Charlotte, NC—Cato Corp. today reported that winter storms and a challenging, highly competitive holiday season adversely affected its fourth quarter profit which was down 52%.
For the quarter ended Feb. 1, Cato posted a net profit of $3.8 million, or 13 cents a share, compared with a net profit of $7.9 million, or 27 a share, a year earlier. The result, however, was in line with analysts’ estimate for 13 cents a share.
‘Very Challenging Environment’
Net revenue fell 7% to $215.2 million, missing analysts’ estimate for $218.1 million in sales. Comparable store sales were down 3%.
For its full fiscal year results, Cato said net income was down 12% to $54.3 million, or $1.86 a share. That’s down from $61.7 million, or $2.11 a share, in fiscal 2012. Total 2013 sales were down 2% to $910.5 million while comp store sales were down 3%, too.
“Results for 2013 were negatively impacted by the continuing difficult economic situation our customers have faced for some time now,” said John Cato, chairman/president/ceo. “Even with the very challenging environment, we have continued to grow our store base, manage our inventory, control costs and, most importantly, remain profitable.”
During fourth quarter, gross margin was relatively flat at 34.7% of sales as merchandise margins held in the very promotional environment. Selling, general and administrative expenses were 30.9% of sales, compared to 28.3% in the prior year.
Cato noted that the company has continued to invest in “renovating and expanding facilities, upgrading systems and launching an e-commerce website in November. The e-commerce website launch went very smoothly and has been well received by customers. However, we do not expect e-commerce to have significant impact on 2014 results.”
For its 2014 forecast, Cato estimated comp store sales will be down 2% to flat with earnings in the range of $1.47 to $1.66a share.
Cato expects to spend about $45 million this year on capital expenditures including $30 million for store development.
The company operates 1,320 stores under the Cato, Versona and It’s Fashion nameplates and expects to open 64 new stores this year and close 17 locations.