UNITED STATES
 
SECURITIES
 
AND EXCHANGE
 
COMMISSION
Washington, D.C.
 
20549
FORM
10-Q
☑
QUARTERLY REPORT PURSUANT
 
TO SECTION
 
13 OR 15(d)
 
OF THE SECURITIES
 
EXCHANGE
 
ACT OF
1934
For the quarterly
 
period ended
May 1, 2021April 30, 2022
OR
☐
TRANSITION
 
REPORT PURSUANT
 
TO SECTION
 
13 OR 15(d)
 
OF THE SECURITIES
 
EXCHANGE
 
ACT OF
1934
For the transition
 
period from
 
________________to__________________
Commission
 
file number
 
1-31340
 
THE CATO CORPORATION
(Exact name
 
name of
registrant
 
as specified
 
in its
charter)
Delaware
56-0484485
(State or
 
or other
jurisdiction
 
of incorporation
 
or organization)
(I.R.S.
 
Employer
 
Identification
 
No.)
8100 Denmark Road
,
Charlotte
,
North Carolina
28273-5975
(Address
 
of principal
 
executive
 
offices)
(Zip Code)
(704)
554-8510
(Registrant's
 
telephone
 
number,
including
 
area code)
Not Applicable
(Former
 
name, former
 
address
 
and former
 
fiscal year,
 
year, if
changed
 
since last
 
report)
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
 
by check
mark
 
whether
the
 
registrant
(1)
 
has
filed
 
all
reports
 
required
to
 
be
filed
 
by Section
13
 
or
15(d)
 
of
the
 
Securities
Exchange Act of 1934 during
 
during the preceding 12
months (or
for such shorter period
 
period that the registrant
was required
to file such
reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes
X
No
Indicate
by
check
 
mark
whether
 
the
registrant
 
has
submitted
 
electronically
every
 
Interactive
Data
 
File
required
 
to
be
 
submitted and
posted pursuant
to Rule
 
405 of Regulation
 
Regulation SS-T during the
 
-T during
the preceding
12 months
 
(or for such
 
such shorter period
 
period that
the registrant
 
was
required to
submit and post such files).
Yes
X
No
Indicate by check
mark whether the
 
the registrant is a
 
large accelerated filer, an
accelerated filer, a
 
non-accelerated
filer, smaller reporting
company,
 
or
an
 
emerging
 
growth
company.
 
See
the
 
definitions of
 
of “large“large
 
accelerated filer,”
 
“accelerated filer,” “accelerated filer
,”
 
“smaller
 
reporting
company,” and
 
and “emerging“emerging
 
growth company”
 
in Rule 12b-2
 
12b-2 of
the Exchange
 
Act.
Large accelerated
 
filer
☐
Accelerated filer
 
☑
 
Non-accelerated
 
filer
☐
 
Smaller
reporting
 
company
☐
 
Emerging
 
growth company
☐
If
 
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
 
provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-212b
-2 of the Exchange Act).
☐
As of May 1, 2021,April 30,
2022, there were
20,829,94019,223,633
 
shares of Class A
 
A common stock
and
1,763,652
 
shares of Class B
 
B common stock
 
stock outstanding.
1
THE CATO CORPORATION
FORM 10-Q
Quarter Ended May 1, 2021April 30, 2022
Table
 
of Contents
Page No.
PART
 
I – FINANCIAL INFORMATION
 
(UNAUDITED)
Item 1.
Financial Statements (Unaudited):
Condensed
 
Consolidated
 
Statements
 
of Income
 
(Loss) and
Comprehensive
 
Income (Loss)
2
For the Three
 
Three Months
Ended
April 30,
2022 and
 
May 1, 2021
 
and May
2, 20202021
Condensed
 
Consolidated
 
Balance Sheets
3
At May 1,April
 
2021 30, 2022
and
 
January 30,
 
202129, 2022
 
Condensed
 
Consolidated
 
Statements
 
of Cash
Flows
4
For the Three
 
Three Months Ended
 
May 1, 2021Ended April
30, 2022
 
and May
 
2, 20201, 2021
Condensed
 
Consolidated
 
Statements
 
of Stockholders’
 
Equity
5
For the Three
 
Three Months Ended
 
May 1, 2021Ended April
30, 2022
 
and May
 
2, 20201, 2021
Notes to
Condensed
 
Consolidated
 
Financial
 
Statements
6 - 1918
For the Three
 
Three Months Ended
 
May 1, 2021Ended April
30, 2022
 
and May
 
2, 20201, 2021
Item 2.
Management’s Discussion and Analysis
 
Analysis of Financial Condition and Results
of Operations
2019 - 2625
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
2726
Item 4.
Controls and Procedures
2726
PART
 
II – OTHER INFORMATION
Item 1.
Legal Proceedings
2827
Item 1A.
Risk Factors
2827
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
2827
Item 3.
Defaults Upon Senior Securities
2827
Item 4.
Mine Safety Disclosures
2928
Item 5.
Other Information
2928
Item 6.
Exhibits
2928
Signatures
30
29
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
PART
 
I FINANCIAL INFORMATION
ITEM 1.
 
FINANCIAL STATEMENTS
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
 
OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
(Dollars in thousands, except per share data)
REVENUES
 
Retail sales
$
211,234204,933
$
98,813211,234
 
Other revenue (principally finance charges, late fees and
 
layaway charges)
1,8511,788
1,9191,851
 
Total revenues
213,085206,721
100,732213,085
COSTS AND EXPENSES, NET
 
Cost of goods sold (exclusive of depreciation shown below)
123,675132,243
83,597123,675
 
Selling, general and administrative (exclusive of depreciation
 
shown below)
63,23760,441
52,51163,237
 
Depreciation
3,0422,743
4,0063,042
 
Interest and other income
(663)(403)
(1,851)(663)
 
Costs and expenses, net
195,024
189,291
138,263
Income (loss) before income taxes
23,79411,697
(37,531)23,794
Income tax expense (benefit)
1,949
3,081
(9,114)
Net income (loss)
$
9,748
$
20,713
$
(28,417)
Basic earnings (loss) per share
$
0.920.46
$
(1.19)0.92
Diluted earnings (loss) per share
$
0.920.46
$
(1.19)0.92
Comprehensive income:
Net income (loss)
$
9,748
$
20,713
$
(28,417)
Unrealized gain (loss) on available-for-sale securities, net
 
 
of deferred income taxes of ($
40362
) and ($
9040
) for May 1, 2021April 30, 2022
(1,206)
(134)
(298)
 
and May 2, 2020,1, 2021, respectively
Comprehensive income (loss)
$
8,542
$
20,579
$
(28,715)
See notes to condensed consolidated financial statements (unaudited).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
May 1, 2021April 30, 2022
January 30, 202129, 2022
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents
 
$
22,27625,881
$
17,51019,759
Short-term investments
 
160,897120,021
126,416145,998
Restricted cash
3,5133,920
3,512
Restricted short-term investments
405
4063,919
Accounts receivable, net of allowance for customer credit losses of
 
$
658801
 
and $
605803
 
at May 1, 2021April 30, 2022 and January 30, 2021,29, 2022, respectively
55,14060,121
52,74355,812
Merchandise inventories
 
84,849127,576
84,123124,907
Prepaid expenses and other current assets
5,9786,029
5,8405,273
 
Total Current Assets
 
333,058343,548
290,550355,668
Property and equipment – net
 
69,92567,079
72,55063,083
Noncurrent deferred income taxes
5,7269,674
5,6859,313
Other assets
 
23,35023,192
22,85024,437
Right-of-Use assets – net
 
185,861168,537
199,817181,265
 
Total Assets
 
$
617,920612,030
$
591,452633,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
 
$
82,262106,229
$
73,769109,546
Accrued expenses
 
44,68245,377
40,79040,373
Accrued bonus and benefits
 
14,83418,901
1,91626,488
Accrued income taxes
 
2,3942,062
2,038920
Current lease liability
58,38563,175
63,42166,808
 
Total Current Liabilities
 
202,557235,744
181,934244,135
Other noncurrent liabilities
20,32717,797
19,70517,914
Lease liability
133,153107,837
143,315117,521
Stockholders' Equity:
Preferred stock, $
100
 
par value per share,
100,000
 
shares
 
authorized, none issued
 
0
0
Class A common stock, $
0.033
 
par value per share,
50,000,000
 
shares authorized;
20,829,94019,223,633
 
and
20,839,79519,824,093
 
shares issued
 
at May 1, 2021April 30, 2022 and January 30, 2021,29, 2022, respectively
703649
703669
Convertible Class B common stock, $
0.033
 
par value per share,
 
15,000,000
 
shares authorized;
1,763,652
 
and
 
1,763,652
 
shares issued at May 1, 2021April 30, 2022 and January 30, 2021,29, 2022, respectively
59
59
Additional paid-in capital
 
115,699120,249
115,278119,540
Retained earnings
 
144,401131,181
129,303134,208
Accumulated other comprehensive income
 
1,021(1,486)
1,155(280)
 
Total Stockholders' Equity
 
261,883250,652
246,498254,196
 
Total Liabilities and Stockholders’ Equity
 
$
617,920612,030
$
591,452633,766
See notes to condensed consolidated financial statements (unaudited).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
 
