Form 8-K CATO CORP For: Aug 18
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street NW
Washington, D.C. 29549
Form
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction
of Incorporation
(Commission
File Number)
(IRS Employer
Identification No.)
,
,
(Address of Principal Executive Offices)
(Zip Code)
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
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
On August 18, 2022, The Cato Corporation issued a press release regarding its financial results for the
second quarter ending July 30, 2022. 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.
August 22, 2022
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
August 22, 2022
/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
EXHIBIT 99.1
The CATO Corporation
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
CATO REPORTS 2Q RESULTS
CHARLOTTE, N.C. (August 18, 2022) – The Cato Corporation (NYSE: CATO) today reported a net loss of
$2.3 million or ($0.11) per diluted share for the second quarter ended July 30, 2022, compared to net income of
$14.0 million or $0.62 per diluted share for the second quarter ended July 31, 2021.
Sales for the second quarter ended July 30, 2022 were $195.0 million, or a decrease of 5% from sales of $206.0
million for the second quarter ended July 31, 2021. The Company’s same-store sales for the quarter decreased
5% compared to 2021.
For the six months ended July 30, 2022, the Company reported net income of $7.4 million or $0.35 per diluted
share, compared to net income of $34.7 million or $1.54 per diluted share for the six months ended July 31,
2021. Sales for the six months ended July 30, 2022 were $399.9 million, a decrease of 4% to sales of $417.2
million for the six months ended July 31, 2021. Year -to-date same-store sales decreased 4% to 2021.
consumers’ ability to spend on discretionary items such as fashion apparel, resulting in significant markdowns
to clear inventory,” stated John Cato, Chairman, President, and Chief Executive Officer. “We have taken steps
to right size our inventory by the end of the fourth quarter, including increased markdowns and reducing future
order volumes. However, we believe the back half of the year will be challenging as a result of the increasing
inflationary environment, effects of the tight labor market and continued late merchandise shipments due to
supply chain disruption.”
Gross margin decreased from 43.9% to 32.4% of sales in the quarter due to lower merchandise margins and
increased freight expense. SG&A expenses as a percent of sales decreased from 34.5% to 31.2% of sales
during the quarter primarily due to reduced incentive compensation expense, partially offset by increased
payroll expense, reflecting more normalized operations, coupled with wage inflation. Tax expense for the
quarter was $5.7 million versus $4.6 million in the prior year, reflecting a true-up of the projected year-end tax
rate, resulting in a quarterly rate of 166.5%, which generated the net loss for the period.
Year -to-date gross margin decreased to 34.0% of sales from 42.6% the prior year primarily due to decreased
merchandise margins and increased freight expense. The year-to-date SG&A rate was 30.3% versus 32.2%
primarily due to lower incentive compensation expense, partially offset by increased payroll expense, which is a
reflection of normalized operations and higher wages. Income tax expense for the first half was $7.6 million,
flat to last year.
During the second quarter ended July 30, 2022, the Company opened 4 stores, relocated 2 stores and closed 7
stores. As of July 30, 2022, the Company has 1,312 stores in 32 states, compared to 1,325 stores in 32 states as
of July 31, 2021.
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,
ncluding,
without limitation, statements regarding the Company’s expected or estimated operational financial results, activities or
opportunities, and potential impacts and effects 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 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; 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 July 30, 2022 AND July 31, 2021
(Dollars in thousands, except per share data)
Quarter Ended
Six Months Ended
July 30,
%
July 31,
%
July 30,
%
July 31,
%
2022
Sales
2021
Sales
2022
Sales
2021
Sales
REVENUES
$
195,006
100.0%
$
205,962
100.0%
$
399,939
100.0%
$
417,196
100.0%
1,858
1.0%
1,784
0.9%
3,646
0.9%
3,635
0.9%
196,864
101.0%
207,746
100.9%
403,585
100.9%
420,831
100.9%
GROSS MARGIN (Memo)
63,257
32.4%
90,375
43.9%
135,947
34.0%
177,934
42.6%
COSTS AND EXPENSES, NET
131,749
67.6%
115,587
56.1%
263,992
66.0%
239,262
57.4%
60,768
31.2%
70,984
34.5%
121,209
30.3%
134,221
32.2%
2,811
1.4%
3,137
1.5%
5,554
1.4%
6,179
1.5%
(1,884)
-1.0%
(515)
-0.3%
(2,287)
-0.6%
(1,178)
-0.3%
193,444
99.2%
189,193
91.9%
388,468
97.1%
378,484
90.7%
Income Before Income Taxes
3,420
1.8%
18,553
9.0%
15,117
3.8%
42,347
10.2%
Income Tax Expense
5,694
2.9%
4,561
2.2%
7,643
1.9%
7,642
1.8%
Net Income (Loss)
$
(2,274)
-1.2%
$
13,992
6.8%
$
7,474
1.9%
$
34,705
8.3%
Basic Earnings Per Share
$
(0.11)
$
0.62
$
0.35
$
1.54
Basic Weighted Average Shares
21,177,321
22,596,907
21,261,405
22,554,736
Diluted Earnings Per Share
$
(0.11)
$
0.62
$
0.35
$
1.54
Diluted Weighted Average Shares
21,177,321
22,596,907
21,261,405
22,554,736
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
August 30,
January 29,
2022
2022
(Unaudited)
(Unaudited)
ASSETS
Current Assets
$
30,153
$
19,759
123,439
145,998
3,930
3,919
24,830
55,812
116,593
124,907
6,566
5,273
Total Current Assets
305,511
355,668
Property and Equipment - net
67,915
63,083
Noncurrent Deferred Income Taxes
9,656
9,313
Other Assets
23,097
24,437
Right-of-Use Assets, net
154,636
181,265
$
560,815
$
633,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
139,804
$
177,327
Current Lease Liability
59,494
66,808
Noncurrent Liabilities
18,685
17,914
Lease Liability
96,999
117,521
Stockholders' Equity
245,833
254,196
$
560,815
$
633,766
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