Provides Second Half Guidance CHARLOTTE, N.C., Aug. 20
/PRNewswire-FirstCall/ -- The Cato Corporation (NYSE:CTR) today
reported net income of $16.7 million or $.56 per diluted share for
the second quarter ended August 1, 2009, compared to net income of
$12.1 million or $.41 per diluted share for the second quarter
ended August 2, 2008. Net income increased 38% and earnings per
diluted share increased 37% over last year. Sales for the second
quarter were $225.4 million, a 2% decrease from sales of $231.0
million last year. Second quarter comparable store sales decreased
3%. For the six months ended August 1, 2009, the Company earned net
income of $35.5 million or $1.20 per diluted share, compared with
net income of $28.9 million or $.98 per diluted share for the six
months ended August 2, 2008, an increase of 23% in net income and
22% in earnings per diluted share. Sales for the first half were
$463.4 million, a 1% increase over the prior year's first half
sales of $456.7 million. Comparable store sales for the first half
were flat compared to first half 2008. "Our second quarter sales
decrease was offset by lower expenses," stated John Cato, Chairman,
President, and Chief Executive Officer. "Our original guidance for
the second half of the year remains unchanged and we continue to
manage our business tightly in this difficult environment." Second
quarter gross margin was 36.3% compared to 35.9% last year due
primarily to lower freight costs. Second quarter SG&A costs as
a percent of sales decreased to 25.1% from 27.5% last year. The
decrease in SG&A for the quarter was primarily a result of the
costs associated with closing stores in the second quarter last
year and a decrease in health and worker's compensation costs this
year. Based on year-to-date results and the Company's original
guidance for the second half, earnings per diluted share for the
year is estimated to be in the range of $1.21 to $1.29 versus $1.14
last year, an increase of 6% to 13%. By quarter, earnings per
diluted share are estimated to be in the range of ($.07) to ($.03)
versus $.03 last year for the third quarter and $.08 to $.13 versus
$.13 last year for the fourth quarter. All 2008 quarterly and
annual result references reflect the restatement of earnings per
diluted share under EITF 03-6-1. Comparable store sales for both
the third and fourth quarters are estimated to be in the range of
down 3% to flat. During the first half, the Company opened 12 new
stores and closed eight stores, four of which were It's Fashion
stores converted to It's Fashion Metro stores. The Company now
expects to open approximately 46 stores during 2009. As of August
1, 2009, The Cato Corporation operated 1,285 stores in 31 states,
compared to 1,287 stores in 31 states as of August 2, 2008. The
Cato Corporation is a leading specialty retailer of value-priced
women's fashion apparel operating two divisions, "Cato" and "It's
Fashion". The Company's Cato division offers exclusive merchandise
with fashion and quality comparable to mall specialty stores at low
prices every day. The It's Fashion division offers fashion with a
focus on the latest trendy styles and nationally recognized urban
brands for the entire family at low prices every day. Additional
information on The Cato Corporation is available at
http://www.catocorp.com/. Statements in this press release not
historical in nature including, without limitation, statements
regarding the Company's expected or estimated financial results for
the third quarter, fourth quarter and full year and any related
assumptions, as well as the Company's expected plans for full year
store openings 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: general economic
conditions; competitive factors and pricing pressures; the
Company's ability to predict fashion trends; consumer apparel
buying patterns; adverse weather conditions and inventory risks due
to shifts in market demand 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, as amended or supplemented, 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,
2009 AND AUGUST 2, 2008 (Dollars in thousands, except per share
data) Quarter Ended ------------- August 1, % August 2, % 2009
Sales 2008 Sales -------- ----- -------- ----- REVENUES Retail
sales $225,369 100.0% $230,957 100.0% Other income (principally
finance, late fees and layaway charges) 2,897 1.3% 2,910 1.3%
-------- ----- -------- ----- Total revenues 228,266 101.3% 233,867
101.3% -------- ----- -------- ----- GROSS MARGIN (Memo) 81,910
36.3% 82,936 35.9% COSTS AND EXPENSES, NET Cost of goods sold
143,459 63.7% 148,021 64.1% Selling, general and administrative
56,480 25.1% 63,578 27.5% Depreciation 5,482 2.4% 5,657 2.5%
Interest and other income (861) -0.4% (1,708) -0.7% -------- -----
-------- ----- Cost and expenses, net 204,560 90.8% 215,548 93.4%
-------- ----- -------- ----- Income Before Income Taxes 23,706
10.5% 18,319 7.9% Income Tax Expense 7,048 3.1% 6,228 2.7% --------
----- -------- ----- Net Income $16,658 7.4% $12,091 5.2% =======
===== ======== ===== Basic Earnings Per Share $0.57 $0.41 =====
===== Diluted Earnings Per Share $0.56 $0.41 ===== ===== Six Months
Ended ---------------- August 1, % August 2, % 2009 Sales 2008
Sales -------- ----- -------- ----- REVENUES Retail sales $463,423
100.0% $456,748 100.0% Other income (principally finance, late fees
and layaway charges) 5,870 1.3% 5,948 1.3% -------- ----- --------
----- Total revenues 469,293 101.3% 462,696 101.3% -------- -----
-------- ----- GROSS MARGIN (Memo) 178,051 38.4% 167,108 36.6%
COSTS AND EXPENSES, NET Cost of goods sold 285,372 61.6% 289,640
63.4% Selling, general and administrative 121,124 26.1% 119,896
26.2% Depreciation 11,026 2.4% 11,267 2.5% Interest and other
income (1,921) -0.4% (3,609) -0.8% -------- ----- -------- -----
Cost and expenses, net 415,601 89.7% 417,194 91.3% -------- -----
-------- ----- Income Before Income Taxes 53,692 11.6% 45,502 10.0%
Income Tax Expense 18,220 3.9% 16,558 3.6% -------- ----- --------
----- Net Income $35,472 7.7% $28,944 6.4% ======= ===== ========
===== Basic Earnings Per Share $1.21 $0.98 ===== ===== Diluted
Earnings Per Share $1.20 $0.98 ===== ===== THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) August
1, August 2, January 31, 2009 2008 2009 (Unaudited) (Unaudited)
----------- ----------- ---------- ASSETS Current Assets Cash and
cash equivalents $28,888 $45,371 $42,262 Short-term investments
145,427 98,875 93,452 Restricted Cash 9,057 9,077 9,089 Accounts
receivable - net 41,798 44,026 44,136 Merchandise inventories
93,807 96,864 112,290 Other current assets 14,283 14,784 14,140
------ ------ ------ Total Current Assets 333,260 308,997 315,369
Property and Equipment - net 111,001 119,952 116,262 Other Assets
7,324 4,482 3,722 ----- ----- ----- TOTAL $451,585 $433,431
$435,353 ======== ======== ======== LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities $141,130 $143,214 $150,730 Noncurrent
Liabilities 21,167 22,465 22,810 Stockholders' Equity 289,288
267,752 261,813 ------- ------- ------- TOTAL $451,585 $433,431
$435,353 ======== ======== ======== DATASOURCE: The Cato
Corporation CONTACT: John R. Howe, Executive Vice President, Chief
Financial Officer of The Cato Corporation, +1-704-551-7315 Web
Site: http://www.catocorp.com/
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