OF CASH FLOWS
(UNAUDITED)
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
(Dollars in thousands)
Operating Activities:
Net income (loss)
$
9,748
$
20,713
$
(28,417)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation
3,0422,743
4,0063,042
Provision for customer credit losses
11372
28113
Purchase premium and premium amortization of investments
(1,121)388
(18)(1,121)
Share-based compensation
306624
650306
Deferred income taxes
(1)0
313(1)
Loss on disposal of property and equipment
5816
66
Impairment of store assets
0
5,27058
Changes in operating assets and liabilities which provided (used) cash:
 
Accounts receivable
(2,510)(4,382)
(4,402)(2,510)
 
Merchandise inventories
(726)(2,669)
(7,402)(726)
 
Prepaid and other assets
(493)474
(255)(493)
 
Operating lease right-of-use assets and liabilities
(1,242)(590)
(1,027)(1,242)
 
Accrued income taxes
3561,142
(13)356
 
Accounts payable, accrued expenses and other liabilities
26,005(8,331)
(40,134)26,005
Net cash provided (used) by operating activities
44,500(765)
(71,335)44,500
Investing Activities:
Expenditures for property and equipment
 
(554)(4,440)
(5,311)(554)
Purchase of short-term investments
(62,075)(1,529)
(8,275)(62,075)
Sales of short-term investments
28,39725,566
90,435
Sales of other assets
0
9428,397
Net cash provided (used) by investing activities
(34,232)19,597
76,943(34,232)
Financing Activities:
Dividends paid
0(3,638)
(7,990)0
Repurchase of common stock
(5,629)(9,162)
(9,875)
Proceeds from line of credit
0
34,000
Payments on line of credit
0
(4,000)(5,629)
Proceeds from employee stock purchase plan
12891
250128
Net cash provided (used) by financing activities
(5,501)(12,709)
12,385(5,501)
Net increase (decrease) in cash, cash equivalents, and restricted cash
4,7676,123
17,9934,767
Cash, cash equivalents, and restricted cash at beginning of period
21,02223,678
14,40121,022
Cash, cash equivalents, and restricted cash at end of period
 
$
25,78929,801
$
32,39425,789
Non-cash activity:
Accrued other assets and property and equipment
$
2632,971
$
1,936
263
See notes to condensed consolidated financial statements (unaudited).
 
 
 
 
5
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
 
OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Convertible
Accumulated
Class A
Class B
Additional
Other
Total
Common
Common
Paid-in
Retained
Comprehensive
Stockholders'
Stock
Capital
Earnings
Income
Equity
(Dollars in thousands)
Balance — January 29, 2022
$
728
$
119,540
$
134,208
$
(280)
$
254,196
Comprehensive income:
Net income
-
-
9,748
-
9,748
Unrealized net losses on available-for-sale securities, net of deferred
income tax benefit of ($
362
)
-
-
-
(1,206)
(1,206)
Dividends paid ($
0.17
per share)
-
-
(3,638)
-
(3,638)
Class A common stock sold through employee stock purchase
plan —
9,468
shares
-
111
-
-
111
Class A common stock issued through restricted stock grant plans
—
0 shares
-
598
5
-
603
Repurchase and retirement of treasury shares –
609,928
shares
(20)
-
(9,142)
-
(9,162)
Balance — April 30, 2022
$
708
$
120,249
$
131,181
$
(1,486)
$
250,652
Accumulated
Additional
Other
Total
Common
Paid-in
Retained
Comprehensive
Stockholders'
Stock
Capital
Earnings
Income
Equity
(Dollars in thousands)
Balance — January 30, 2021
$
703
$
59762
$
115,278
$
129,303
$
1,155
$
246,498
Comprehensive income:
 
Net income (loss)
-
-
-
20,713
-
20,713
 
Unrealized gainsnet losses on available-for-sale securities, net of deferred
 
 
income tax benefit of ($
40
)
-
-
-
-
(134)
(134)
Dividends paid ($0.00 per share)
-
-
-0
-
-
-0
Class A common stock sold through employee stock purchase
 
 
plan —
19,248
 
shares
1
-
150
-
-
151
Class B common stock sold through stock option plans —
0 shares
-
-
-
-
-
-
Class A common stock issued through restricted stock grant plans
—
 
 
396,558
 
shares
13
-
271
-0
-
284
Repurchase and retirement of treasury shares –
425,661
 
shares
 
(14)
-
-
(5,615)
-
(5,629)
Balance — May 1, 2021
$
703
$
59762
$
115,699
$
144,401
$
1,021
$
261,883
Convertible
Accumulated
Class A
Class B
Additional
Other
Total
Common
Common
Paid-in
Retained
Comprehensive
Stockholders'
Stock
Stock
Capital
Earnings
Income
Equity
(Dollars in thousands)
Balance — February 1, 2020
$
761
$
59
$
110,813
$
203,458
$
1,423
$
316,514
Comprehensive income:
Net income (loss)
-
-
-
(28,417)
-
(28,417)
Unrealized gains on available-for-sale securities, net of deferred
income tax benefit of ($
90
)
-
-
-
-
(298)
(298)
Dividends paid ($
0.33
per share)
-
-
-
(7,990)
-
(7,990)
Class A common stock sold through employee stock purchase
plan —
26,957
shares
1
-
293
-
-
294
Class B common stock sold through stock option plans —
0 shares
-
-
-
-
-
-
Class A common stock issued through restricted stock grant plans —
307,354
shares
10
-
587
8
-
605
Repurchase and retirement of treasury shares –
618,056
shares
(22)
-
-
(9,034)
-
(9,056)
Balance — May 2, 2020
$
750
$
59
$
111,693
$
158,025
$
1,125
$
271,652
See notes to condensed consolidated financial statements (unaudited).
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
6
NOTE 1 -
 
- GENERAL
:
The condensed
 
consolidated financial
 
statements as
 
of MayApril
 
1, 202130, 2022
 
and for
 
the thirteen-thirteen-week
 
week periods
ended
April
30,
2022
and
May
 
1,
2021
 
and Mayhave
 
2, 2020
have been
 
prepared
from
 
the
accounting
 
records
of
 
The
Cato
Corporation and its
 
its wholly-owned
subsidiaries (the
 
“Company”), and all
 
all amounts
shown are
 
unaudited.
 
In the opinion of management, all adjustments considered necessary for a fair presentation of the financial
statements
have been
 
included.
 
All such adjustments
 
adjustments are
of a
 
normal, recurring nature
 
nature unless
otherwise
noted.
 
The results of the interim period may not be indicative of the results expected for
 
for the entire year.
The interim financial
statements should be read
 
be read in conjunction with
 
the consolidated financial statements
and
notes
 
thereto,
included
 
in
the
 
Company’s
Annual
 
Report
on
 
Form 10-
 
K10-K
 
for
the
 
fiscal
year
 
ended
January 30, 2021.29, 2022.
 
Amounts as of January 30, 202129, 2022 have been derived from the audited balance sheet, but
do not include all disclosures required by
accounting principles generally
accepted in the United States of
America.
As
planned,
in
May
2022,
the
Company
made
a
$14.4
million
contribution
to
its
Employee
Stock
Ownership
Plan,
which
is
included
in
Accrued
bonus
and
benefits
on
the
accompanying
Condensed
Consolidated Balance Sheets.
Subsequent to
April 30,
2022, the
Company received
$18 million
of its
income tax
receivable, which
is
included in Accounts receivable. The Company anticipates that the remaining balance will
be received by
the end of the second quarter of fiscal 2022.
On May 20, 2021,19, 2022, the Board of Directors declared the quarterly dividend
at $0.11$0.17 per share.
COVID-19
Update
The COVID-19 pandemic adversely
impacted the Company's business,
financial condition and operating
results through fiscal 2020.
The first quarter of
2021 saw significant improvements in
sales compared to
2020.
This improvement was
primarily attributable to
government stimulus, increased
customer traffic,
states continuing
to lift
capacity limits
as more
people are
vaccinated, consumers’
increasing comfort
level with
venturing out
to social
events
and
customers’ preparing
to return
to work.
However, the
Company’s sales
were well below 2019
sales for the
comparable period, and there
is still a
high level of
uncertainty regarding the
lingering effects of
the COVID-19 pandemic
and the
continued impact on
the
Company’s customers’
buying habits.
The Company
faces
additional uncertainty
from the
continued
effects of disruption in the global supply chain and available workers as it attempts
to hire associates as its
operating hours
continue to
expand. The
Company expects
that these
uncertainties and
perhaps others
related to the
pandemic will continue
to impact the
Company in fiscal
2021 and possibly
beyond.
The
adverse financial impacts associated with the continued
effects of, and uncertainties related to, the
COVID-19 pandemic include, but
are not limited
to, (i) lower net
sales in markets affected
by the actual
or potential
outbreak, whether
due to
state and
local orders,
reductions in
store traffic
and customer
demand, labor
shortages, or
all of
these factors,
(ii) lower
net sales
caused by
the delay
of inventory
production and fulfillment,
(iii) and
incremental costs associated
with efforts
to mitigate the
effects of
the outbreak, including increased freight and logistics costs and other
expenses.
The extent
to which
the COVID
-19 pandemic
ultimately impacts
the Company’s
business, financial
condition, results of operations, cash flows, and liquidity may
differ from management’s current estimates
due to inherent
uncertainties regarding the
duration and further
spread of the
outbreak or its
variants, its
severity, actions taken
to contain the virus or
treat its impact, and how
quickly and to what extent normal
economic and operating conditions can resume.
While the Company currently anticipates a continuation of the adverse impacts
of COVID-19 during 2021
and possibly
beyond, the
duration and
severity of
these effects
will depend
on the
course of
future
developments, which are
highly uncertain, including
the relative speed
and success of,
as well as
public
confidence in, mitigation measures
such as the current
effort to vaccinate substantial
portions of the U.S.
and global
population, emerging
information regarding
variants of
the virus
or new
viruses and
their
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY
2, 2020
7
potential impact on
current mitigation efforts,
public attitudes toward
continued compliance with
containment and
mitigation measures, and
possible new information
and understanding that
could alter
the course and duration of current measures to combat the spread of the virus.
Recently
Adopted
Accounting
Policies
In December 2019,
the FASB
issued ASU 2019-
12,
Income Taxes
(Topic 740):
Simplifying the
Accounting for Income Taxes
. The new accounting
rules reduce complexity by
removing specific
exceptions to
general principles
related to
intraperiod tax
allocations, ownership
changes in
foreign
investments, and
interim period
income tax
accounting for
year-to-date losses
that exceed
anticipated
losses. The new
accounting
rules also simplify
accounting for franchise
taxes that are
partially based on
income, transactions
with a
government that
result in
a step
up in
the tax
basis of
goodwill, separate
financial statements of legal entities that are not subject
to tax, and enacted changes in tax laws
in interim
periods. The
Company adopted this
accounting standards update
on the
first day
of the
first quarter
of
2021 with no material impact on its Condensed Consolidated Financial
Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
8
7
NOTE 2 -
 
