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Cato Reports 3Q EPS Of $0.24

CHARLOTTE, N.C., Nov. 21, 2019 /PRNewswire/ -- The Cato Corporation (CATO) today reported net income of $6.0 million for the third quarter ended November 2, 2019, compared to net income of $3.8 million for the third quarter ended November 3, 2018.  Earnings per diluted share for the third quarter were $0.24, compared to $0.16 last year.  Sales for the third quarter ended November 2, 2019 were $189.4 million, up 1% compared to sales of $187.9 million for the third quarter ended November 3, 2018.  Same-store sales for the quarter increased 4% to last year.

"We are pleased with our third quarter results, which continued our positive trends in same-store sales and merchandise margins," stated John Cato, Chairman, President, and Chief Executive Officer.  "We remain cautiously optimistic about the fourth quarter as customer buying patterns continue to change and we evaluate the potential impact of current and future tariffs."

For the nine months ended November 2, 2019, the Company earned net income of $39.1 million, compared to net income of $33.7 million for the nine months ended November 3, 2018.  Earnings per diluted share were $1.59 compared to $1.36 last year.  Sales for the nine months ended November 2, 2019 were $627.8 million, flat compared to sales of $630.8 million for the nine months ended November 3, 2018.  Year-to-date same-store sales increased 2% to last year.

For the quarter, the gross margin rate increased to 37.4% of sales from 34.5% last year, primarily due to higher merchandise margins and lower occupancy expenses.  The SG&A rate for the quarter increased to 34.2% from 32.9% last year primarily due to higher incentive compensation in the current year and favorable litigation settlements in the prior year.  Income tax for the quarter was an expense of $0.1 million compared to a benefit of $1.3 million last year.  The Company ended the quarter with cash and short-term investments of $228.4 million.

Year-to-date, the gross margin rate increased to 38.7% of sales from 37.4% the prior year primarily due to higher merchandise margins and lower occupancy expenses.  The year-to-date SG&A rate increased slightly to 31.3% from 31.2% last year primarily due to higher incentive compensation offset by lower insurance costs.  Income tax for the year was an expense of $6.5 million compared to an expense of $2.9 million last year.

As of November 2, 2019, the Company operated 1,298 stores in 31 states, compared to 1,350 stores in 33 states as of November 3, 2018.

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.

THE CATO CORPORATION
















CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)










FOR THE PERIODS ENDED NOVEMBER 2, 2019 AND NOVEMBER 3, 2018










(Dollars in thousands, except per share data)
































Quarter Ended


Nine Months Ended


















November 2,

%


November 3,

%


November 2,

%


November 3,

%


2019

Sales


2018

Sales


2019

Sales


2018

Sales

















REVENUES
















  Retail sales

$

189,357

100.0%


$

187,892

100.0%


$

627,780

100.0%


$

630,765

100.0%

  Other revenue (principally finance,
















    late fees and layaway charges)


2,166

1.1%



2,120

1.1%



6,676

1.1%



6,464

1.0%

















    Total revenues


191,523

101.1%



190,012

101.1%



634,456

101.1%



637,229

101.0%

















GROSS MARGIN (Memo)


70,733

37.4%



64,878

34.5%



242,701

38.7%



235,663

37.4%

















COSTS AND EXPENSES, NET
















  Cost of goods sold


118,624

62.6%



123,014

65.5%



385,079

61.3%



395,102

62.6%

  Selling, general and administrative


64,681

34.2%



61,765

32.9%



196,737

31.3%



196,616

31.1%

  Depreciation


3,844

2.0%



4,094

2.2%



11,523

1.8%



12,470

2.0%

  Interest and other income


(1,662)

-0.9%



(1,374)

-0.7%



(4,491)

-0.7%



(3,559)

-0.6%

















    Cost and expenses, net


185,487

98.0%



187,499

99.8%



588,848

93.8%



600,629

95.2%

































Income Before Income Taxes


6,036

3.2%



2,513

1.3%



45,608

7.3%



36,600

5.8%

















Income Tax (Benefit)/Expense


51

0.0%



(1,287)

-0.7%



6,501

1.0%



2,907

0.5%

















Net Income

$

5,985

3.2%


$

3,800

2.0%


$

39,107

6.2%


$

33,693

5.3%

































Basic Earnings Per Share

$

0.24



$

0.16



$

1.59



$

1.36


































Diluted Earnings Per Share

$

0.24



$

0.16



$

1.59



$

1.36


















































































THE CATO CORPORATION
















CONDENSED CONSOLIDATED BALANCE SHEETS 













(Dollars in thousands)

































November 2,



February 2,











2019



2019











(Unaudited)



(Unaudited)


























ASSETS
















Current Assets
















  Cash and cash equivalents

$

21,222



$

24,603










  Short-term investments


203,309




182,711










  Restricted cash


3,880




3,802










  Accounts receivable - net


27,479




28,137










  Merchandise inventories


114,049




119,585










  Other current assets


4,301




11,750


























Total Current Assets


374,240




370,588


























Property and Equipment - net


88,384




94,304


























Noncurrent Deferred Income Taxes


10,829




11,209


























Other Assets


23,475




21,805


























Right-of-Use Assets, net


154,235




0


























      TOTAL

$

651,163



$

497,906


























LIABILITIES AND STOCKHOLDERS' EQUITY






























Current Liabilities

$

133,229



$

141,086


























Current Lease Liability


53,536




0


























Noncurrent Liabilities


21,741




39,984


























Lease Liability


110,948




0


























Stockholders' Equity


331,709




316,836


























      TOTAL

$

651,163



$

497,906











 

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