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Cato Reports 4Q and Full-Year Earnings

CHARLOTTE, N.C., March 19, 2020 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported earnings for the fourth quarter and year ended February 1, 2020.  For the fourth quarter, the Company reported a net loss of $3.2 million, or a loss of $0.13 per diluted share, compared to a net loss of $3.2 million or a loss of $0.13 per diluted share for the prior fourth quarter ended February 2, 2019.  Full-year fiscal 2019 net income was $35.9 million or $1.46 per diluted share compared to $30.5 million or $1.23 per diluted share for 2018.  For the year, net income increased 18% and earnings per diluted share increased 19% from the prior year. 

Sales for fiscal fourth quarter ended February 1, 2020 were $188.4 million, a decrease of 1% from sales of $190.3 million for the fourth quarter ended February 2, 2019.  For the quarter, same-store sales increased 1% from last year.  For the year, the Company's sales decreased 1% to $816.2 million from 2018 sales of $821.1 million.  Same-store sales for the year increased 2% to last year.

"We are encouraged by the growth experienced in 2019, building off a stabilized 2018," said John Cato, Chairman, President and Chief Executive Officer. "We continued to focus on our product and merchandise assortments,  while maintaining strong inventory control."

Fourth-quarter gross margin increased to 34.3% of sales from 33.1% of sales in 2018 due primarily to improved merchandise margins partially offset by higher occupancy costs.  Selling, general and administrative expenses were 35.6% of sales, compared to 34.7% in the prior year.  SG&A costs as a percent of sales were higher primarily due to higher incentive compensation partially offset by lower store impairment charges. Income tax for the quarter was an expense of $0.8 million compared to a benefit of $0.3 million last year.  The tax expense is primarily due to discrete items that were recognized during the fourth quarter of 2019. 

For 2019, gross margin increased to 37.6% of sales from 36.4% of sales in 2018 due to increased merchandise margins.  Selling, general and administrative expenses increased to 32.3% of sales compared to 31.9% in the prior year.  The selling, general and administrative expense increase was primarily due to increased incentive compensation partially offset by lower store impairment charges and insurance costs.  Income tax for the year was an expense of $7.3 million compared to an expense of $2.6 million last year. 

"Cato continues to maintain a strong balance sheet, with approximately $212 million in unrestricted cash and short-term investments and no debt," Mr. Cato said.  "As a company, our priority remains to provide great value to our customers, opportunity for growth to our associates, and strong returns to our shareholders." During 2019, the Company returned $42.2 million to shareholders through dividends of $32.6 million and share repurchases of $9.6 million.  The Company maintained its quarterly dividend of $0.33 per share, or $1.32 over the year.  For the fiscal year ended February 1, 2020, the Company opened 5 stores and closed 35 stores.  As of February 1, 2020, the Company operated 1,281 stores in 31 states. 

We continue to assess the potential impact of the coronavirus, which remains uncertain at this time.  Because of the uncertainties we are not providing a 2020 outlook or assumptions.  There remains a high level of uncertainty over the extent of supply chain disruption, and as many other retailers, we are seeing the dramatic impact on our customers and are unsure how long this will continue.

We are monitoring this unprecedented situation and continue to be mindful of the current events unfolding and of the safety of our customers and associates.  And although we cannot quantify the impact of this unprecedented situation, first quarter results will be negatively impacted.

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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE PERIODS ENDED FEBRUARY 1, 2020 AND FEBRUARY 2, 2019

(Dollars in thousands, except per share data)


















Quarter Ended


Twelve Months Ended


















February 1,

%


February 2,

%


February 1,

%


February 2,

%


2020

Sales


2019

Sales


2020

Sales


2019

Sales

















REVENUES
















  Retail sales

$

188,404

100.0%


$

190,348

100.0%


$

816,184

100.0%


$

821,113

100.0%

  Other revenue (principally finance,
















    late fees and layaway charges)


2,475

1.3%



2,087

1.1%



9,151

1.1%



8,551

1.0%

















    Total revenues


190,879

101.3%



192,435

101.1%



825,335

101.1%



829,664

101.0%

















GROSS MARGIN (Memo)


64,577

34.3%



62,915

33.1%



307,278

37.6%



298,578

36.4%

















COSTS AND EXPENSES, NET
















  Cost of goods sold


123,827

65.7%



127,433

67.0%



508,906

62.4%



522,535

63.6%

  Selling, general and administrative


67,065

35.6%



65,990

34.7%



263,802

32.3%



262,606

31.9%

  Depreciation


3,963

2.1%



3,993

2.1%



15,485

1.9%



16,463

2.0%

  Interest and other income


(1,574)

-0.8%



(1,432)

-0.8%



(6,065)

-0.7%



(4,991)

-0.6%

















    Cost and expenses, net


193,281

102.6%



195,984

103.0%



782,128

95.8%



796,613

97.0%

































Income Before Income (Loss) Taxes


(2,402)

-1.3%



(3,549)

-1.9%



43,207

5.3%



33,051

4.0%

















Income Tax (Benefit)/Expense


808

0.4%



(317)

-0.2%



7,310

0.9%



2,590

0.3%

















Net Income (Loss)

$

(3,210)

-1.7%


$

(3,232)

-1.7%


$

35,897

4.4%


$

30,461

3.7%

































Basic Earnings Per Share

$

(0.13)



$

(0.13)



$

1.46



$

1.23


































Diluted Earnings Per Share

$

(0.13)



$

(0.13)



$

1.46



$

1.23


 

 

THE CATO CORPORATION







CONDENSED CONSOLIDATED BALANCE SHEETS 





(Dollars in thousands)















February 1,



February 2,


2020



2019


(Unaudited)



(Unaudited)








ASSETS







Current Assets







  Cash and cash equivalents

$

11,824



$

24,603

  Short-term investments


200,387




182,711

  Restricted cash


3,896




3,802

  Accounts receivable - net


26,088




28,137

  Merchandise inventories


115,365




119,585

  Other current assets


5,237




11,750








Total Current Assets


362,797




370,588








Property and Equipment - net


88,667




94,304








Noncurrent Deferred Income Taxes


8,636




11,209








Other Assets


24,073




21,805








Right-of-Use Assets, net


200,803




0








      TOTAL

$

684,976



$

497,906








LIABILITIES AND STOCKHOLDERS' EQUITY












Current Liabilities

$

136,153



$

141,086








Current Lease Liability


63,149




0








Noncurrent Liabilities


21,976




39,984








Lease Liability


147,184




0








Stockholders' Equity


316,514




316,836








      TOTAL

$

684,976



$

497,906


 

 

Cision

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SOURCE The Cato Corporation