- EARNINGS
 
PER SHARE:
Accounting
 
Standard
 
Codification
 
(“ASC”)
 
260 –
Earnings
 
Per Share
 
requires
 
dual presentation
 
of basic
 
and
diluted
Earnings
 
Per Share
(“EPS”)
 
on the face of all income
 
income statements
 
for all entities
 
with complex
 
capital
structures.
 
The Company
 
has presented
 
one basic
 
EPS and
 
one diluted
 
EPS amount
 
for all
common
 
shares
in
the accompanying
Condensed
 
Consolidated
 
Statements of Income and Comprehensive Income.
While the
Company’s certificate
 
of Income
(Loss) and
Comprehensive
Income
(Loss).
While the Company’s certificate of
incorporation
 
provides the right
 
the right for
the Board of
Directors
 
to declare
dividends
 
on
Class
 
A
shares
 
without
 
declaration
 
of commensurate
 
commensurate dividends
 
on
Class
 
B
shares,
 
the
Company
has
has historically
 
paid the
 
same dividends
 
to both Class
 
A and Class
 
B shareholders
 
and the Board
 
of Directors
has
has resolved
 
to continue
 
this practice.
 
Accordingly,
 
the Company’s
 
allocation
 
of income
 
for purposes
 
of the EPS
EPS computation
is the
same for Class
A and Class B shares
and the EPS amounts
reported
herein are applicable
to both
Class
 
A and Class
 
B shares and
the EPS amounts
reported
herein
are
applicable
to both
Class A
and Class
B shares.
Basic EPS
is
 
computed as net
 
as net income less earnings allocated to
 
earnings
allocated
to non-vested equity awards divided by
 
the
weighted average number
 
average
number of common shares outstanding
 
for the period.
 
Diluted
EPS reflects the potential
dilution that
 
that could
occur
 
from
common
shares
 
issuable
through
 
stock
options and
 
the
Employee Stock
Purchase
 
Plan.
 
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
(Dollars in thousands)
Numerator
Net earnings (loss)
$
9,748
$
20,713
$
(28,417)
Earnings (loss) allocated to non-vested equity awards
(942)(541)
1,135(942)
Net earnings (loss) available to common stockholders
$
19,7719,207
$
(27,282)19,771
Denominator
Basic weighted average common shares outstanding
21,489,16220,149,201
22,959,88721,489,162
Diluted weighted average common shares outstanding
21,489,16220,149,201
22,959,88721,489,162
Net income (loss) per common share
Basic earnings (loss) per share
$
0.920.46
$
(1.19)0.92
Diluted earnings (loss) per share
$
0.920.46
$
(1.19)0.92
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
9
8
NOTE 3 –
 
– ACCUMULATED
 
OTHER COMPREHENSIVE
 
INCOME:
The
 
following
The following
table
sets
 
forth
information
 
regarding
 
the
reclassification
 
out of A
 
ccumulatedof
Accumulated
 
other
comprehensive
 
income
 
(in thousands)
 
for the
 
three months
 
ended MayApril
 
1, 2021:30, 2022:
Changes in Accumulated Other
 
Comprehensive Income (a)
Unrealized Gains
and (Losses) on
Available-for-Sale
Securities
Beginning Balance at January 29, 2022
$
(280)
 
Other comprehensive income (loss) before
reclassification
(1,203)
Amounts reclassified from accumulated
other comprehensive income (b)
(3)
Net current-period other comprehensive income (loss)
(1,206)
Ending Balance at April 30, 2022
$
(1,486)
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $
4
impact of Accumulated other comprehensive income reclassifications into Interest and other
income for net gains on available-for-sale securities. The tax impact of this reclassification was $
1
.
The
following
table
sets
forth
information
regarding
the
reclassification
out
of
Accumulated
other
comprehensive
income
(in thousands)
for the
three months
ended
May 1,
2021:
Changes in Accumulated Other
 
Comprehensive Income (a)
Unrealized Gains
and (Losses) on
Available-for-Sale
Securities
Beginning Balance at January 30, 2021
$
1,155
 
Other comprehensive income (loss) before
 
 
reclassification
(173)
 
Amounts reclassified from accumulated
 
other comprehensive income (b)
39
Net current-period other comprehensive income (loss)
(134)
Ending Balance at May 1, 2021
$
1,021
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $
51
 
impact of accumulatedAccumulated other comprehensive income reclassifications into Interest and other
 
income for
net gains on available-for-sale securities. The tax impact of this reclassification was $
12
.
The following table sets
 
forth information
regarding
the reclassification
out of A
ccumulated
other
comprehensive
income
(in thousands)
for the
three months
ended May
2, 2020:
Changes in Accumulated Other
Comprehensive Income (a)
Unrealized Gains
and (Losses) on
Available-for-Sale
Securities
Beginning Balance at February 1, 2020
$
1,423
Other comprehensive income (loss) before
reclassification
(802)
Amounts reclassified from accumulated
other comprehensive income (b)
504
Net current-period other comprehensive income (loss)
(298)
Ending Balance at May 2, 2020
$
1,125
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $
655
impact of accumulated other comprehensive income reclassifications into Interest and other
income for net gains on available-for-
sale securities. The tax impact of this reclassification was $
151
.
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
10
9
NOTE 4 – FINANCING ARRANGEMENTS:
At
 
April
 
As of May30,
 
1, 2021, 2022,
the
Company
had
 
an
unsecured
revolving
credit
agreement,
 
allowingwhich
 
the Company to
borrow $
35.0
provided
 
for
borrowings of up to $35.0 million
less the balance
of any letters
 
of credit asdiscussed below and was committed
through
 
discussedMay
 
below. On2022.
 
June 2, 2020,In
May
2022,
 
the
Company
 
signed an amendment extending
a
new
unsecured
revolving
credit
agreement,
which replaces
the revolving prior
credit agreement,
provides up
to $35.0
million in
committed availability
and is
committed
through
May 2023.
2027.
 
The
prior
credit
agreement
 
containscontained
 
various
 
financial
 
covenants
 
and
limitations,
 
including
 
the
maintenance
 
of
specific
financial
 
ratios
 
with
which
 
the
Company
 
was in compliance
 
in
compliance as of May 1, 2021.April 30, 2022.
The new credit agreement also contains various financial covenants and
limitations, including the maintenance of specific financial ratios.
 
There were no outstanding borrowings
outstanding
under thisthe prior credit
facility
as of May 1, 2021April 30, 2022 or January 30, 2021.29, 2022.
 
The weighted
average
interest rate
rate under
the prior credit
facility
was zero
at May 1,
2021April 30, 2022 due
to no borrowings
outstanding.
At May 1, 2021
and January
30, 2021,
the Company
had no outstanding
 
borrowings.
At
April
30,
2022
and
January
29,
2022,
the
Company had
no
outstanding letters
 
of
credit
 
relating to
purchase
 
to purchase
commitments.
NOTE 5 – REPORTABLE SEGMENT INFORMATION:
The Company has determined
that it has four operating segments,
 
segments, as defined under
ASC 280-10,
including
Cato,
It’s
 
Fashion, Versona
 
Versona and
 
Credit.
 
As
outlined in
 
ASC
280-10,
the
 
Company has
 
has two
 
reportable
segments: Retail
 
Retail and Credit.
 
