Cato Q3 Profit Beats Estimate

CatoCharlotte, NC—A surprisingly strong October pushed Cato Corp. into a better-than-expected third quarter earnings report, the company reported last week.

For the three months ended Oct. 29, Cato posted a net income increase of 5% to $4.9 million, or 17 cents a share, compared with $4.7 million, or 16 cents a share, in the year-ago period. Analysts’ average estimate expected 14 cents a share.

Net sales were up 1% to $198.8 versus the consensus estimate for $201.2 million in sales. Comparable store sales fell 1%.

Forecast In-Line

“Our third-quarter results were above expectations and were primarily the result of a stronger-than-estimated October,” said John Cato, chairman, president/ceo.

Gross margin widened to 35.2% from 34.0% last year, primarily due to higher merchandise margin. Sales, general and administrative expenses increases to 30.7% from 29.5% last year due to store fixture write-offs and accrued incentive compensation offset by lower insurance expense.

Cato said that the company expects fourth quarter sales results will be “in line with our year-to-date trend with same-store sales in the range of down 3% to flat.”

The company forecast fourth quarter earnings to be in the range of 17 cents to 23 cents a share. Analysts’ consensus is for 20 cents a share.

For its fiscal year, Cato forecast earnings in the range of $1.90 to $1.96 a share, down from $2.11 last year. Analysts’ estimate is for $1.90 a share.

So far this year, Cato has opened 16 new stores, relocated four and closed eight. The company operates 1,318 stores in 32 states.


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