4

FALSE0000018255 0000018255 2019-11-21 2019-11-21

 

 

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):     November 22, 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, 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.

 


 

THE CATO CORPORATION

Item 2.02. Results of Operations and Financial Condition.

On November 21, 2019, The Cato Corporation issued a press release regarding its financial results for the third quarter ending November 2, 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 November 21, 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

 

 

November 22, 2019

 

/s/ John P. D. Cato

Date

 

John P. D. Cato

Chairman, President and

Chief Executive Officer

 

 

 

 

November 22, 2019

 

/s/ John R. Howe

Date

 

John R. Howe

Executive Vice President

Chief Financial Officer

3


 

Exhibit Index

 

 

 

 

 

Exhibit

 

Exhibit No.

 

 

 

 

 

Exhibit 99.1 - Press Release issued November 21, 2019

 

 

99.1

 

 

 

EXHIBIT 31

                                                                         

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 3Q EPS OF $0.24

 

CHARLOTTE, N.C. (November 21, 2019) –– The Cato Corporation (NYSE: CATO) today reported net income of $6.0 million for the third quarter ended November 2, 2019, compared to net income of $3.8 million for the third quarter ended November 3, 2018.  Earnings per diluted share for the third quarter were $0.24, compared to $0.16 last year.  Sales for the third quarter ended November 2, 2019 were $189.4 million, up 1% compared to sales of $187.9 million for the third quarter ended November 3, 2018.  Same-store sales for the quarter increased 4% to last year.

 

“We are pleased with our third quarter results, which continued our positive trends in same-store sales and merchandise margins,” stated John Cato, Chairman, President, and Chief Executive Officer.  “We remain cautiously optimistic about the fourth quarter as customer buying patterns continue to change and we evaluate the potential impact of current and future tariffs.”

 

For the nine months ended November 2, 2019, the Company earned net income of $39.1 million, compared to net income of $33.7 million for the nine months ended November 3, 2018.  Earnings per diluted share were $1.59 compared to $1.36 last year.  Sales for the nine months ended November 2, 2019 were $627.8 million, flat compared to sales of $630.8 million for the nine months ended November 3, 2018.  Year-to-date same-store sales increased 2% to last year.

 

 

 

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

 

For the quarter, the gross margin rate increased to 37.4% of sales from 34.5% last year, primarily due to higher merchandise margins and lower occupancy expenses.  The SG&A rate for the quarter increased to 34.2% from 32.9% last year primarily due to higher incentive compensation in the current year and favorable litigation settlements in the prior year.  Income tax for the quarter was an expense of $0.1 million compared to a benefit of $1.3 million last year.  The Company ended the quarter with cash and short-term investments of $228.4 million.

 

Year-to-date, the gross margin rate increased to 38.7% of sales from 37.4% the prior year primarily due to higher merchandise margins and lower occupancy expenses.  The year-to-date SG&A rate increased slightly to 31.3% from 31.2% last year primarily due to higher incentive compensation offset by lower insurance costs.  Income tax for the year was an expense of $6.5 million compared to an expense of $2.9 million last year.

 

As of November 2, 2019, the Company operated 1,298 stores in 31 states, compared to 1,350 stores in 33 states as of November 3, 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

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

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.

 

# # #

  

8100 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 NOVEMBER 2, 2019 AND NOVEMBER 3, 2018

(Dollars in thousands, except per share data)

 

 

Quarter Ended

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 2,

%

 

November 3,

%

 

November 2,

%

 

November 3,

%

 

2019

Sales

 

2018

Sales

 

2019

Sales

 

2018

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Retail sales

$

189,357

100.0%

 

$

187,892

100.0%

 

$

627,780

100.0%

 

$

630,765

100.0%

  Other revenue (principally finance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    late fees and layaway charges)

 

2,166

1.1%

 

 

2,120

1.1%

 

 

6,676

1.1%

 

 

6,464

1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total revenues

 

191,523

101.1%

 

 

190,012

101.1%

 

 

634,456

101.1%

 

 

637,229

101.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN (Memo)

 

70,733

37.4%

 

 

64,878

34.5%

 

 

242,701

38.7%

 

 

235,663

37.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES, NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of goods sold

 

118,624

62.6%

 

 

123,014

65.5%

 

 

385,079

61.3%

 

 

395,102

62.6%

  Selling, general and administrative

 

64,681

34.2%

 

 

61,765

32.9%

 

 

196,737

31.3%

 

 

196,616

31.1%

  Depreciation

 

3,844

2.0%

 

 

4,094

2.2%

 

 

11,523

1.8%

 

 

12,470

2.0%

  Interest and other income

 

(1,662)

-0.9%

 

 

(1,374)

-0.7%

 

 

(4,491)

-0.7%

 

 

(3,559)

-0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cost and expenses, net

 

185,487

98.0%

 

 

187,499

99.8%

 

 

588,848

93.8%

 

 

600,629

95.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

6,036

3.2%

 

 

2,513

1.3%

 

 

45,608

7.3%

 

 

36,600

5.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Benefit)/Expense

 

51

0.0%

 

 

(1,287)

-0.7%

 

 

6,501

1.0%

 

 

2,907

0.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

5,985

3.2%

 

$

3,800

2.0%

 

$

39,107

6.2%

 

$

33,693

5.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

0.24

 

 

$

0.16

 

 

$

1.59

 

 

$

1.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

0.24

 

 

$

0.16

 

 

$

1.59

 

 

$

1.36

 

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

 

 

 

 

November 2,

 

February 2,

 

 

2019

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

$

21,222

 

$

24,603

 

Short-term investments

 

203,309

 

 

182,711

 

Restricted cash

 

3,880

 

 

3,802

 

Accounts receivable - net

 

27,479

 

 

28,137

 

Merchandise inventories

 

114,049

 

 

119,585

 

Other current assets

 

4,301

 

 

11,750

 

 

 

 

 

 

 

 

Total Current Assets

 

374,240

 

 

370,588

 

 

 

 

 

 

 

 

Property and Equipment – net

 

88,384

 

 

94,304

 

 

 

 

 

 

 

 

Noncurrent Deferred Income Taxes

 

10,829

 

 

11,209

 

 

 

 

 

 

 

 

Other Assets

 

23,475

 

 

21,805

 

 

 

 

 

 

 

 

Right-of-Use Assets, net

 

154,235

 

 

-

 

 

 

 

 

 

 

 

     TOTAL

$

651,163

 

$

497,906

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

$

133,229

 

$

141,086

 

 

 

 

 

 

 

 

Current Lease Liability

 

53,536

 

 

-

 

 

 

 

 

 

 

 

Noncurrent Liabilities

 

21,741

 

 

39,984

 

 

 

 

 

 

 

 

Lease Liability

 

110,948

 

 

-

 

 

 

 

 

 

 

 

Stockholders' Equity

 

331,709

 

 

316,836

 

 

 

 

 

 

 

 

     TOTAL

$

651,163

 

$

497,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


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Document and Entity Information
Nov. 21, 2019
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Document Period End Date Nov. 22, 2019
Entity Registrant Name THE CATO CORPORATION
Entity Central Index Key 0000018255
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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
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