The Company has aggregated
its three retail operating
 
operating segments,
 
including
e-
commerce,
 
based on
 
the aggregation
 
criteria
 
outlined
 
in ASC 280-10,
 
which states
 
that two
 
or more
 
operating
segments
may be aggregated
 
into a single reportable
 
segment
if aggregation
 
is consistent
with the objective
and basic principles of ASC 280
 
-10,ASC 280-10, which require the
segments to have
 
similar
economic
characteristics,
products,
 
production
 
processes,
 
clients
 
and methods
 
of distribution.
 
The
 
The Company’s
 
retail
operating
 
segments
 
have
similar
 
economic
 
characteristics and
 
and similar
 
operating,
financial
and competitive
risks.
 
They are
similar in nature
 
nature of product, as they
 
they all
offer women’s
apparel,
shoes and accessories.
 
Merchandise
 
inventory
 
for the Company’s retail
operating
 
segments is sourced
 
is sourced from
the same countries
and some of the same vendors,
 
using
similar
production
 
processes.
 
Merchandise
 
for the
Company’s operating segments
is
distributed to
 
retail stores
in
a
 
similar
manner
 
through the
 
the Company’s
single
distribution
 
center and
 
and is
subsequently
 
distributed
 
to clients
 
in a similar
 
manner.
 
The
 
The Company
 
operates
its
 
women’s
fashion
 
specialty
retail
 
stores
in
 
32
states
 
as
of
 
May 1,April
 
2021,30,
2022,
principally in the
 
the southeastern
United States. The Company offers its own credit card to its customers
 
and
all credit
authorizations,
 
payment
processing
 
and collection
 
efforts are
performed
 
by a separate
subsidiary
 
of
the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
11
10
NOTE 5 – REPORTABLE
 
SEGMENT INFORMATION (CONTINUED):
The following
 
schedule
 
summarizes
 
certain
 
segment
information
 
(in thousands):
Three Months Ended
April 30, 2022
Retail
Credit
Total
Revenues
$206,208
$513
$206,721
Depreciation
2,743
0
2,743
Interest and other income
(403)
0
(403)
Income before taxes
11,613
84
11,697
Capital expenditures
4,440
0
4,440
Three Months Ended
May 1, 2021
Retail
Credit
Total
Revenues
$212,547
$538
$213,085
Depreciation
3,042
0
3,042
Interest and other income
(663)
0
(663)
Income (loss) before taxes
23,540
254
23,794
Capital expenditures
554
0
554
Three Months Ended
May 2, 2020
Retail
Credit
Total
Revenues
$99,890
$842
$100,732
Depreciation
4,006
0
4,006
Interest and other income
(1,851)
0
(1,851)
Income (loss) before taxes
(37,923)
392
(37,531)
Capital expenditures
5,311
0
5,311
Retail
Credit
Total
Total assets as of May 1, 2021April 30, 2022
$575,335574,601
$42,58537,429
$617,920612,030
Total assets as of January 30, 202129, 2022
549,349595,487
42,10338,279
591,452633,766
The
Company evaluates
 
segment
 
performance based
 
based on
 
income
 
before
taxes.
 
The
Company does
 
not
allocate
 
certain
 
corporate
 
expenses
 
or income
 
taxes to
 
the credit
 
segment.
The following
 
schedule
summarizes
 
the direct
expenses
 
of the credit segment
 
which are reflected
 
in Selling,
general
 
and administrative
 
expenses
 
(in thousands):
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
Payroll
$
117137
$
152117
Postage
7893
11178
Other expenses
89199
18789
Total expenses
$
284429
$
450284
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
12
11
NOTE 6 – STOCK BASED COMPENSATION:
As of
 
As of May
1, 2021,April 30, 2022,
 
the Company had two
 
long-term
compensation
 
plans pursuant to which
stock-based
compensation was
 
was outstanding or
 
could
be
 
granted.
 
The
2018
 
Incentive
 
Compensation Plan
 
Plan and
 
2013
Incentive
 
Compensation Plan
 
Plan are
 
for
the
granting
 
of
various
 
forms
 
of equity-based
 
equity-based awards,
 
including
restricted
 
stock and
 
stock options
 
for grant,
 
to officers,
 
directors
 
and key
employees.
 
Effective
 
May 24,
2018,
shares for
 
for grant were
 
were no
longer
 
available
 
under the
 
the 2013
Incentive
 
Compensation
 
Plan.
The following table
presents the
number
 
of
options and shares
 
shares of
restricted stock initially authorized and
available
 
for grant
 
under each
 
each of
the plans
 
as of MayApril
 
1, 2021:30, 2022:
 
2013
2018
Plan
Plan
Total
Options and/or restricted stock initially authorized
1,500,000
4,725,000
6,225,000
Options and/or restricted stock available for grant:
 
 
 
May 1, 2021April 30, 2022
-
3,564,9153,580,471
3,564,9153,580,471
In accordance
with ASC 718,
 
718, the fair value
 
value of current
restricted stock awards
 
awards is estimated on
 
the date
of
grant based on
 
on the
market price
 
of the
Company’s
 
stock and is
 
is amortized
to compensation
 
expense on
a
straight-line basis over
 
the related vesting
 
vesting periods. As of
 
of May 1,April 30, 2022
 
2021 and January 29,
 
30, 2021,2022, there
was
$
14,763,0009,868,000
 
and
$
10,550,00011,096,000
,
respectively,
 
of
total
unrecognized
compensation
 
expense
related
to
nonvestedunvested restricted stock
awards, which had
a remaining weighted-average
 
vesting period of
3.0
years
and
2.12.4
 
years and
2.3
years,
respectively.
The
 
total
compensation
expense
during
 
the
three
months
 
ended May 1, 2021
April
30,
2022
was
$
603,000
compared
to
$
283,000
 
compared tofor
 
$
606,000
for the
 
three
months
 
ended
May
 
2, 2020.1,
2021.
 
These
expenses
 
are
classified as a component of
 
of Selling, general and
administrative expenses in the
 
the Condensed Consolidated
Statements of Income (Loss).Income.
The following
summary
 
shows the changes
in the shares
of unvested
restricted
 
stock outstanding
 
during
the
three months ended May 1,April
 
2021:30, 2022:
Weighted
Average
Number of
Grant Date Fair
Shares
Value
 
Per Share
Restricted stock awards at January 30, 202129, 2022
1,023,9561,196,288
$
15.3313.76
 
Granted
406,9940
13.480
Vested
(175,673)0
22.21
0
Forfeited or expired
(10,436)0
13.67
0
Restricted stock awards at May 1, 2021April 30, 2022
1,244,8411,196,288
$
13.7713.76
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
13
12
The Company’s
Employee Stock Purchase Plan
 
allows eligible full-time employees to
 
eligiblepurchase a
 
full-time
employees
to purchase a limited
number of shares of
the Company’s Class A
 
A Common Stock during each semi-annual offering period at a
15% discount
through
 
payroll
deductions.
 
During the three months ended April
 
the three
months
ended30, 2022 and May
1, 2021, and
May 2, 2020,
the
the Company
 
sold
9,468
and
19,248
 
and
26,957
shares
 
shares to employees
 
at an average
discount
 
of $
1.172.21
 
and $
1.641.17
 
per share,
respectively,
under the Employee Stock Purchase
 
Plan. The compensation expense
 
expense recognized
for the 15%
discount given under
 
given under the Employee Stock Purchase
 
Purchase Plan was
approximately $
23,00021,000
 
and $
44,00023,000
 
for the
three
months ended
 
April
30,
2022
and
May
1,
 
2021,
respectively.
These
expenses are
classified as
a
component of
Selling, general and
 
May 2,administrative expenses in the
 
2020, respectively.
These expenses ar
e
classified
as a
component
of S
elling,
general
and administrative
expenses
in the Condensed Consolidated Statements o
fof
Income
(Loss).Income.
NOTE 7 –
 
– FAIR VALUE MEASUREMENTS:
The following tables
 
set forth information regarding
the Company’s financial assets and liabilities that are
measured
 
at fair
 
value (in
 
(in thousands)
 
as of MayApril
 
1, 202130, 2022
 
and January
 
30, 2021:29, 2022:
Quoted
Prices in
Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
May 1, 2021April 30, 2022
Assets
Inputs
Inputs
Description
Level 1
Level 2
Level 3
Assets:
 
State/Municipal Bonds
$
24,49028,514
$
-
$
24,49028,514
$
-
 
Corporate Bonds
90,09356,515
-
90,09356,515
-
 
U.S. Treasury/Agencies Notes and Bonds
29,12021,112
-
29,12021,112
-
 
Cash Surrender Value of Life Insurance
11,58511,033
-
-
11,58511,033
 
Asset-backed Securities (ABS)
15,77813,512
-
15,77813,512
-
 
Corporate Equities
846803
846803
-
-
 
Commercial Paper
1,821367
-
1,821367
-
Total Assets
$
173,733131,856
$
846803
$
161,302120,020
$
11,58511,033
Liabilities:
 
Deferred Compensation
(10,271)(9,272)
-
-
(10,271)(9,272)
Total Liabilities
$
(10,271)(9,272)
$
-
$
-
$
(10,271)(9,272)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
14
13
Quoted
Prices in
Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
January 30,29,
20212022
Assets
Inputs
Inputs
Description
Level 1
Level 2
Level 3
Assets:
 
State/Municipal Bonds
$
23,25430,451
$
-
$
23,25430,451
$
-
 
Corporate Bonds
67,56676,909
-
67,56676,909
-
 
U.S. Treasury/Agencies Notes and Bonds
17,86919,715
-
17,86919,715
-
 
Cash Surrender Value of Life Insurance
11,26311,472
-
-
11,26311,472
 
Asset-backed Securities (ABS)
16,06418,556
-
16,06418,556
-
 
Corporate Equities
703818
703818
-
-
 
Commercial Paper
2,069367
-
2,069367
-
Total Assets
$
138,788158,288
$
703818
$
126,822145,998
$
11,26311,472
Liabilities:
 
Deferred Compensation
(10,316)(10,020)
-
-
(10,316)(10,020)
Total Liabilities
$
(10,316)(10,020)
$
-
$
-
$
(10,316)(10,020)
The Company’s investment
 
portfolio
was primarily
 
invested
in corporate
 
bonds and tax-exempt
 
and taxable
governmental
debt securities
 
held in managed
 
managed accounts
with underlying
ratings
of A or better
 
better at May 1, 2021April
30,
2022 and
January 30, 2021.29,
2022.
 
