8-K - CATO - Equibles

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 18, 2022

THE CATO CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

1-31340

56-0484485

(State or Other Jurisdiction

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

the

Form

8-K

filing

intended

simultaneously

satisfy

the

filing

obligation

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

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 99.1 - Press Release issued August 18, 2022

Exhibit 104 – Cover Page Interactive Data File (embedded within Inline

XBRL document)

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 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

Exhibit Index

Exhibit

No.

99.1 - Press Release issued August 18, 2022

99.1

104

Cover page Interactive Data File (embedded within Inline

XBRL document)

104

exhibit99

EXHIBIT 99.1

The CATO Corporation

NEWS RELEASE

FOR IMMEDIATE RELEASE

For Further Information Contact:

Charles D. Knight

Executive Vice President

Chief Financial Officer

InvestorRelations@catocorp.com

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.

“Our sales were negatively impacted during the first half of the year by the increasing pressure of inflation on

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

Retail sales

195,006

100.0%

205,962

100.0%

399,939

100.0%

417,196

100.0%

Other revenue (principally finance,

late fees and layaway charges)

1,858

1.0%

1,784

0.9%

3,646

0.9%

3,635

0.9%

Total revenues

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

Cost of goods sold

131,749

67.6%

115,587

56.1%

263,992

66.0%

239,262

57.4%

Selling, general and administrative

60,768

31.2%

70,984

34.5%

121,209

30.3%

134,221

32.2%

Depreciation

2,811

1.4%

3,137

1.5%

5,554

1.4%

6,179

1.5%

Interest and other income

(1,884)

-1.0%

(515)

-0.3%

(2,287)

-0.6%

(1,178)

-0.3%

Costs and expenses, net

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

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

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

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

30,153

19,759

Short-term investments

123,439

145,998

Restricted cash

3,930

3,919

Accounts receivable - net

24,830

55,812

Merchandise inventories

116,593

124,907

Other current assets

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

TOTAL

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

TOTAL

560,815

633,766