MRO Magazine

Cato Reports 1Q EPS Up 7%

May 21, 2015
By PRN NewsWire

CHARLOTTE, N.C., May 21, 2015 /PRNewswire/ — The Cato Corporation (NYSE: CATO) today reported net income of $31.1 million or $1.11 per diluted share for the first quarter ended May 2, 2015, compared to net income of $30.0 million or $1.04 per diluted share for the first quarter ended May 3, 2014. Net income increased 4% and earnings per diluted share increased 7% for the quarter. Earnings per share benefited $.03 in the first quarter due to share repurchases in the first quarter of 2014. Sales for the first quarter were $281.6 million, or flat from sales of $282.5 million for the first quarter ended May 3, 2014. The Company’s same-store sales decreased 3% in the quarter.

“Although sales for the first quarter were below expectations, our earnings per diluted share increased over last year primarily due to lower incentive compensation expenses and a favorable tax adjustment,” stated John Cato, Chairman, President, and Chief Executive Officer. “Our expectations for the second quarter remain unchanged from what was included in the original guidance for the full year and reflect same store sales in the range of down 2% to flat and earnings per diluted share in the range of $.54 to $.57 versus $.56 last year. After adjusting our original 2015 guidance for first quarter actual results, our estimate of earnings per diluted share for the full year is now a range of $2.10 to $2.23 versus $2.15 last year.”

Gross margin increased 50 basis points to 42.3% of sales primarily due to higher merchandise contribution in the quarter. SG&A expenses as a percent of sales increased 50 basis points to 24.4% during the quarter primarily due to increased store expenses which were partially offset by lower incentive compensation. The effective tax rate decreased 250 basis points to 35.2% versus the prior year at 37.7% due to a favorable tax adjustment in the quarter. The Company ended the quarter with cash and short-term investments of $276.2 million.

During the first quarter, the Company opened eight stores and closed two stores. As of May 2, 2015, the Company operated 1,352 stores in 32 states, compared to 1,324 stores in 32 states as of May 3, 2014.

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 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 It’s Fashion offers fashion with a focus on the latest trendy styles for the entire family at low prices every day. Additional information on The Cato Corporation is available at

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected or estimated 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: 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 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 MAY 2, 2015 AND MAY 3, 2014 (Dollars in thousands, except per share data) Quarter Ended ————- May 2, % May 3, % 2015 Sales 2014 Sales —- —– —- —– REVENUES Retail sales $281,575 100.0% $282,462 100.0% Other revenue (principally finance, late fees and layaway charges) 2,324 0.8% 2,270 0.8% —– —– Total revenues 283,899 100.8% 284,732 100.8% ——- —– ——- —– GROSS MARGIN (Memo) 119,055 42.3% 118,099 41.8% COSTS AND EXPENSES, NET Cost of goods sold 162,520 57.7% 164,363 58.2% Selling, general and administrative 68,584 24.4% 67,487 23.9% Depreciation 5,374 1.9% 5,452 1.9% Interest and other income (568) -0.2% (742) -0.3% —- —- Cost and expenses, net 235,910 83.8% 236,560 83.7% ——- ——- Income Before Income Taxes 47,989 17.0% 48,172 17.0% Income Tax Expense 16,906 6.0% 18,166 6.4% —— —— Net Income $31,083 11.0% $30,006 10.6% ======= ==== ======= ==== Basic Earnings Per Share $1.11 $1.04 Diluted Earnings Per Share $1.11 $1.04 THE CATO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) May 2, May 3, January 31, 2015 2014 2015 (Unaudited) (Unaudited) ———- ———- ASSETS Current Assets Cash and cash equivalents $94,294 $79,468 $93,946 Short-term investments 177,471 159,286 162,185 Restricted Cash 4,474 4,699 4,479 Accounts receivable – net 38,315 41,036 41,023 Merchandise inventories 133,862 129,652 137,549 Other current assets 17,876 15,274 15,269 Total Current Assets 466,292 429,415 454,451 Property and Equipment – net 133,481 142,989 135,181 Noncurrent Deferred Income Taxes 4,567 1,375 3,363 Other Assets 17,894 9,458 15,283 TOTAL $622,234 $583,237 $608,278 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities $185,069 $179,562 $193,901 Noncurrent Liabilities 34,172 30,170 34,179 Stockholders’ Equity 402,993 373,505 380,198 TOTAL $622,234 $583,237 $608,278 ======== ======== ========

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The Cato Corporation

CONTACT: John R. Howe, Executive Vice President, Chief Financial Officer,704-551-7315

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