The state,
municipal and corporate bonds have con
 
tractualhave contractual maturities which
range from one day to 4.6 years. The U.S. Treasury Notes
have contractual
 
maturities which
 
which range from 46
from
four days
 
to
4.5
2.4
 
years.
 
The U.S. Treasury
Notes have
contractual
maturities
which range
from
14
days
to
2.5
years. These
 
securities
 
are
classified
 
as available-for-sale
 
available-for-sale and
are
recorded
 
as Short-term
 
investments,Short-term
investments,
Restricted
 
cash Restrictedand
 
short-term
investments
and Other assets
 
on the accompanying
 
Condensed
Consolidated
 
Balance
 
Sheets.
These assets
are carried
at fair value with
unrealized
 
gains and
losses reported
net of taxes in Accumulated
other comprehensive
 
income. The
 
The asset-backed
 
securities
 
are bonds comprised
of auto loans and bank
 
and bank credit
cards that
carry AAA
ratings.
 
The auto loan
asset-backed
 
securities
 
are backed
by static
pools of auto loans
that were
 
loans that
were originated
 
and serviced
 
by captive
 
auto finance
 
units, banks
 
or finance
companies.
 
The bank
 
credit
card asset
-backed
asset-backed securities
 
are backed by
 
revolving
pools of
credit
card
receivables
generated
by account
holders
 
of cards
 
from American
Express,
 
Citibank,
 
JPMorgan
Chase,
Capital
 
One, and
 
Discover.
Additionally,
 
at May 1,
 
2021,April
30,
2022,
the
Company
had
$
0.8
million
of
corporate
equities
and
deferred
compensation
plan assets
of $
11.0
million.
At January
29, 2022, the
 
Company
 
had $
0.8
 
million
 
of corporate
equities
 
and deferred
compensation
plan assets of $
11.6
million.
At January 30, 2021, the Company
had $
0.7
million
of corporate
equities
and
deferred
 
compensation
 
plan assets
 
of $
11.311.5
 
million.
 
All of these
 
assets are
 
are recorded
 
within Other
assets
 
assets in the
 
the
Condensed
 
Consolidated
 
Balance
 
Sheets.
 
Level 1 category
 
securities
 
are measured
 
at fair value
 
using quoted
 
active market
 
prices.
 
Level 2 investment
securities include corporate and
 
include
corporate
and municipal bonds for
 
which quoted
prices may
 
not
be
available on
 
active
exchanges
for identical instruments.
 
Their fair value is
principally based on market
values
determined
by
management with
 
with assistance of
 
a third
 
-party
third-party pricing
 
service.
 
Since quoted prices
 
in active marketsquoted
 
prices in
active
markets for
identical
assets
 
are not available,
 
these prices
are determined
 
by the pricing
service
 
using observable
 
market
information
 
such
as
quotes
from
less
active
markets
 
and/or
quoted
 
prices
 
of
securities
 
with
similar
characteristics,
 
among other
 
other factors.
Deferred
compensation
 
plan assets
consist
 
of life insurance
 
policies.
 
These life
insurance
 
policies are
 
are valued
based on the
 
cash surrender
 
value of the
 
insurance
 
contract,
 
which is
determined
 
based on such
 
such factors
 
as the
fair value
 
of the underlying
 
assets and
 
discounted
 
cash flow
 
and are therefore
 
classified
 
within Level
 
3 of the
valuation hierarchy. The
 
hierarchy.
The Level 3
 
liability associated with the
 
associatedlife insurance policies represents a
 
withdeferred
compensation
obligation, the life
value of which is tracked via underlying insurance
 
policies
represents
a deferredfunds’ net asset values, as
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
15
14
compensationrecorded in
 
obligation,
the value of which is tracked via underlying insurance funds’
net asset values, as
recorded
in Other
 
noncurrent
liabilities
 
in
the
 
Condensed
Consolidated
Balance
 
Sheet.
 
These
funds
are
designed
 
to mirror
 
mutual
 
funds and
 
money
 
market
 
funds that
 
that are
observable
 
and actively
 
traded.
 
The following tables
summarize the change in
 
fair value
of the
 
Company’s financial assets and
 
assets and liabilities
measured
 
using
Level
 
3 inputs
 
as of MayApril
 
1, 202130, 2022
 
and January
 
30, 202129, 2022
 
(dollars
 
in thousands):
Fair Value
Measurements Using
Significant Unobservable
Asset Inputs (Level 3)
Cash Surrender Value
Beginning Balance at January 29, 2022
$
11,472
Redemptions
-
Additions
-
Total gains or (losses)
Included in interest and other income (or changes in net assets)
(439)
Included in other comprehensive income
-
Ending Balance at April 30, 2022
$
11,033
Fair Value
Measurements Using
Significant Unobservable
Liability Inputs (Level 3)
Deferred Compensation
Beginning Balance at January 29, 2022
$
(10,020)
Redemptions
489
Additions
(149)
Total (gains) or losses
Included in interest and other income (or changes in net assets)
408
Included in other comprehensive income
-
Ending Balance at April 30, 2022
$
(9,272)
Fair Value
Measurements Using
Significant Unobservable
Asset Inputs (Level 3)
Cash Surrender Value
Beginning Balance at January 30, 2021
$
11,263
Redemptions
-
Additions
-
Total gains or (losses)
 
Included in interest and other income (or changes in net assets)
322209
 
Included in other comprehensive income
-
Ending Balance at May 1, 2021January 29, 2022
$
11,58511,472
Fair Value
Measurements Using
Significant Unobservable
Liability Inputs (Level 3)
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021
15
Deferred Compensation
Beginning Balance at January 30, 2021
$
(10,316)
 
Redemptions
5471,010
 
Additions
(145)(304)
 
Total (gains) or losses
 
Included in interest and other income (or changes in net assets)
(357)
Included in other comprehensive income
-
Ending Balance at May 1, 2021
$
(10,271)
Fair Value
Measurements Using
Significant Unobservable
Asset Inputs (Level 3)
Cash Surrender Value
Beginning Balance at February 1, 2020
$
10,517
Redemptions
-
Additions
-
Total gains or (losses)
Included in interest and other income (or changes in net assets)
746(410)
 
Included in other comprehensive income
-
Ending Balance at January 30, 202129, 2022
$
11,263
Fair Value
Measurements Using
Significant Unobservable(10,020)
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
16
Liability Inputs (Level 3)
Deferred Compensation
Beginning Balance at February 1, 2020
$
(10,391)
Redemptions
1,714
Additions
(652)
Total (gains) or losses
Included in interest and other income (or changes in net assets)
(987)
Included in other comprehensive income
-
Ending Balance at January 30, 2021
$
(10,316)
The presentation in the table above has been revised to reflect current year presentation.
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY
2, 2020
17
NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:
In March 2020
,
the FASB
issued ASU 2020-
04,
Reference Rate
Reform (Topic
848): Facilitation of
the
Effects of Referenc
e
Rate Reform on Financial Reporting
. In January 2021,
the FASB clarified
the scope
of that guidance
with the issuance of
ASU 2021-01, “Reference Rate
Reform: Scope.” The new
accounting rules provide
optional expedients and
exceptions for
applying GAAP to
contracts and
other
transactions affected by reference
rate reform. The amendments
in this standard can
be adopted any time
before the
fourth quarter of
2022. The Company
is currently in
the process of
evaluating the
impact of
adoption of
the new
rules on
the Company’s
financial condition,
results of
operations, cash
flows and
disclosures.None.
NOTE 9 – INCOME TAXES:
The Company had
an effective tax
rate for the
 
first quarter of 2022 of
16.7
2021
% compared to an effective tax
rate of
12.9
% (Expense) compared
to an
effectivefor the first quarter of 2021. The increase in the 2022 first quarter tax
 
rate of
24.3
% (Benefit) for
the first quarter
of 2020. The
decrease in the
2021 first quarter
tax rate
was primarily due
to
 
to higher
 
pre-tax earnings andGlobal
Intangible Low-taxed
Income (GILTI),
partially
offset
by the
 
ability to realize
 
realize foreign
tax credits,
offset by
increases in
state income
taxes and
an upward
adjustment in
the reserves
for uncertain
tax positions
specific to
state income
taxes in
the first
quarter of
2020. Further,
the Coronavirus
Aid, Relief
and
Economic Security
Act (“
CARES”) allows
the Company
to carryback
losses five
years; therefore,
the
Company has recorded $33.0
million of estimated refunds
calculated through the first
quarter of 2021 in
Accounts receivable in the Condensed Consolidated Balance Sheets.
credits.
NOTE 10 – COMMITMENTS AND CONTINGENCIES:
The Company is, from time to time, involved in routine litigation incidental to the conduct of its business,
including
litigation
 
regarding
the
 
merchandise
that
 
it
sells,
 
litigation
regarding
 
intellectual
property,
litigation instituted by
 
by persons
injured upon
 
premises under its
 
its control,
litigation with
 
respect to
various
employment
matters,
including
 
alleged
discrimination and
 
wage
and
 
hour
litigation,
and
 
litigation
with
present or former employees.
 
