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 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
======== ======== ========
SOURCE The Cato Corporation
For further information: John R. Howe, Executive Vice President, Chief Financial Officer of The Cato Corporation, +1-704-551-7315
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