8-K
Cato Corp (CATO)
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 20, 2025
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 March 20, 2025 The Cato Corporation issued a press release regarding
its financial results for the fourth quarter
and year ending February 1, 2025.
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 March 20, 2025
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
March 24, 2025
/s/ John P.
D. Cato
Date
John P.
D. Cato
Chairman, President and
Chief Executive Officer
March 24, 2025
/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 March 20, 2025
99.1
104
Cover page Interactive Data File (embedded within Inline
XBRL document)
104
exhibit991
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
Charles D. Knight
Executive Vice President
Chief Financial Officer
InvestorRelations@catocorp.com
CATO REPORTS
4Q AND FULL YEAR LOSS
CHARLOTTE, N.C. (March 20, 2025) – The Cato Corporation (NYSE: CATO) today reported a net loss of ($14.1)
million or ($0.74) per diluted share for the fourth quarter ended February
1, 2025, compared to a net loss of ($23.4)
million or ($1.14) per diluted share for the fourth quarter ended
February 3, 2024.
Full-year fiscal 2024 net loss
was ($18.1) million or ($0.97) per diluted share compared to a net
loss of ($23.9) million or ($1.17) per diluted share for
2023.
The fiscal year and fourth quarter ended February 1, 2025 contains
52 weeks and 13 weeks, respectively versus 53
weeks and 14 weeks in the fiscal year and fourth quarter ended February
3, 2024, respectively.
Sales for the fourth quarter ended February 1, 2025 were $155.3 million,
a decrease of 10.0% from sales of $172.1 million
for the fourth quarter ended February 3, 2024.
On a comparable 13-week basis, total sales for the quarter decreased
5.1%
and same-store sales decreased 0.8% from last year.
For the year, the Company's sales decreased 8.3% to $642.1
million from 2023 sales of $700.3 million.
On a comparable 52-week basis, total sales for the fiscal
year ended February
1, 2025 decreased 6.8% and same store sales decreased 3.1% to last year.
"
Our fiscal 2024 sales trend was negatively impacted by
continued pressure on our customers’ discretionary spending
levels, and a difficult third quarter which included three hurricanes and supply chain interruptions,
” said John Cato,
Chairman, President and Chief Executive Officer.
“Our fourth quarter sales trend improved compared to our full year
and
third quarter sales trend.
This was partly due to improvements in our supply chain and our Distribution
Center (DC)
efficiency as we worked through our DC automation conversion issues.
During the year we continued to focus on
controlling expenses and improving our merchandise offering
.
”
Fourth-quarter gross margin decreased from 31.0% of sales in 2023 to 28.0% of sales in 2024
reflecting pressure from
increased markdowns, coupled with higher distribution costs and domestic
freight costs, as well as deleveraging of
occupancy costs
.
Selling, general and administrative (SG&A) expenses as
a percent of sales decreased from 39.2% in
2023 to 37.8% in 2024 during the quarter, primarily due to decreased incentive compensation, insurance,
closed store and
impairment expenses partially offset by increased professional fees.
For the quarter, SG&A expenses decreased $8.8
million.
Income tax expense for the quarter was $0.3 million compare
d to expense of $10.9 million last year.
The
decrease in tax expense for the quarter was due primarily to a non-cash valuation
allowance recorded against U.S. federal
and state deferred tax assets last year.
For the full year 2024, gross margin decreased from 33.7% of sales in 2023
to 32.0% of sales in 2024.
This decrease was
in part due to higher distribution and freight costs and deleveraging
of our occupancy costs.
SG&A expenses decreased to
36.0% of sales in 2024 compared to 36.1% of sales in 2023.
The SG&A rate decrease was primarily due to
decreased
incentive compensation, insurance, closed store and impairment expenses
partially offset by increased payroll expenses as
a percent of sales.
For the year,
SG&A expenses decreased $21.3 million.
Income tax expense for the year was $1.9
million compared to expense of $10.1 million las
t year.
The decrease in tax expense for the year was due primarily to a
non-cash valuation allowance recorded against U.S. federal and state deferred
tax assets last year.