Although such litigation
 
litigation is
routine and
 
incidental to
the conduct
 
of the Company’s
 
Company’s business,
as with
 
any
business
of
 
its
size
 
with
a
 
significant
number
 
of
employees
 
and
significant
 
merchandise
sales,
 
such
litigation could result
 
result in
large
 
monetary awards. Based
 
Based on
information currently
 
available, management
does
not
 
believe
that
 
any
reasonably
possible
 
losses
arising
 
from current
 
pending litigation
 
will
have a
material adverse
effect
 
on its condensed
 
condensed consolidated
financial statements.
 
However, given
 
given the
inherent
uncertainties involved in such
 
such matters, an
adverse outcome in
 
in one or
 
more such matters could
 
could materially
and
adversely
 
affect
the
 
Company’s
financial
 
condition,
results
 
of opera
 
tions operations
and
 
cash
flows
 
in
any
particular reporting period. The Company accrues for
 
these matters when the liability is
deemed probable
and reasonably estimable.
NOTE 11 – REVENUE RECOGNITION:
The
 
The Company
 
recognizes
sales
 
at
the
 
point
of
 
purchase
when
 
the
customer
 
takes
possession
 
of
the
merchandise
and
 
pays
for
 
the
purchase,
 
generally
with
cash
 
or
credit.
 
Sales
from
purchases
 
made
with
Cato
credit,
gift
cards
 
and
layaway
sales
from
stores
 
are
also
recorded
when
 
the
customer
takes
possession of
the merchandise. E-commerce
 
E-commerce sales are recorded
 
recorded when the
risk of
 
loss is
transferred to
the
customer. Gift cards
are recorded
as deferred revenue until they are
redeemed or
forfeited. Layaway sales
are
recorded
 
as
deferred
 
revenue
until
 
the
customer
 
takes
possession
 
or
forfeits
 
the
merchandise.
 
Gift
cards do not have
expiration dates. A provision is
made for estimated merchandise returns
based on sales
volumes
and
the
Company’s
experience;
actual
returns
have
not
varied
materially
from
historical
amounts.
A
provision
is
made
for
estimated
write-offs
associated
with
sales
made
with
the
Company’s
proprietary
credit
card.
Amounts
related
to
shipping
and
handling
billed
to
customers
in
a
sales
transaction are
classified as
Other revenue
and the
costs related
to shipping
product to
customers (billed
and accrued) are classified as Cost of goods sold.
The Company
offers its
own proprietary
credit card
to customers.
All credit
activity is
performed by
the
Company’s
wholly-owned subsidiaries.
None of
the
credit card
receivables are
secured.
The
Company
estimated customer credit
losses of $
86,000
and $
131,000
for the periods
ended April 30,
2022 and May
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
18
17
cards do not have expiration1,
 
dates. A provision is made2021,
 
for estimated merchandise returns based respectively,
on
 
sales
purchased by
volumes and
the
 
Company’s experience;
 
actual returns have
not varied materially from
historical
amounts. A
provision is
made for
estimated write-offs
associated with
sales made with
the Company’s
proprietary credit card.
Amounts related to
shipping and handling
billed to customers
in a sales
transaction are classified
as Other revenue
and the costs
related to shipping
product to customers
(billed
and accrued) are classified as Cost of goods sold.
The Company offers
its own proprietary credit
 
card to customers.
 
All credit activity isof
 
performed by the
Company’s wholly-
owned subsidiaries.
None of the
credit card receivables
are secured.
The Company
estimated customer credit losses of $
131,0005.7
 
million and $
69,000
for the periods ended May 1,
2021 and May 2,
2020, respectively, on
sales purchased by the Company’s
proprietary credit card of $
4.4
 
million and $
2.6
million for the periods ended April 30, 2022 and May 1, 2021, and May 2, 2020,
respectively.
The
 
The following
 
table
provides
 
information
about
 
receivables
and
 
contract
liabilities
 
from
contracts
 
with
customers (in thousands):
Balance as of
May 1, 2021April 30, 2022
January 30, 202129, 2022
Proprietary Credit Card Receivables, net
$
9,0949,522
$
9,6068,998
Gift Card Liability
$
6,8326,556
$
8,1558,308
NOTE 12 – LEASES:
The Company
determines whether
an arrangement
is a
lease at
inception. The
 
Company determines
whether
an
arrangement
is
a
lease
at
inception.
The
Company
has
 
operating
leases
for
 
stores,
offices
 
and
equipment.
Its
 
leases
have remaining
 
lease
terms
of
 
one
year
 
to
10
 
years,
some of which
 
which include
options to
 
extend the lease
 
lease term
for up
 
to five years,
 
years, and
some of
 
which
include
options to terminate
 
terminate the
lease within
 
one year.
 
The Company considers
 
considers these
options in
 
determining the
lease term used
 
used to
establish its
 
right-of-use assets and
 
and lease
liabilities. The
 
Company’s lease
 
lease agreements
do not contain any material residual value guarantees or material restrictive
 
restrictive covenants.
As
 
As most
 
of
the
 
Company’s
leases
 
do
not
 
provide
an
 
implicit
rate,
 
it
uses
 
its
estimated
 
incremental
borrowing rate based on
 
on the information
available at commencement date
 
commencement date of the lease
 
lease in determining the
present value of lease payments.
The components of lease cost are shown below (in thousands):
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
Operating lease cost (a)
$
16,72617,754
$
16,99316,726
Variable
 
lease cost (b)
$
793768
$
80793
(a) Includes right-of-use asset amortization of ($1.2)0.4) million and
 
($1.7)1.2) million for the three months ended
April 30, 2022 and May 1, 2021, and May 2, 2020, respectively.
(b) Primarily related to monthly percentage rent for stores not presented on the balance sheet.
Supplemental cash flow
information and non-cash
activity related to
the Company’s
operating leases are
as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
(UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 30, 2022 AND MAY 1, 2021 AND MAY
2, 2020
19
Supplemental cash flow information
and non-cash activity related
to the Company’s
operating leases are
as follows (in thousands):
18
Operating cash flow information:
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
Cash paid for amounts included in the measurement of lease liabilities
$
15,94716,836
$
15,49915,947
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
$
7343,515
$
28,197734
Weighted-average
remaining
 
lease
term
 
and
discount
 
rate
for
the
Company’s
operating
leases
are
as
follows:
As of
April 30, 2022
May 1, 2021
Weighted-average remaining lease term
2.4 years
2.7 years
Weighted-average discount rate
2.92%
3.73%
As of
April 30,
2022,
the maturities
of lease
liabilities by fiscal
year for
 
the Company’s
 
operating leases
are as
follows:
As of
May 1, 2021
May 2, 2020
Weighted-average remaining lease term
2.7 years
3.2 years
Weighted-average discount rate
3.73%
4.36%
As of May 1, 2021,
the maturities of lease liabilities by fiscal year for the Company’s operating leases
are
as follows (in thousands):
Fiscal Year
20212022 (a)
$
51,803
2022
48,97153,370
2023
36,10253,633
2024
22,73136,956
2025
13,91521,875
2026
10,602
Thereafter
36,8702,986
Total lease payments
210,392179,422
Less: Imputed interest
18,8548,410
Present value of lease liabilities
$
191,538171,012
(a) Excluding the 3 months ended May 1, 2021.April 30, 2022.
 
