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 23, 2019     

 

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, NC

(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))

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. ¨


 
THE CATO CORPORATION

Item 2.02.  Results of Operations and Financial Condition.

On August 22, 2019, The Cato Corporation issued a press release regarding its financial results for the second quarter ending August 3, 2019.  A copy of this press release is furnished as Exhibit 99.1 hereto.

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits

Exhibit 99.1 – Press Release issued August 22, 2019.

2


 
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 23, 2019

 

/s/ John P. D. Cato

Date

 

John P. D. Cato

Chairman, President and

Chief Executive Officer

 

 

 

 

August 23, 2019

 

/s/ John R. Howe

Date

 

John R. Howe

Executive Vice President

Chief Financial Officer

3


 
Exhibit Index

 

 

 

 

 

Exhibit

 

Exhibit  No.

 

 

 

 

 

Press Release issued August 22, 2019.

 

 

99.1

 

 

 

4

exhibit991.htm - Generated by SEC Publisher for SEC Filing
EXHIBIT 99.1

 

The CATO Corporation

                                           NEWS RELEASE

FOR IMMEDIATE RELEASE

                       

For Further Information Contact:

            John R. Howe

            Executive Vice President

            Chief Financial Officer

            704-551-7315

 

CATO REPORTS INCREASE IN 2Q NET INCOME AND EPS

 

CHARLOTTE, N.C. (August 22, 2019) – The Cato Corporation (NYSE: CATO) today reported net income of $11.9 million or $.48 per diluted share for the second quarter ended August 3, 2019, compared to a net income of $6.5 million or $.26 per diluted share for the second quarter ended August 4, 2018.  Sales for the second quarter were $210.4 million, or an increase of 2% from sales of $206.8 million for the second quarter ended August 4, 2018.   The Company’s same-store sales for the quarter increased 4% to last year.

 

For the six months ended August 3, 2019, the Company earned net income of $33.1 million, compared to net income of $29.9 million for the six months ended August 4, 2018.  Earnings per diluted share were $1.34 compared to $1.20 last year.  Sales for the six months ended August 3, 2019 were $438.4 million, down 1% to sales of $442.9 million for the six months ended August 4, 2018.  Year-to-date same-store sales increased 1%.

 

“Our performance in the second quarter and first half of 2019 exceeded our expectations with higher same-store sales, higher merchandise margins and savings in SG&A,” commented John Cato, Chairman, President, and Chief Executive Officer.  “However, we remain cautiously optimistic about the second half of the year given the difficult retail environment and the potential effect of new tariffs.”

 

Gross margin increased 80 basis points to 38.0% of sales in the quarter, primarily due to higher merchandise margins and lower occupancy costs.  SG&A expenses as a percent of sales

decreased 190 basis points to 31.4% during the quarter primarily due to lower insurance expense partially offset by higher incentive compensation.  Income tax for the quarter was an expense of $2.1 million compared to $1.0 million last year.  The Company ended the quarter with cash and short-term investments of $237.2 million.

5

8100 Denmark Road8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 

 

Year-to-date, the gross margin increased to 39.2% of sales from 38.6% the prior year primarily due to higher merchandise margins and lower buying and occupancy costs.  The year-to-date SG&A rate was 30.1% versus 30.5% last year primarily due to lower insurance costs partially offset by higher incentive compensation.  Income tax was an expense of $6.4 million compared to an expense of $4.2 million last year. 

 

As of August 3, 2019, The Cato Corporation operated 1,299 stores in 31 states, compared to 1,350 stores in 33 states as of August 4, 2018. 

 

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 not historical in nature including, without limitation, statements regarding the Company’s expected or estimated operational and 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: any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, home values, consumer net worth and the availability of credit; uncertainties regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; adverse weather 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.

# # #

6

8100 Denmark Road8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 
THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE PERIODS ENDED AUGUST 3, 2019 AND AUGUST 4, 2018

(Dollars in thousands, except per share data)

 

 

Quarter Ended

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 3,

%

 

August 4,

%

 

August 3,

%

 

August 4,

%

 

2019

Sales

 

2018

Sales

 

2019

Sales

 

2018

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Retail sales

$

210,357

100.0%

 

$

206,848

100.0%

 

$

438,423

100.0%

 

$

442,873

100.0%

  Other revenue (principally finance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    late fees and layaway charges)

 

2,224

1.1%

 

 

2,069

1.0%

 

 

4,510

1.0%

 

 

4,344

1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total revenues

 

212,581

101.1%

 

 

208,917

101.0%

 

 

442,933

101.0%

 

 

447,217

101.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN (Memo)

 

79,985

38.0%

 

 

77,047

37.3%

 

 

171,968

39.2%

 

 

170,785

38.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES, NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of goods sold

 

130,372

62.0%

 

 

129,801

62.8%

 

 

266,455

60.8%

 

 

272,088

61.4%

  Selling, general and administrative

 

66,066

31.4%

 

 

68,892

33.3%

 

 

132,056

30.1%

 

 

134,851

30.4%

  Depreciation

 

3,836

1.8%

 

 

4,152

2.0%

 

 

7,679

1.8%

 

 

8,376

1.9%

  Interest and other income

 

(1,693)

-0.8%

 

 

(1,431)

-0.7%

 

 

(2,829)

-0.7%

 

 

(2,185)

-0.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cost and expenses, net

 

198,581

94.4%

 

 

201,414

97.4%

 

 

403,361

92.0%

 

 

413,130

93.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

14,000

6.7%

 

 

7,503

3.6%

 

 

39,571

9.0%

 

 

34,087

7.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Benefit)/Expense

 

2,134

1.0%

 

 

1,021

0.5%

 

 

6,450

1.5%

 

 

4,195

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

11,866

5.6%

 

$

6,482

3.1%

 

$

33,121

7.6%

 

$

29,892

6.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

0.48

 

 

$

0.26

 

 

$

1.34

 

 

$

1.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

0.48

 

 

$

0.26

 

 

$

1.34

 

 

$

1.20

 

7

8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510

 

 

 


 
THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

 

 

 

 

August 3,

 

February 2,

 

 

2019

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

$

26,011

 

$

24,603

 

Short-term investments

 

207,366

 

 

182,711

 

Restricted cash

 

3,855

 

 

3,802

 

Accounts receivable - net

 

27,479

 

 

28,137

 

Merchandise inventories

 

99,952

 

 

119,585

 

Other current assets

 

4,651

 

 

11,750

 

 

 

 

 

 

 

 

Total Current Assets

 

369,314

 

 

370,588

 

 

 

 

 

 

 

 

Property and Equipment – net

 

89,567

 

 

94,304

 

 

 

 

 

 

 

 

Noncurrent Deferred Income Taxes

 

10,821

 

 

11,209

 

 

 

 

 

 

 

 

Other Assets

 

22,676

 

 

21,805

 

 

 

 

 

 

 

 

Right-of-Use Assets, net

 

164,988

 

 

-

 

 

 

 

 

 

 

 

     TOTAL

$

657,366

 

$

497,906

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

$

123,862

 

$

141,086

 

 

 

 

 

 

 

 

Current Lease Liability

 

55,747

 

 

-

 

 

 

 

 

 

 

 

Noncurrent Liabilities

 

22,822

 

 

39,984

 

 

 

 

 

 

 

 

Lease Liability

 

120,317

 

 

-

 

 

 

 

 

 

 

 

Stockholders' Equity

 

334,618

 

 

316,836

 

 

 

 

 

 

 

 

     TOTAL

$

657,366

 

$

497,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

8100 Denmark Road

P.O. Box 34216

Charlotte, NC  28234

(704) 554-8510