“As we look ahead to 2025, we remain cautious in this challenging
economic environment with pressures related to newly
implemented tariffs and the uncertainty of potential additional tariffs,” stated Mr. Cato.
“In 2025, we will continue our
focus on reducing
expenses.
To this end, we eliminated approximately 40 corporate positions in February. We
also expect
expense reductions in other areas of our business as we continue our
productivity and efficiency initiatives including
reductions in our distribution and domestic freight expenses.
We will continue our initiatives on improving our
merchandise assortment, including introducing new offerings.”
During 2024, the Company opened one store, relocated four stores and
permanently closed 62 stores.
As of February 1,
2025, the Company operated 1,117 stores in 31 states, compared to 1,178 stores in 31 states as
of February 3, 2024.
During 2025, the Company plans to open up to 15 new stores and close
up to 50 underperforming stores as leases expire.
These store closings are anticipated to have minimal financial impact.
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 interest rates, inflation or other factors that may
affect our customers’ disposable income or our costs, 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, geopolitical, and public health conditions and uncertainties,
levels of
unemployment, fuel, energy and food costs, inflation, wage rates, tax rates, interest rates, home values, consumer net
worth and the availability of credit; changes in laws,
regulations or government policies 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 (such as
COVID-19) 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; adverse
developments or volatility affecting the financial services industry or
broader financial markets; 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 November 2, 2024 AND October 28, 2023
(Dollars in thousands, except per share data)
Quarter Ended
Twelve Months Ended
February 1,
%
February 3,
%
February 1,
%
February 3,
%
2025
Sales
2024
Sales
2025
Sales
2024
Sales
REVENUES
Retail sales
$
155,292
100.0%
$
172,144
100.0%
$
642,140
100.0%
$
700,318
100.0%
Other revenue (principally finance,
late fees and layaway charges)
2,617
1.7%
2,738
1.6%
7,666
1.2%
7,741
1.1%
Total revenues
157,909
101.7%
174,882
101.6%
649,806
101.2%
708,059
101.1%
GROSS MARGIN (Memo)
43,434
28.0%
53,367
31.0%
205,700
32.0%
236,005
33.7%
COSTS AND EXPENSES, NET
Cost of goods sold
111,858
72.0%
118,777
69.0%
436,440
68.0%
464,313
66.3%
Selling, general and administrative
58,680
37.8%
67,433
39.2%
231,489
36.0%
252,777
36.1%
Depreciation
2,711
1.7%
2,500
1.5%
9,817
1.5%
9,871
1.4%
Interest and other income
(1,618)
-1.0%
(1,347)
-0.8%
(11,827)
-1.8%
(5,101)
-0.7%
Costs and expenses, net
171,631
110.5%
187,363
108.8%
665,919
103.7%
721,860
103.1%
Income Before Income Taxes
(13,722)
-8.8%
(12,481)
-7.3%
(16,113)
-2.5%
(13,801)
-2.0%
Income Tax Expense
330
0.2%
10,937
6.4%
1,944
0.3%
10,140
1.4%
Net Income (Loss)
$
(14,052)
-9.0%
$
(23,418)
-13.6%
$
(18,057)
-2.8%
$
(23,941)
-3.4%
Basic Earnings Per Share
$
(0.74)
$
(1.14)
$
(0.97)
$
(1.17)
Diluted Earnings Per Share
$
(0.74)
$
(1.14)
$
(0.97)
$
(1.17)
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
February 1,
February 3,
2025
2024
(Unaudited)
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
20,279
$
23,940
Short-term investments
57,423
79,012
Restricted cash
2,799
3,973
Accounts receivable - net
24,540
29,751
Merchandise inventories
110,739
98,603
Other current assets
7,406
7,783
Total Current Assets
223,186
243,062
Property and Equipment - net
60,326
64,022
Other Assets
19,979
25,047
Right-of-Use Assets, net
148,870
154,686
TOTAL
$
452,361
$
486,817
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
130,684
$
126,900
Current Lease Liability
57,555
61,108
Noncurrent Liabilities
13,485
14,475
Lease Liability
88,341
92,013
Stockholders' Equity
162,296
192,321
TOTAL
$
452,361
$
486,817