 
20
19
THE CATO CORPORATION
ITEM 2.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION:
The
 
The following
 
information
should
 
be
read
 
along
with
 
the
unaudited
 
Condensed
Consolidated
 
Financial
Statements,
including
the
accompanying
Notes
 
appearing
in
this
report.
Any
 
of
the
following
are
“forward-looking”
statements
within
the
 
meaning
of
Section 27A
of
the
Securities
Act
of
1933,
 
as
amended,
and
 
Section 21E
of
 
the
Securities
 
Exchange
Act
 
of
1934,
 
as
amended:
 
(1) statements
in
 
this
Form 10-Q
 
that
reflect
 
projections
or
 
expectations
of
 
our
future
 
financial
or
 
economic
performance;
(2) statements
that
 
are
not
 
historical
information;
 
(3) statements
of
 
our be
 
liefs, beliefs,
intentions,
 
plans
and
objectives for future operations,
including those contained in
 
contained in “Management’s“Management’s Discussion and
 
and Analysis of
Financial Condition
and Results of
 
of Operations”; (4) statements relating
 
to our
operations or activities
 
activities for
our
fiscal
 
year
ending
January
 
29, 2022 (“28,
2023
(“fiscal 2021”
2022”)
and
beyond,
including,
 
but
not
limited
 
to,
statements regarding expected
 
amounts of capital
 
capital expenditures and store
 
store openings, relocations,
remodels
and
closures
 
and
statements
 
regarding
the
 
potential
impact
 
of
the
 
COVID-19
pandemic
 
and
related
responses
and
mitigation
efforts
 
on
our
business,
results
of
operations
and
financial
 
condition;
and
(5) statements relating
to our future contingencies. When possible, we have attempted to identify forward-
looking statements by
 
by using
words
such
 
as “will,
“will,” “expects,”
 
“anticipates,” “approximates,” “believes,
“believes,”
“estimates,” “hopes,
“hopes,” “intends,
“intends,” “may,
“may,”
 
“plans,” “could,
“could,” “would,
“would,” “should”
“should”
and
 
any
variations
or
negative formations of
 
of such
words and
 
similar expressions.
We
 
can give no
 
no assurance
that actual
 
results
or
events
will
not
 
differ
materially
from
those
 
expressed
or
implied
in
any
 
such
forward-looking
statements. Forward-looking statements included in this report are based on information available to us as
of the filing
 
filing date
of this
 
report, but subject
 
subject to
known and
 
unknown risks, uncertainties
 
uncertainties and
other factors
that
could
 
cause
actual
 
results
to
 
differ
materially
 
from
those
 
contemplated
by
 
the forward
 
-lookingforward-looking
statements.
 
Such
factors
include,
 
but
are
not
 
limited
to,
the
 
following:
 
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
 
energy and
food costs,
 
wage rates, tax
 
tax rates,
interest rates,
 
home values,
consumer
net
worth, and
 
the
availability of
 
credit; credit
and
inflation;
changes in
 
laws, or regulations
 
regulations and
government policies
affecting
our
 
business,
including
but
but
not
 
limited
to
 
tariffs;
 
uncertainties
regarding
 
the
impact
 
of any
 
any
governmental action regarding, or
 
regarding, orresponses to, the
foregoing conditions; competitive factors
and pricing
responsespressures; our
ability to
 
the foregoing
conditions; competitive
factorspredict and
 
pricing pressures;respond to
 
our abilityrapidly changing
 
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 our
ability of
 
any such
new stores to
 
to grow
and perform
 
as expected;
adverse weather,
public health
threats (including the COVID-19 pandemic)
 
the
COVID-19 pandemic) or similar conditions that
may affect our
 
our sales or operations; inventory risks due to
inventory
risks
due
to
shifts
in
 
market
demand,
including
 
the
ability
 
to
liquidate
 
excess inventory at
 
inventory
at
anticipated
margins;
 
and
other
other
factors
discussed
under “Risk
“Risk
Factors”
in
Part
I,
Item
 
1A of our annual report on Form 10-
 
Kof
our
annual
report
on
Form
10-K
 
for the
fiscal year ended January 30,
 
2021 (“the
fiscal 2020”
year
ended
January
29,
2022
(“fiscal
2021”),
as
amended
 
or
supplemented,
and in other
 
other reports
we
file
file
with
or
 
furnish
to
the
 
Securities and
Exchange
 
Commission
(“SEC”) from
 
from time
to
time.
 
We
do
 
not
undertake, and
expressly
 
decline,
any obligation
 
to
update
 
any
such forward-forward-looking information contained
 
looking information
contained in this report,
whether as a
result of new
information, future
events,
or otherwise.
 
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
21
20
CRITICAL ACCOUNTING POLICIES AND ESTIMATES:
The Company’s accounting
 
policies are more
 
are more fully
described
 
in “Management’s
Discussion
 
and Analysis
of
Financial
 
Condition
 
and Results
 
of Operations”
 
in the Company’s
 
Annual
 
Report
 
on Form
 
10-K for
 
for the
fiscal
year
ended
January
 
30, 2021.29,
2022.
 
As
disclosed
 
in “Management’s
“Management’s
 
Discussion
 
and
Analysis
 
of
Financial
Condition
and Results of Operations,”
 
the preparation
of the Company’s financial statements
 
statements in conformity
with generally
 
accepted
accounting
 
principles
 
in the United States
(“GAAP”)
 
requires
management
 
to make
estimates
 
and assumptions
 
about future
 
events that
 
that affect the
 
the amounts
 
reported
 
in the financial
 
statements
 
and
accompanying
 
notes. Future
 
events and
 
their effects
 
cannot be
 
determined
 
with absolute
 
certainty. Therefore,
the determination
of estimates requires the exercise of judgment. Actual results inevitably will differ from
those
estimates, and
 
such
differences may
 
be
material to
 
the
financial statements.
The
 
most
significant
accounting
 
estimates
 
inherent
 
in the preparation
 
of the Company’s
 
financial
 
statements
 
include
 
the allowance
for
customer
credit
 
losses,
 
inventory
 
shrinkage, the
 
the cacalculation of
 
lculationpotential
 
of potential asset
 
impairment,
workers’
compensation,
general
and auto insurance liabilities, reserves
relating
to self-insured
health
insurance,
and
uncertain
 
tax positions.
The Company’s
 
critical
 
accounting
 
policies
 
and estimates
 
are discussed
 
with the
 
Audit Committee.
 
 
 
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
22
21
RESULTS OF OPERATIONS:
The following
 
table sets
 
forth, for
 
the periods
 
indicated,
 
certain items
 
items in
the Company's
 
unaudited
 
Condensed
Consolidated
 
Statements
 
of Income
 
as a percentage
 
of total
 
retail sales:
 
sales:
Three Months Ended
April 30, 2022
May 1, 2021
May 2, 2020
Total retail sales
100.0
%
100.0
%
Other revenue
0.9
1.90.9
Total revenues
100.9
101.9100.9
Cost of goods sold (exclusive of depreciation)
58.564.5
84.658.5
Selling, general and administrative (exclusive of depreciation)
29.929.5
53.129.9
Depreciation
1.41.3
4.11.4
Interest and other income
(0.2)
(0.3)
(1.9)
Income (loss) before income taxes
11.35.7
(38.0)11.3
Net income (loss)
4.8
9.8
(28.8)
 
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
23
22
RESULTS OF OPERATIONS
 
(CONTINUED):
Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations
(“MD&A”) is
intended
to
provide
information
to
assist
readers
in
better
understanding
and
evaluating
our
financial
condition
and
results
of
operations.
We
recommend
reading
this
MD&A
in
conjunction
with
our
Condensed
Consolidated
Financial
Statements
and
the
Notes
to
those
statements
included
in
the
“Financial Statements” section of this Quarterly Report on Form
10-Q, as well as our 2021 Form 10-K.
COVID-19
 
Update
There
 
is
The
still
significant
uncertainty
regarding
the
lingering
effects
of
the
COVID-19 pandemic adversely
 
impacted the Company's business,on
 
our
business, financial condition, and operating
results through fiscal 2020.
 
The first quarter of operations, cash flows,
and liquidity.
These uncertainties include
the
impact
of
 
2021 saw significant improvements innew
 
sales compared to
2020.or
 
This improvement waspotential
 
primarily attributable variants
of
the
virus
that
are
more
transmissible
or
severe,
stagnant
vaccination rates
and related
factors that
may continue
to
 
government stimulus, increasedfuel
 
customer traffic,periodic surges
of
the
virus or
otherwise
states continuingimpede
progress
toward
the
return
 
to lift
 
capacity limitspre-pandemic
 
as more
people are
vaccinated, consumers’
increasing comfort
level with
venturing out
to social
eventsactivities
 
and
 
customers’ preparinglevels
 
to returnof
 
to work.consumer
 
However, the
Company’s salesconfidence
 
were well below 2019and
commercial
 
sales for activity.
The
Company
also
faces
uncertainty
from
the
 
comparable period, and thereimpacts
 
is still a
high level of
uncertainty regarding the
lingering effects of
 
the COVID-19 pandemic
 
and the
continued impact on
 
the
Company’s customers’governmental
 
buying habits.responses
to
COVID-19 surges,
including
lockdowns,
in
the
foreign
countries
where
our
merchandise is produced.
 
The Company
faces additional
uncertainty from
is also subject to the continued
effects of disruption in the global
supply chain and available workers as it attempts
 
to hire associates as its
operating hourschain,
 
continue toinflation
 
expand. The
Company expects
that these
uncertainties and
 
perhaps othersits
impact
on
our
cost
of
products,
transportation,
wage
rates
and
other
operating
costs,
as
well
as,
the
impact
on
our
customers’
disposable
incomes,
and
the
availability
of
workers.
The Company
expects that
these uncertainties
and perhaps
others related
to the
 
pandemic will
continue
 
to
impact
the
 
Company
in
fiscal
 
2021 and possibly
beyond.2022.
 
