4

FALSE0000018255 0000018255 2020-03-19 2020-03-19

 

 

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 19, 2020     

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 March 19, 2020, The Cato Corporation issued a press release regarding its financial results for the fourth quarter ending February 1, 2020. 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 March 19, 2020

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

 

 

March 23, 2020

 

/s/ John P. D. Cato

Date

 

John P. D. Cato

Chairman, President and

Chief Executive Officer

 

 

 

 

March 23, 2020

 

/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 March 19, 2020

 

 

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 4Q AND FULL-YEAR EARNINGS

 

CHARLOTTE, N.C. (March 19, 2020) –– The Cato Corporation (NYSE: CATO) today reported earnings for the fourth quarter and year ended February 1, 2020.  For the fourth quarter, the Company reported a net loss of $3.2 million, or a loss of $0.13 per diluted share, compared to a net loss of $3.2 million or a loss of $0.13 per diluted share for the prior fourth quarter ended February 2, 2019.  Full-year fiscal 2019 net income was $35.9 million or $1.46 per diluted share compared to $30.5 million or $1.23 per diluted share for 2018.  For the year, net income increased 18% and earnings per diluted share increased 19% from the prior year. 

Sales for fiscal fourth quarter ended February 1, 2020 were $188.4 million, a decrease of 1% from sales of $190.3 million for the fourth quarter ended February 2, 2019.  For the quarter, same-store sales increased 1% from last year.  For the year, the Company's sales decreased 1% to $816.2 million from 2018 sales of $821.1 million.  Same-store sales for the year increased 2% to last year.       

"We are encouraged by the growth experienced in 2019, building off a stabilized 2018,” said John Cato, Chairman, President and Chief Executive Officer. “We continued to focus on our product and merchandise assortments, while maintaining strong inventory control.”

Fourth-quarter gross margin increased to 34.3% of sales from 33.1% of sales in 2018 due primarily to improved merchandise margins partially offset by higher occupancy costs.  Selling, general and administrative expenses were 35.6% of sales, compared to 34.7% in the prior year.  SG&A costs as a percent of sales were higher primarily due to higher incentive compensation partially offset by lower

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

store impairment charges. Income tax for the quarter was an expense of $0.8 million compared to a benefit of $0.3 million last year.  The tax expense is primarily due to discrete items that were recognized during the fourth quarter of 2019. 

For 2019, gross margin increased to 37.6% of sales from 36.4% of sales in 2018 due to increased merchandise margins.  Selling, general and administrative expenses increased to 32.3% of sales compared to 31.9% in the prior year.  The selling, general and administrative expense increase was primarily due to increased incentive compensation partially offset by lower store impairment charges and insurance costs.  Income tax for the year was an expense of $7.3 million compared to an expense of $2.6 million last year. 

"Cato continues to maintain a strong balance sheet, with approximately $212 million in unrestricted cash and short-term investments and no debt," Mr. Cato said.  “As a company, our priority remains to provide great value to our customers, opportunity for growth to our associates, and strong returns to our shareholders.” During 2019, the Company returned $42.2 million to shareholders through dividends of $32.6 million and share repurchases of $9.6 million.  The Company maintained its quarterly dividend of $0.33 per share, or $1.32 over the year.  For the fiscal year ended February 1, 2020, the Company opened 5 stores and closed 35 stores.  As of February 1, 2020, the Company operated 1,281 stores in 31 states. 

We continue to assess the potential impact of the coronavirus, which remains uncertain at this time.  Because of the uncertainties we are not providing a 2020 outlook or assumptions.  There remains a high level of uncertainty over the extent of supply chain disruption, and as many other retailers, we are seeing the dramatic impact on our customers and are unsure how long this will continue.

We are monitoring this unprecedented situation and continue to be mindful of the current events unfolding and of the safety of our customers and associates.  And although we cannot quantify the impact of this unprecedented situation, first quarter results will be negatively impacted.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected or estimated operational and financial results and potential impact 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

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

worth and the availability of credit; changes in laws or regulations affecting our business including tariffs; 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; our ability to successfully open new stores as planned and our 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.

