CHARLOTTE, N.C., Nov. 19, 2020 /PRNewswire/ -- The Cato
Corporation (NYSE: CATO) today reported a net loss of $3.6 million or ($0.15) per diluted share for the third quarter
ended October 31, 2020, compared to
net income of $6.0 million or
$0.24 per diluted share for the
third quarter ended November 2,
2019. Sales for the third quarter were $149.2 million, or a decrease of 21% from sales
of $189.4 million for the third
quarter ended November 2,
2019. The Company's same-store sales for the quarter
decreased 23% 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 nine months ended October 31,
2020, the Company reported a net loss of $39.2 million or ($1.64) per diluted share, compared to net income
of $39.1 million or $1.59 per diluted share for the nine months ended
November 2, 2019. Sales for the
nine months ended October 31, 2020
were $414.3 million, down 34% to
sales of $627.8 million for the nine
months ended November 2, 2019.
Year-to-date same-store sales decreased 35%.
"Sales in the third quarter reflected continued softening of
customer demand as COVID-19 cases continued to rise throughout our
market areas and many people still have not returned to work. As we
see this trend continuing, we anticipate that the remainder of the
year will be challenging," stated John
Cato, Chairman, President, and Chief Executive Officer. "We
appreciate our store associates' diligence in providing a safe
shopping environment and our customers' patience as we continue our
enhanced cleaning and product handling procedures to make our
stores as safe as possible in light of the COVID-19 pandemic."
For the quarter, gross margin decreased to 26.7% from 37.4% of
sales the prior year due to a reduction in merchandise
contribution, combined with the effects of deleveraging from the
sales decline. SG&A expenses as a percent of sales
increased to 34.8% from 34.2% during the quarter primarily due to
the effects of deleveraging, and an impairment charge of
$2.3 million, partially offset by
company-wide expense reductions and reduction of incentive
compensation compared to prior year. A pre-tax loss and the
beneficial effects of the CARES Act resulted in $9.7 million of tax benefit versus $0.1 million of expense in the prior
year. The Company ended the quarter with unrestricted cash and
short-term investments of $151.4
million and full availability of its $35 million revolving line of credit.
Year-to-date gross margin decreased to 21.4% of sales from 38.7%
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
35.8% versus 31.2% last year primarily due to the effects of
deleveraging and impairment charges of $7.6
million, partially offset by company-wide expense reductions
and the reduction of incentive compensation. Income tax
benefit for the nine months was $22.7
million compared to an expense of $6.5 million last year.
During the third quarter ended October
31, 2020, the Company opened 16 new stores, which had leases
prior to the COVID-19 pandemic and permanently closed 2
stores. As of October 31, 2020,
the Company operated 1,347 stores in 33 states, compared to 1,298
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
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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FOR THE PERIODS
ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019
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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
31,
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%
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November
2,
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%
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October
31,
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%
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November
2,
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%
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2020
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Sales
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2019
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Sales
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2020
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Sales
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2019
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Sales
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REVENUES
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Retail
sales
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$
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149,205
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100.0%
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$
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189,357
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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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$
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627,780
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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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1,586
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1.1%
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2,166
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1.1%
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5,410
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1.3%
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6,676
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1.1%
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Total revenues
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150,791
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101.1%
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191,523
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101.1%
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419,693
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101.3%
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634,456
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101.1%
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GROSS MARGIN
(Memo)
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39,801
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26.7%
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70,733
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37.4%
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88,545
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21.4%
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242,701
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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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109,404
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73.3%
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118,624
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62.7%
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325,738
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78.6%
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385,079
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61.3%
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Selling,
general and administrative
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51,885
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34.8%
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64,681
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34.2%
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148,353
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35.8%
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196,737
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31.2%
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Depreciation
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3,619
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2.4%
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3,844
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2.0%
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11,113
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2.7%
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11,523
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1.8%
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Interest and
other income
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(791)
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-0.5%
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(1,662)
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-0.9%
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(3,603)
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-0.9%
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(4,491)
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-0.7%
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Cost and expenses, net
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164,117
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110.0%
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185,487
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98.0%
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481,601
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116.2%
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588,848
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93.8%
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Income (Loss) Before
Income Taxes
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(13,326)
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-8.9%
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6,036
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3.2%
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(61,908)
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-14.9%
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45,608
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7.3%
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Income Tax (Benefit)
Expense
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(9,704)
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-6.5%
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51
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0.0%
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(22,698)
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-5.5%
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6,501
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1.0%
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Net Income
(Loss)
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$
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(3,622)
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-2.4%
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$
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5,985
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3.2%
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$
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(39,210)
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-9.5%
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$
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39,107
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6.2%
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Basic Earnings Per
Share
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$
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(0.15)
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$
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0.24
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$
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(1.64)
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$
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1.59
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Diluted Earnings Per
Share
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$
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(0.15)
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$
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0.24
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$
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(1.64)
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$
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1.59
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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
31,
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February
1,
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2020
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2020
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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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18,812
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$
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11,824
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Short-term
investments
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132,574
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200,387
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Restricted
cash
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3,917
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3,896
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Accounts
receivable - net
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47,725
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26,088
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Merchandise
inventories
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84,281
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115,365
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Other current
assets
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7,185
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5,237
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Total Current
Assets
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294,494
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362,797
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Property and
Equipment - net
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81,853
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88,667
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Noncurrent Deferred
Income Taxes
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7,464
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8,636
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Other
Assets
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22,722
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24,073
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Right-of-Use Assets,
net
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184,338
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200,803
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TOTAL
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$
|
590,871
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$
|
684,976
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LIABILITIES AND
STOCKHOLDERS' EQUITY
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Current
Liabilities
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$
|
122,489
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$
|
136,153
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Current Lease
Liability
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54,250
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63,149
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Noncurrent
Liabilities
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19,799
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21,976
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Lease
Liability
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138,196
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147,184
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Stockholders'
Equity
|
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256,137
|
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316,514
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TOTAL
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$
|
590,871
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$
|
684,976
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View original
content:http://www.prnewswire.com/news-releases/cato-reports-3q-net-loss-301176882.html
SOURCE The Cato Corporation