Form 8-K - Current report

FALSE 0000018255 0000018255 2024-08-22 2024-08-22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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):

 

August 22, 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 August 22, 2024, The Cato Corporation issued a press release regarding its

 

financial results for the second

quarter ending August 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 99.1 - Press Release issued August

 

22, 2024

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

August 27, 2024

/s/ John P.

 

D. Cato

Date

John P.

 

D. Cato

Chairman, President and

Chief Executive Officer

August 27, 2024

/s/ Charles D. Knight

Date

Charles D. Knight

 

Executive Vice President

Chief Financial Officer

 

 

4

Exhibit Index

 

Exhibit

Exhibit

No.

99.1 - Press Release issued August

 

22, 2024

99.1

104

 

Cover page Interactive Data File (embedded within Inline

XBRL document)

104

 

 

 

 

 

 

EXHIBIT 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

 

For Further Information Contact:

 

Charles D. Knight

 

Executive Vice President

 

Chief Financial Officer

 

[e-mail]

CATO REPORTS

 

2Q RESULTS

CHARLOTTE, N.C. (August 22, 2024) – The Cato Corporation (NYSE: CATO) today reported net income of $0.1

million or $0.01 per diluted share for the second quarter ended August 3, 2024,

 

compared to net income of $1.1 million or

$0.06 per diluted share for the second quarter ended July

 

29, 2023.

 

Sales for the second quarter ended August 3, 2024 were $166.9 million,

 

a decrease of 8% from sales of $181.2 million for

the second quarter ended July 29, 2023 primarily due to closed stores

 

in 2023 and a 2% same-store sales decrease for the

quarter compared to 2023.

For the six months ended August 3, 2024, the Company reported net

 

income of $11.1 million or $0.54 per diluted share,

compared to net income of $5.6 million or $0.27 per diluted share for the six

 

months ended July 29, 2023.

 

Sales for the

six months ended August 3, 2024 were $342.2 million, a decrease of

 

8% from sales of $371.5 million for the six months

ended July 29, 2023 primarily due to closed stores in 2023 and a 4% same-store

 

sales decrease compared to 2023.

 

“Although the second quarter sales trend improved, the sales

 

environment continues to be challenged by negative

pressure on our customers’ discretionary spending,” stated John Cato, Chairman,

 

President, and Chief Executive Officer.

 

“We continue to manage our SG&A expenses tightly in line with our current sales trend.

 

We believe the back half of the

year will remain challenging.”

 

Gross margin decreased from 35.1% to 34.6% of sales in the quarter due to higher

 

distribution costs and deleveraging of

occupancy and buying costs, partially offset by higher merchandise margins.

 

SG&A expenses as a percent of sales

increased from 34.0% to 34.9% of sales during the quarter primarily

 

due to deleveraging of payroll costs partially offset

by lower closed store and advertising expenses.

 

However, SG&A expenses in the quarter were $3.4 million lower than

last year due to lower payroll and insurance costs, equity compensation and advertising

 

expenses.

 

Tax expense for the

quarter was $0.6 million versus $1.3 million in the prior year. The decrease in tax expense is primarily due to lower

taxable income, valuation allowances against net deferred tax assets

 

and the impact of the foreign rate differential and

lower state income taxes.

Year

 

-to-date gross margin decreased from 35.5% of sales to 35.2% primarily due

 

to higher distribution costs and

deleveraging of occupancy and buying costs, partially offset by higher merchandise

 

margins.

 

Year-to-date SG&A

expenses were 33.6% as a percent of sales versus 33.3% in the prior year

 

primarily due to deleveraging of payroll costs

and higher insurance costs, partially offset by lower closed store and advertising

 

expenses.

 

SG&A expenses year-to-date

were $8.6 million lower than last year due to lower payroll costs and

 

equity compensation, and closed store and

advertising expenses, partially offset by higher insurance expense.

 

Income tax expense for the first half decreased to $1.3

million from $3.5 million last year, primarily due to valuation allowances against net deferred tax assets

 

and the impact of

the foreign rate differential and lower state income taxes.