 

# # #

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 FEBRUARY 1, 2020 AND FEBRUARY 2, 2019

(Dollars in thousands, except per share data)

 

 

Quarter Ended

 

Twelve Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

February 1,

%

 

February 2,

%

 

February 1,

%

 

February 2,

%

 

2020

Sales

 

2019

Sales

 

2020

Sales

 

2019

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Retail sales

$

188,404

100.0%

 

$

190,348

100.0%

 

$

816,184

100.0%

 

$

821,113

100.0%

  Other revenue (principally finance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    late fees and layaway charges)

 

2,475

1.3%

 

 

2,087

1.1%

 

 

9,151

1.1%

 

 

8,551

1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total revenues

 

190,879

101.3%

 

 

192,435

101.1%

 

 

825,335

101.1%

 

 

829,664

101.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN (Memo)

 

64,577

34.3%

 

 

62,915

33.1%

 

 

307,278

37.6%

 

 

298,578

36.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES, NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of goods sold

 

123,827

65.7%

 

 

127,433

67.0%

 

 

508,906

62.4%

 

 

522,535

63.6%

  Selling, general and administrative

 

67,065

35.6%

 

 

65,990

34.7%

 

 

263,802

32.3%

 

 

262,606

31.9%

  Depreciation

 

3,963

2.1%

 

 

3,993

2.1%

 

 

15,485

1.9%

 

 

16,463

2.0%

  Interest and other income

 

(1,574)

-0.8%

 

 

(1,432)

-0.8%

 

 

(6,065)

-0.7%

 

 

(4,991)

-0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cost and expenses, net

 

193,281

102.6%

 

 

195,984

103.0%

 

 

782,128

95.8%

 

 

796,613

97.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(2,402)

-1.3%

 

 

(3,549)

-1.9%

 

 

43,207

5.3%

 

 

33,051

4.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Benefit)/Expense

 

808

0.4%

 

 

(317)

-0.2%

 

 

7,310

0.9%

 

 

2,590

0.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

$

(3,210)

-1.7%

 

$

(3,232)

-1.7%

 

$

35,897

4.4%

 

$

30,461

3.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

(0.13)

 

 

$

(0.13)

 

 

$

1.46

 

 

$

1.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

(0.13)

 

 

$

(0.13)

 

 

$

1.46

 

 

$

1.23

 

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


                                                                         

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

 

 

 

 

February 1,

 

February 2,

 

 

2020

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

$

11,824

 

$

24,603

 

Short-term investments

 

200,387

 

 

182,711

 

Restricted cash

 

3,896

 

 

3,802

 

Accounts receivable - net

 

26,088

 

 

28,137

 

Merchandise inventories

 

115,365

 

 

119,585

 

Other current assets

 

5,237

 

 

11,750

 

 

 

 

 

 

 

 

Total Current Assets

 

362,797

 

 

370,588

 

 

 

 

 

 

 

 

Property and Equipment – net

 

88,667

 

 

94,304

 

 

 

 

 

 

 

 

Noncurrent Deferred Income Taxes

 

8,636

 

 

11,209

 

 

 

 

 

 

 

 

Other Assets

 

24,073

 

 

21,805

 

 

 

 

 

 

 

 

Right-of-Use Assets, net

 

200,803

 

 

-

 

 

 

 

 

 

 

 

     TOTAL

$

684,976

 

$

497,906

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

$

136,153

 

$

141,086

 

 

 

 

 

 

 

 

Current Lease Liability

 

63,149

 

 

-

 

 

 

 

 

 

 

 

Noncurrent Liabilities

 

21,976

 

 

39,984

 

 

 

 

 

 

 

 

Lease Liability

 

147,184

 

 

-

 

 

 

 

 

 

 

 

Stockholders' Equity

 

316,514

 

 

316,836

 

 

 

 

 

 

 

 

     TOTAL

$

684,976

 

$

497,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8100 Denmark Road

P.O. Box 34216

Charlotte, NC   28234

(704) 554-8510

 


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Document and Entity Information
Mar. 19, 2020
Document and Entity Information [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Mar. 19, 2020
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
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Pre-Commencement Tender Offer false
Pre-Commencement Issuer Tender Offer false