CHARLOTTE, N.C., Nov. 17, 2021 /PRNewswire/ -- The Cato
Corporation (NYSE: CATO) today reported net income of $8.6 million or $0.39 per diluted share for the third quarter
ended October 30, 2021, compared to a
net loss of $3.6 million or
($0.15) per diluted share for the
third quarter ended October 31,
2020.
Sales for fiscal 2020 were significantly impacted by the closure
of our stores for six weeks due to the COVID-19 pandemic, beginning
March 19, 2020. Due to the impact of
the unprecedented closures, the Company will report sales compared
to the past two years. Sales for the third quarter ended
October 30, 2021 were $170.5 million, or an increase of 14% from sales
of $149.2 million for the third
quarter ended October 31, 2020.
Compared to the same period in 2019, sales decreased 10% from sales
of $189.4 million for the quarter
ended November 2, 2019. The Company's
same-store sales for the quarter increased 14% compared to 2020 and
decreased 13% when compared to the same period in 2019.
For the nine months ended October 30,
2021, the Company reported net income of $43.3 million or $1.93 per diluted share, compared to a net loss
of $39.2 million or ($1.64) per diluted share for the nine months
ended October 31, 2020. Sales
for the nine months ended October 30,
2021 were $587.7 million, an
increase of 42% to sales of $414.3
million for the nine months ended October 31, 2020. Compared to the same
period in 2019, sales decreased 6% from sales of $627.8 million for the nine months ended
November 2, 2019. Year-to-date
same-store sales increased 41% to 2020 and decreased 9% compared to
the same period in 2019.
"We continue to face challenges due to the lingering effects of
the pandemic on the retail industry and the economy as a whole,"
stated John Cato, Chairman,
President and Chief Executive Officer. "Our sales for the
third quarter were negatively impacted by lower inventory levels
related to further deterioration in the supply chain coupled with
increased positive cases related to the COVID-19 Delta
variant."
Gross margin increased from 26.7% to 38.9% of sales in the
quarter due to higher merchandise margins. SG&A expenses
as a percent of sales increased from 34.8% to 36.6% of sales during
the quarter primarily due to increased employee benefit/bonus
expense and store operating expenses as store operating hours have
increased substantially compared to prior year. Income tax benefit
for the quarter was $5.7 million due
to increased benefits from tax planning initiatives and lower
reserves related to uncertain tax positions, offset by higher
pre-tax earnings versus a $9.7
million benefit in the prior year due to the pre-tax
loss. The Company ended the quarter with unrestricted cash
and short-term investments of $200.1
million driven by strong cash flow from operations, offset
by dividends and share repurchases. This compares with
$151.4 million for the same period in
2020.
Year-to-date gross margin increased to 41.6% of sales from 21.4%
the prior year primarily due to increased merchandise
margins. The year-to-date SG&A rate was 33.5% versus
35.8% primarily due to leveraging of expenses, partially offset by
higher employee benefit/bonus expense. Income tax expense for
the nine months ended October 30,
2021 was $1.9 million versus a
$22.7 million benefit last year.
Year-to-date, the Company permanently closed 6 stores. As
of October 30, 2021, the Company
operates 1,324 stores in 32 states, compared to 1,347 stores in 33
states as of October 31,
2020.
"While our first half sales benefitted from pent-up demand,
government stimulus and more reasonable inventory levels, third
quarter sales softened due to decreasing inventory levels caused by
worsening supply chain disruption," stated Mr. Cato. "As we
see these conditions persisting, coupled with the effects of rising
inflation and potential government vaccine mandates, we believe the
fourth quarter will be very challenging."
"As we enter the Holidays, amid the lingering effects of the
pandemic, our associates' and customers' safety remain our primary
focus," Mr. Cato said. "We strive to offer our customers a
safe place to shop for their favorite fashion trends at a great
value with outstanding customer service."
