Cato Reports 1Q EPS Up 7%

Provides 2Q and Updates 2015 Full Year Guidance

May 21, 2015, 07:00 ET from The Cato Corporation

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 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.  Additional information on The Cato Corporation is available at 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 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

 

SOURCE The Cato Corporation



RELATED LINKS

http://www.catocorp.com