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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street NW
Washington, D.C. 29549
 
Form
8-K
CURRENT REPORT PURSUANT
 
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
 
March 21, 2024
 
THE CATO CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
1-31340
56-0484485
(State or Other Jurisdiction
of
 
Incorporation
(Commission
File Number)
(IRS Employer
Identification No.)
8100 Denmark Road
,
Charlotte
,
North Carolina
(Address of Principal Executive Offices)
28273-5975
(Zip Code)
(704)
554-8510
(Registrant’s Telephone
 
Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check
 
the
 
appropriate
 
box
 
below
 
if
 
the
 
Form
 
8-K
 
filing
 
is
 
intended
 
to
 
simultaneously
 
satisfy
 
the
 
filing
 
obligation
 
of
 
the
 
registrant
under any of the following provisions:
 
 
Written communications pursuant to Rule 425
 
under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a
 
-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
 
Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
 
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A - Common Stock, par value $.033 per share
CATO
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company
 
as defined in as defined in Rule 405 of the Securities
Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
 
(§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company,
 
indicate by check mark if the registrant has elected not to use the extended
 
transition period for
complying with any new or revised financial accounting standards provided
 
pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
2
THE CATO
 
CORPORATION
 
Item 2.02. Results of Operations and Financial Condition
On March 21, 2024,
 
The Cato Corporation issued a press release regarding its financial results
 
for the fourth quarter
ending February 3, 2024.
 
A copy of this press release is hereby incorporated as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)
 
 
 
 
 
3
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
 
Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
 
authorized.
 
THE CATO
 
CORPORATION
March 25, 2024
/s/ John P.
 
D. Cato
Date
John P.
 
D. Cato
Chairman, President and
Chief Executive Officer
March 25, 2024
/s/ Charles D. Knight
Date
Charles D. Knight
 
Executive Vice President
Chief Financial Officer
 
 
4
Exhibit Index
 
Exhibit
Exhibit
No.
99.1
104
 
Cover page Interactive Data File (embedded within Inline
XBRL document)
104
EX-99.1 5 exhibit99.htm EX-99.1 exhibit99
 
 
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
 
For Further Information Contact:
 
Charles D. Knight
 
Executive Vice President
 
Chief Financial Officer
 
InvestorRelations@catocorp.com
CATO REPORTS
 
4Q AND FULL YEAR LOSS
CHARLOTTE, N.C. (March 21, 2024) – The Cato Corporation (NYSE: CATO) today reported a net loss of ($23.4)
million or ($1.14) per diluted share for the fourth quarter ended
 
February 3, 2024, compared to a net loss of ($3.0) million
or ($0.14) per diluted share for the fourth quarter ended January
 
28, 2023.
 
Full-year fiscal 2023 net loss was ($23.9)
million or ($1.17) per diluted share compared to net income of $0.0 million
 
or $0.00 per diluted share for 2022.
 
Contributing to the net loss is income tax expense of $10.9 million for the
 
fourth quarter of fiscal 2023 and $10.1 million
for the full year of fiscal 2023.
 
The income tax expense is primarily due to a non-cash valuation allowance
 
recorded
against U.S. federal and state deferred tax assets.
Sales for the fourth quarter ended February 3, 2024 were $172.1 million,
 
or a decrease of 3% from sales of $177.5 million
for the fourth quarter ended January 28, 2023.
 
The Company’s same-store sales for the quarter decreased 5% compared to
the same period in 2022.
 
The gap between sales and same store sales percentages is due to
 
the fourth quarter of 2023
containing fourteen weeks versus thirteen weeks in the fourth quarter
 
of fiscal 2022, as the fiscal year ended February 3,
2024 contains 53 weeks versus 52 weeks in the fiscal year ended
 
January 28, 2023.
 
For the year, the Company's sales
decreased 7% to $700.3 million from 2022 sales of $752.4 million.
 
Same-store sales for the year decreased 6% compared
to 2022.
 
"Our fiscal 2023 sales trend was negatively impacted by pressure on our
 
customers’ discretionary spending levels
primarily due to higher interest rates and inflation,” said John Cato, Chairman,
 
President and Chief Executive Officer.
“Our full year gross margin rate improved compared to fiscal 2022, as we focused
 
on controlling our inventory.
 
Despite
the challenges experienced throughout 2023, we have continued
 
investing in key capital projects and efficiency initiatives
in support of our long-term growth.”
 
Fourth-quarter gross margin decreased from 31.3% to 31.0% of sales in 2023 reflecting
 
pressure from increased
markdowns, coupled with higher buying and domestic freight costs.
 
Selling, general and administrative expenses as a
percent of sales increased from 33.8% to 39.2% of sales during the quarter primarily
 
due to increased store operating
expenses, insurance, closed store and impairment expenses.
 
Income tax for the quarter was an expense of $10.9 million
compared to a benefit of $1.2 million last year.
 
The increase in tax expense for the quarter was due primarily to a non-
cash valuation allowance recorded against U.S. federal and state deferred
 
tax assets.
For the full year 2023, gross margin increased from 32.3% of sales in 2022 to 33.7% of
 
sales in part due to lower ocean
freight costs and an increase in regular priced selling of goods, partially
 
offset by higher occupancy and buying costs.
 