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, 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
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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FOR THE PERIODS
ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020
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(Dollars in
thousands, except per share data)
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Quarter
Ended
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Nine Months
Ended
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October
30,
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%
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October
31,
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%
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October
30,
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%
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October
31,
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%
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2021
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Sales
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2020
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Sales
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2021
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Sales
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2020
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Sales
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REVENUES
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Retail
sales
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$
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170,513
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100.0%
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$
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149,205
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100.0%
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$
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587,709
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100.0%
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$
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414,283
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100.0%
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Other revenue
(principally finance,
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late fees and layaway charges)
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1,700
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1.0%
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1,586
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1.1%
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5,335
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0.9%
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5,410
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1.3%
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Total revenues
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172,213
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101.0%
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150,791
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101.1%
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593,044
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100.9%
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419,693
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101.3%
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GROSS MARGIN
(Memo)
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66,288
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38.9%
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39,801
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26.7%
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244,222
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41.6%
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88,545
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21.4%
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COSTS AND
EXPENSES, NET
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Cost of goods
sold
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104,225
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61.1%
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109,404
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73.3%
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343,487
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58.4%
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325,738
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78.6%
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Selling,
general and administrative
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62,466
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36.6%
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51,885
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34.8%
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196,687
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33.5%
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148,353
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35.8%
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Depreciation
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3,173
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1.9%
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3,619
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2.4%
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9,352
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1.6%
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11,113
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2.7%
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Interest and
other income
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(541)
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-0.3%
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(791)
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-0.5%
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(1,719)
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-0.3%
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(3,603)
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-0.9%
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Cost and expenses, net
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169,323
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99.3%
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164,117
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110.0%
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547,807
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93.2%
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481,601
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116.3%
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Income (Loss) Before
Income Taxes
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2,890
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1.7%
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(13,326)
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-8.9%
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45,237
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7.7%
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(61,908)
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-14.9%
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Income Tax (Benefit)
Expense
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(5,713)
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-3.4%
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(9,704)
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-6.5%
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1,929
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0.3%
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(22,698)
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-5.5%
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Net Income
(Loss)
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$
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8,603
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5.0%
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$
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(3,622)
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-2.4%
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$
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43,308
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7.4%
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$
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(39,210)
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-9.5%
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Basic Earnings Per
Share
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$
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0.39
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$
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(0.15)
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$
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1.93
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$
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(1.64)
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Diluted Earnings Per
Share
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$
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0.39
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$
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(0.15)
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$
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1.93
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$
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(1.64)
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THE CATO
CORPORATION
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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(Dollars in
thousands)
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October
30,
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January
30,
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2021
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2021
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(Unaudited)
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(Unaudited)
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ASSETS
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Current
Assets
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Cash and cash
equivalents
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$
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23,990
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$
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17,510
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Short-term
investments
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176,120
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126,416
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Restricted
cash
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3,919
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3,918
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Accounts
receivable - net
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56,017
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52,743
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Merchandise
inventories
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90,229
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84,123
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Other current
assets
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11,478
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5,840
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Total Current
Assets
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361,753
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290,550
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Property and
Equipment - net
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65,115
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72,550
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Noncurrent Deferred
Income Taxes
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5,920
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5,685
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Other
Assets
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23,528
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22,850
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Right-of-Use Assets,
net
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130,842
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199,817
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TOTAL
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$
|
587,158
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$
|
591,452
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LIABILITIES AND
STOCKHOLDERS' EQUITY
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Current
Liabilities
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$
|
164,103
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$
|
118,513
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Current Lease
Liability
|
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50,234
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63,421
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Noncurrent
Liabilities
|
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17,408
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19,705
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Lease
Liability
|
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84,635
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|
|
143,315
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|
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Stockholders'
Equity
|
|
270,778
|
|
|
|
246,498
|
|
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TOTAL
|
$
|
587,158
|
|
|
$
|
591,452
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View original
content:https://www.prnewswire.com/news-releases/cato-reports-3q-net-income-301426381.html
SOURCE The Cato Corporation