CHARLOTTE, N.C., Nov. 16, 2017 /PRNewswire/ -- The Cato
Corporation (NYSE: CATO) today reported net income of $2.7 million for the third quarter ended
October 28, 2017, compared to net
income of $8.3 million for the third
quarter ended October 29, 2016.
Earnings per diluted share for the third quarter were $0.11, compared to $0.30 last year. Sales for the third
quarter ended October 28, 2017 were
$188.4 million, a 9% decrease from
sales of $207.0 million for the third
quarter ended October 29, 2016.
Same-store sales for the quarter decreased 9%.
"Consistent with our previous releases, pressure on merchandise
margins and profitability persist as we continue to work through
our merchandise missteps," stated John
Cato, Chairman, President, and Chief Executive
Officer. "The negative sales trends are below our
expectations and, consequently, we continue to expect our full year
earnings to be significantly below last year."
For the nine months ended October 28,
2017, the Company earned net income of $24.0 million, compared to net income of
$60.0 million for the nine months
ended October 29, 2016.
Earnings per diluted share were $0.93
compared to $2.17 last year.
Sales for the nine months ended October 28,
2017 were $631.0 million, a
decrease of 13% from sales of $729.2
million for the nine months ended October 29, 2016. Year-to-date same-store
sales decreased 14%.
For the quarter, the gross margin rate decreased to 33.9% of
sales from 35.5% last year, primarily due to lower merchandise
margins and deleveraging of occupancy expenses. The SG&A
rate for the quarter increased to 33.0% from 32.8% last year
primarily due to deleveraging of expenses offset by cost savings
initiatives implemented in the third quarter. Income tax for
the quarter was a benefit of $2.8
million compared to a benefit of $4.9
million last year. The company ended the quarter with
cash and short-term investments of $218.6
million.
Year-to-date, the gross margin rate decreased to 34.8% of sales
from 38.7% the prior year primarily due to lower merchandise
margins and deleveraging of expenses. The year-to-date
SG&A rate was 30.1% versus 28.3% last year primarily due to
deleveraging of expenses partially offset by cost savings
initiatives. Income tax for the year was a benefit of
$0.3 million compared to an expense
of $11.5 million last year.
The Company has opened six new stores during 2017, down from our
original plan of 13 stores and expects to close 26 stores versus
our original plan of 19 stores. Additionally, two stores have
been relocated. As of October 28,
2017, the Company operated 1,370 stores in 33 states,
compared to 1,372 stores in 33 states as of October 29, 2016.
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 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, the following: any
actual or perceived deterioration in the conditions that drive
consumer confidence and spending, including, but not limited to,
levels of unemployment, fuel, energy and food costs, wage rates,
tax rates, home values, consumer net worth and the availability of
credit; 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; adverse weather 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.
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THE CATO
CORPORATION
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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FOR THE PERIODS
ENDED OCTOBER 28, 2017 AND OCTOBER 29, 2016
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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
28,
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%
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October
29,
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%
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October
28,
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%
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October
29,
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%
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2017
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Sales
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2016
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Sales
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2017
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Sales
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2016
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Sales
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REVENUES
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Retail
sales
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$
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188,368
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100.0%
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$
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207,022
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100.0%
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$
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631,049
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100.0%
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$
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729,173
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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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1,905
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1.0%
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2,240
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1.1%
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5,926
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0.9%
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6,949
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1.0%
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Total revenues
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190,273
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101.0%
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209,262
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101.1%
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636,975
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100.9%
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736,122
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101.0%
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GROSS MARGIN
(Memo)
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63,906
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33.9%
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73,395
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35.5%
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219,546
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34.8%
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282,515
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38.7%
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COSTS AND
EXPENSES, NET
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Cost of goods
sold
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124,462
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66.1%
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133,627
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64.6%
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411,503
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65.2%
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446,658
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61.3%
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Selling,
general and administrative
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62,100
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33.0%
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67,815
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32.8%
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190,162
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30.1%
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206,441
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28.3%
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Depreciation
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5,047
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2.7%
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5,734
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2.8%
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14,989
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2.4%
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17,082
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2.3%
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Interest and
other income
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(1,200)
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-0.6%
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(1,288)
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-0.6%
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(3,472)
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-0.6%
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(5,593)
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-0.8%
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Cost and expenses, net
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190,409
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101.1%
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205,888
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99.5%
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613,182
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97.2%
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664,588
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91.1%
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Income Before Income
Taxes
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(136)
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-0.1%
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3,374
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1.6%
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23,793
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3.8%
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71,534
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9.8%
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Income Tax
(Benefit)/Expense
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(2,830)
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-1.5%
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(4,886)
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-2.4%
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(252)
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0.0%
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11,513
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1.6%
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Net Income
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$
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2,694
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1.4%
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$
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8,260
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4.0%
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$
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24,045
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3.8%
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$
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60,021
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8.2%
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Basic Earnings Per
Share
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$
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0.11
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$
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0.30
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$
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0.93
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$
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2.17
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Diluted Earnings Per
Share
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$
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0.11
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$
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0.30
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$
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0.93
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$
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2.17
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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
28,
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January
28,
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2017
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2017
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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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78,666
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$
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47,234
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Short-term
investments
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136,207
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201,233
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Restricted
Cash
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3,711
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3,691
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Accounts
receivable - net
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30,507
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30,336
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Merchandise
inventories
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127,763
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145,682
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Other current
assets
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16,563
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15,632
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Total Current
Assets
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393,417
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443,808
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Property and
Equipment - net
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120,179
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126,386
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Noncurrent Deferred
Income Taxes
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12,487
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13,773
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Other
Assets
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22,268
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22,357
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TOTAL
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$
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548,351
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$
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606,324
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LIABILITIES AND
STOCKHOLDERS' EQUITY
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Current
Liabilities
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$
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149,132
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$
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171,912
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Noncurrent
Liabilities
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46,793
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50,509
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Stockholders'
Equity
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352,426
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383,903
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TOTAL
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$
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548,351
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$
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606,324
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View original
content:http://www.prnewswire.com/news-releases/cato-reports-3q-eps-of-011-300557431.html
SOURCE The Cato Corporation