During the second quarter ended August 3, 2024, the Company

 

closed five stores.

 

As of August 3, 2024, the Company

had 1,166 stores in 31 states, compared to 1,247 stores in 31 states as of

 

July 29, 2023.

 

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 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 August 3, 2024 AND July 29, 2023

(Dollars in thousands, except per share data)

Quarter Ended

Six Months Ended

August 3,

%

July 29,

%

August 3,

%

July 29,

%

2024

 

Sales

2023

 

Sales

2024

 

Sales

2023

 

Sales

REVENUES

 

Retail sales

$

166,934

100.0%

$

181,181

100.0%

$

342,206

100.0%

$

371,492

100.0%

 

Other revenue (principally finance,

 

late fees and layaway charges)

1,694

1.0%

1,690

0.9%

3,521

1.0%

3,429

0.9%

 

Total revenues

168,628

101.0%

182,871

100.9%

345,727

101.0%

374,921

100.9%

GROSS MARGIN (Memo)

57,812

34.6%

63,564

35.1%

120,579

35.2%

131,788

35.5%

COSTS AND EXPENSES, NET

 

Cost of goods sold

109,122

65.4%

117,617

64.9%

221,627

64.8%

239,704

64.5%

 

Selling, general and administrative

58,181

34.9%

61,618

34.0%

114,933

33.6%

123,552

33.3%

 

Depreciation

2,329

1.4%

2,510

1.4%

4,369

1.3%

4,867

1.3%

 

Interest and other income

(1,742)

-1.0%

(1,334)

-0.7%

(7,563)

-2.2%

(2,231)

-0.6%

 

Costs and expenses, net

167,890

100.6%

180,411

99.6%

333,366

97.4%

365,892

98.5%

Income Before Income Taxes

738

0.4%

2,460

1.4%

12,361

3.6%

9,029

2.4%

Income Tax Expense

 

643

0.4%

1,333

0.7%

1,292

0.4%

3,475

0.9%

Net Income (Loss)

$

95

0.1%

$

1,127

0.6%

$

11,069

3.2%

$

5,554

1.5%

Basic Earnings Per Share

$

0.01

$

0.06

$

0.54

$

0.27

Diluted Earnings Per Share

$

0.01

$

0.06

$

0.54

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

August 3,

February 3,

2024

 

2024

 

(Unaudited)

(Unaudited)

ASSETS

Current Assets

 

Cash and cash equivalents

$

30,764

$

23,940

 

Short-term investments

73,902

79,012

 

Restricted cash

3,562

3,973

 

Accounts receivable - net

29,772

29,751

 

Merchandise inventories

95,972

98,603

 

Other current assets

9,506

7,783

Total Current Assets

243,478

243,062

Property and Equipment - net

63,975

64,022

Other Assets

22,340

25,047

Right-of-Use Assets, net

125,779

154,686

 

TOTAL

$

455,572

$

486,817

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

$

122,498

$

126,900

Current Lease Liability

51,091

61,108

Noncurrent Liabilities

14,573

14,475

Lease Liability

72,348

92,013

Stockholders' Equity

195,062

192,321

 

TOTAL

$

455,572

$

486,817

Document and Entity Information	Aug. 22, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 22, 2024
Entity Registrant Name	THE CATO CORPORATION
Entity Central Index Key	0000018255
Entity Emerging Growth Company	false
Security 12b Title	Class A - Common Stock, par value $.033 per share
Trading Symbol	CATO
Security Exchange Name	NYSE
Entity File Number	1-31340
Entity Incorporation State Country Code	DE
Entity TaxIdentification Number	56-0484485
Entity Address Address Line 1	8100 Denmark Road
Entity Address City Or Town	Charlotte
Entity Address State Or Province	NC
Entity Address Postal Zip Code	28273-5975
City Area Code	(704)
Local Phone Number	554-8510
Written Communications	false
Soliciting Material	false
Pre-Commencement Tender Offer	false
Pre-Commencement Issuer Tender Offer	false

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