Selling, general and administrative expenses increased to 36.1% of sales compared
 
to 32.3% in the prior year.
 
The
selling, general and administrative rate increase was primarily due
 
to higher payroll costs, insurance and closed store
expenses including impairment expenses. Income tax expense for
 
the year was $10.1 million compared to an expense of
$1.7 million last year.
 
The increase in tax expense for the year was due primarily
 
to a non-cash valuation allowance
recorded against U.S. federal and state deferred tax assets.
“As we look ahead to 2024, we remain cautious in this challenging
 
economic environment with continued high interest
rates and persistent inflation impacting our customers’ disposable
 
income,” stated Mr. Cato.
 
“In 2024, we will continue to
introduce new merchandise offerings, as well as refine our existing merchandise assortments. We will also continue to invest in our productivity and efficiency initiatives.
As always we will continue our strategy of offering great fashion at a
value, with outstanding customer service.”
 
During 2023, the Company opened seven stores, relocated two stores and
 
permanently closed 109 stores.
 
As of February
3, 2024, the Company operated 1,178 stores in 31 states, compared
 
to 1,280 stores in 32 states as of January 28, 2023.
 
During 2024, the Company plans to open up to 15 new stores and close
 
up to 75 underperforming stores as leases expire.
 
These store closings are anticipated to have minimal financial impact.
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 that express a belief, expectation or
 
intention, as well as those that are not a historical fact,
including, without limitation, statements regarding the Company’s expected or estimated operational financial
 
results,
activities or opportunities, and potential impacts and effects of interest rates,
 
inflation or other factors that may affect our
customers’ disposable income or our costs, 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, inflation, wage rates, tax rates, interest rates, home values,
 
consumer net worth and the availability of
credit; changes in laws,
 
regulations or government policies affecting our business, including but not limited
 
to tariffs;
uncertainties regarding the impact of any governmental action regarding,
 
or 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 implement our new store development
 
strategy to increase new store
openings and the 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;
adverse developments or volatility affecting the financial services industry or broader
 
financial markets; 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 (LOSS) (UNAUDITED)
FOR THE PERIODS ENDED February 3, 2024 AND January 28, 2023
(Dollars in thousands, except per share data)
Quarter Ended
Twelve Months Ended
February 3,
%
January 28,
%
February 3,
%
January 28,
%
2024
 
Sales
2023
 
Sales
2024
 
Sales
2023
 
Sales
REVENUES
 
Retail sales
$
172,144
100.0%
$
177,510
100.0%
$
700,318
100.0%
$
752,370
100.0%
 
Other revenue (principally finance,
 
late fees and layaway charges)
2,738
1.6%
1,539
0.9%
7,741
1.1%
6,890
0.9%
 
Total revenues
174,882
101.6%
179,049
100.9%
708,059
101.1%
759,260
100.9%
GROSS MARGIN (Memo)
53,367
31.0%
55,590
31.3%
236,005
33.7%
242,706
32.3%
COSTS AND EXPENSES, NET
 
Cost of goods sold
118,777
69.0%
121,920
68.7%
464,313
66.3%
509,664
67.7%
 
Selling, general and administrative
67,433
39.2%
60,042
33.8%
252,777
36.1%
242,648
32.3%
 
Depreciation
2,500
1.5%
2,662
1.5%
9,871
1.4%
11,080
1.5%
 
Interest and other income
(1,347)
-0.8%
(1,337)
-0.8%
(5,101)
-0.7%
(5,902)
-0.8%
 
Costs and expenses, net
187,363
108.8%
183,287
103.3%
721,860
103.1%
757,490
100.7%
Income Before Income Taxes
(12,481)
-7.3%
(4,238)
-2.4%
(13,801)
-2.0%
1,770
0.2%
Income Tax Expense
 
10,937
6.4%
(1,246)
-0.7%
10,140
1.4%
1,741
0.2%
Net Income (Loss)
$
(23,418)
-13.6%
$
(2,992)
-1.7%
$
(23,941)
-3.4%
$
29
0.0%
Basic Earnings Per Share
$
(1.14)
$
(0.14)
$
(1.17)
$
-
Diluted Earnings Per Share
$
(1.14)
$
(0.14)
$
(1.17)
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
February 3,
January 28,
2024
 
2023
 
(Unaudited)
(Unaudited)
ASSETS
Current Assets
 
Cash and cash equivalents
$
23,940
$
20,005
 
Short-term investments
79,012
108,652
 
Restricted cash
3,973
3,787
 
Accounts receivable - net
29,751
26,497
 
Merchandise inventories
98,603
112,056
 
Other current assets
7,783
6,676
Total Current Assets
243,062
277,673
Property and Equipment - net
64,022
70,382
Noncurrent Deferred Income Taxes
-
9,213
Other Assets
25,047
21,596
Right-of-Use Assets, net
154,686
174,276
 
TOTAL
$
486,817
$
553,140
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
126,900
$
135,597
Current Lease Liability
61,108
67,360
Noncurrent Liabilities
14,475
16,183
Lease Liability
92,013
107,407
Stockholders' Equity
192,321
226,593
 
TOTAL
$
486,817
$
553,140