Charlotte, NC–Cato Corp. reported Thursday that its fourth quarter profit fell 7%, hurt by lower sales.
For the quarter ended Jan. 29, Cato posted net income of $10.11 million or 35 cents a share, from $10.94 million, or 37 cents a share last year. (The company noted that the results have been restated, reflecting its adoption of a cost method of accounting for merchandise inventories.)
Net sales were down 1% to $221.52 million. Comparable store sales decreased 4%. Gross margin decreased 70 basis points to 37.6% due to the deleveraging of store occupancy and slightly lower merchandise margin.
‘Second Half Difficult’
For the full fiscal 2011, Cato’s sales were $920.6 million, an increase of 1% over 2010 sales of $913.1 million. For the year, comparable store sales decreased 1%.
“In 2011, Cato delivered its second consecutive year of record earnings,” commented John Cato, Chairman, president/ceo. “However, the second half of the year was very difficult both in terms of the sales environment and the increased merchandise costs we faced…In the fourth quarter, sales were below expectations but we were able to generate earnings within our original guidance.”
For 2012, Cato said that it believes its shoppers will continue to be negatively affected by slow job and salary growth and higher grocery and gas prices, similar to 2011.
Cato forecast first quarter net income in a range of $30.2 million to $31.9 million, or $1.04 to $1.09 a share, a flat to a 5% increase from last year. Comparable store sales would be down flat to 3%.
For its full fiscal 2012, Cato projected net income in a range of $61.3 million to $65.9 million, or $2.10 to $2.25 a share, a 5% decrease to a 2% increase from last year. Comparable store sales are expected in the range of down 2% to flat with a decrease in gross margin.