|
|
|
|
|
|
|
|
|
|
Short-term
investments
|
|
100,391
|
|
|
|
200,387
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
3,917
|
|
|
|
3,896
|
|
|
|
|
|
|
|
|
|
Accounts
receivable - net
|
|
39,037
|
|
|
|
26,088
|
|
|
|
|
|
|
|
|
|
Merchandise
inventories
|
|
88,280
|
|
|
|
115,365
|
|
|
|
|
|
|
|
|
|
Other current
assets
|
|
12,460
|
|
|
|
5,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current
Assets
|
|
280,650
|
|
|
|
362,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and
Equipment - net
|
|
84,938
|
|
|
|
88,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Deferred
Income Taxes
|
|
5,911
|
|
|
|
8,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
23,142
|
|
|
|
24,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right-of-Use Assets,
net
|
|
201,776
|
|
|
|
200,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
$
|
596,417
|
|
|
$
|
684,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
$
|
96,149
|
|
|
$
|
136,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Lease
Liability
|
|
57,878
|
|
|
|
63,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
23,663
|
|
|
|
21,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
Liability
|
|
152,508
|
|
|
|
147,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
266,219
|
|
|
|
316,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
$
|
596,417
|
|
|
$
|
684,976
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/cato-reports-2q-net-loss-301115957.html
SOURCE The Cato Corporation