The
adverse financial impacts associated with the continued
 
adverse
financial
impacts
associated
with
these
continued effects of, and uncertainties related
to, the
COVID-19 pandemic include, but are
 
are not limited to,
to, (i) lower net
 
sales in markets affected
 
affected by the actual
or potential adverse
 
outbreak,changes in conditions
relating to the
pandemic, whether
 
due to
increases in
case counts,
 
state and
 
local orders,
 
reductions in
 
store traffic
 
and customer
customer
demand,
labor
 
shortages,
or
 
all
of
 
these
factors,
 
(ii)
lower
 
net
sales
 
caused
by
 
the
delay
 
of inventory
inventory
production
and
fulfillment,
 
(iii)
and
 
incremental
costs
associated
 
with
efforts
 
to mitigate the
 
mitigate
the
effects of
the outbreak, including increased freight and logistics costs and other
 
expenses.
The extent
to which
the COVID
-19 pandemic
ultimately impacts
the Company’s
business, financial
condition, results of operations, cash flows, and liquidity may differ from management’s current
estimates
due to inherent
uncertainties regarding the
duration and further
spread of the
outbreak or its
variants, its
severity, actions taken
to contain the virus or
treat its impact, and how
quickly and to what extent normal
economic and operating conditions can resume.
While the Company currently anticipates a continuation of the
uncertainties listed above and the potential
adverse impacts
 
of COVID-19 during 2021
and possibly
 
beyond,during fiscal
2022, the
 
duration and
 
severity of
 
these effects
 
will depend
on
 
on the
 
course of
 
future developments,
developments, which are
 
highly uncertain, includinguncertain.
The
extent to
which the
COVID-19
pandemic
ultimately
impacts
 
the relative speed
Company’s
business,
financial
condition,
results
of
operations,
cash
flows,
 
and success of,
 
as well asliquidity
 
public
confidence in, mitigation measuresmay
 
such as the differ
from
management’s
current
 
effort to vaccinate substantialestimates
 
portions of the U.S.
and globaldue
 
population, emergingto
 
information inherent
uncertainties
regarding
 
variants the
duration
and
further
spread
of
 
the virus
outbreak
 
or new
 
virusesits
variants,
its
severity,
actions
taken
to
contain the
virus or
treat its
impact, and how
quickly and to
what extent
normal economic and
 
theiroperating
potential impact onconditions can resume.
 
current mitigation efforts,
public attitudes toward
continued compliance with
containment and
mitigation measures, and
possible new information
and understanding that
could alter
the course and duration of current measures to combat the spread of the virus.
Comparison
 
of First Quarter
 
of 20212022
 
with 2020
2021
Total retail sales
for the first
 
quarter were
 
were $211.2$204.9 million
 
compared
 
to last year’s first
 
first quarter
 
sales of $98.8$211.2
million.
 
Sales increased
 
decreased primarily
 
due to an increase
 
to
a
decrease in
same-store sales,
partially offset
by
 
sales and
 
sales from
new stores,
partially
offset by permanently closed storesnoncomparable stores. The decrease in
 
2020. The 111.0%
increase
in same-store sales is was
primarily due to
cooler, wetter
weather, late
merchandise
shipments
due
 
to
stores being closed from
 
March 19, 2020supply
 
throughchain
 
the end ofdisruptions
 
the first quarter ofand
 
2020.inflationary
pressure
on
our
customers’
disposable income. Same store
sales
include
stores
that have been open more than 15 months.
Stores
that have been relocated or expanded are
also included
in the same
store sales
calculation
after they
have been
open
more than
 
15 months.
 
Stores that
have been relocated or expanded are also included in
the same store sales calculation after they have been
open more
than 15
months.
The method
of calculating
 
same store sales
 
sales varies
 
across the retail
 
retail industry.
 
As a
result, our same
 
store sales calculation
 
calculation
may not
be comparable
 
to similarly
 
titled measures
 
reported
 
by other
companies.
 
E-commerce
 
sales were
 
less than
than 5.0% of sales for
 
the first quarter of fiscal 2021sales
 
and are included infor the
 
same-storefirst quarter
 
sales calculation.of fiscal
 
Total revenues, comprised of
retail sales2022 and
 
other revenue (principally finance charges and
late fees onare included
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
23
in the same-store sales calculation.
 
Total revenues, comprised of retail sales
 
and other revenue (principally
finance
 
24
charges
 
and
late
fees
on
customer
 
accounts
 
receivable,
 
shipping
 
charged
to
customers
 
for e-commerce
 
e-
commerce purchases and
 
and layaway fees),
were $213.1
 
were
$206.7 million
for
the
first
quarter ended
April 30,
2022,
compared to $213.1 million
 
for the first quarter ended
 
quarterMay 1, 2021. The Company operated
 
ended May1,315 stores at
April 30,
 
1, 2021,2022 compared
 
to $100.71,325
 
million
for the first
quarter
ended May
2, 2020. The
Company
operated
1,325 stores
at May 1, 2021
compared
to 1,300 stores
 
at the end
of last fiscal
 
fiscal year’s first
 
first quarter.
 
For the first
 
first three months
 
months
of fiscal 2021,2022, the Company opened
 
the Company
five stores and permanently
 
closed
five stores. one store.
 
The Company currently
currently
expects
 
to close
 
approximately
 
25 stores
 
in fiscal
 
2021.
2022.
Credit revenue
 
of $0.5
 
million
 
represented
 
0.3%0.2% of
 
total revenues
 
in the first
 
quarter
 
of fiscal
 
2021,2022, compared
to 2020 2021
credit revenue of
 
$0.80.5 million or 0.8%
0.3% of
 
total revenues.
 
Credit revenue is
comprised of interest
earned on
 
the Company’s
 
private
 
label credit
 
card portfolio
 
and related
 
fee income.
 
Credit revenue
decreased
slightly
for the most
recent comparable
period due
to lower
finance
charge income
and lower
late fee
income
from sales
using the
Company’s proprietary
credit
card. Related
 
expenses
 
include
principally
 
payroll,
 
postage
and other
administrative
expenses,
and totaled $0.3$0.4
 
million in
 
in the first
quarter
 
of 2021,
2022, compared to
 
to last
year’s first
 
year’s
first quarter
 
expenses
 
of $0.5$0.3
 
million.
 
Other revenue,
 
a component
 
of total revenues,
 
was $1.9$1.8 million
 
for the first
 
quarter
 
of fiscal 2022,
 
2021, compared
to $1.9
$1.9
 
million for
 
for the
 
prior
year’s
 
comparable first
 
first quarter.
 
The
slight
decrease was
due
to
lower
e-
commerce
shipping
revenue
and finance
charges,
slightly
offset by
higher
layaway
fees.
Cost of goods sold
 
sold was $123.7
$132.2 million,
 
or 58.5%64.5% of retail
 
sales for the first
 
first quarter of fiscal
 
of fiscal 2021,
2022, compared
to $83.6$123.7 million, or 58.5% of retail
 
or 84.6% of retail sales in the first quarter of fiscal 2020.2021.
 
The overall
decrease increase
 
in cost of
goods sold as
 
as a percent of
 
of retail
sales for first
 
first quarter
 
of 20212022 resulted primarily from
 
the leveraging of
occupancy, buying and distributionprimarily
 
from higher
markdown
sales
and an increase
in freight costs
due to normalized sales and higher sales of regular priced goods.fuel
prices.
Cost of goods sold
includes
merchandise
 
costs (net
of
discounts
 
and
allowances),
 
buying
costs,
 
distribution
costs, occupancy costs, freight and
 
inventoryoccupancy
 
shrinkage.
Net merchandise costs, and in
-bound
 
freight
 
are
capitalizedand
 
inventory
shrinkage.
Net
merchandise costs
and
in-bound freight
are
capitalized as
inventory costs.
 
Buying
 
and
distribution costs
include
payroll,
payroll-related
 
costs and
operating
 
operating expenses for the
 
for the buying departments
and
distribution
center.
 
Occupancy
 
costs
include
rent,
real
estate
estate
taxes,
insurance,
 
common
 
area
maintenance, utilities and
 
utilities
and maintenance
 
for stores
 
and distribution
facilities.
 
Total gross margin
 
dollars
 
(retail
sales less
 
cost of goods
 
goods sold exclusive
 
exclusive of depreciation)
 
increased
depreciation) decreased by 475.4%17.0% to
 
to $87.6$72.7 million for
 
millionthe first
for the
first quarter
 
of fiscal
 
20212022 compared
 
to $15.2$87.6
 
million
 
in the first
 
quarter
 
of fiscal
fiscal 2020.2021.
 
Gross margin
 
as presented
may not
 
be comparable
 
to those
 
of other
 
entities.
Selling,
 
general
 
and administrative
 
expenses
 
(“SG&A”)
 
primarily
 
include
 
corporate
 
and store
 
payroll,
 
related
payroll taxes
 
taxes and benefits,
insurance,
supplies,
advertising,
and bank and
 
credit card
 
card processing
fees.
 
SG&A
expenses were 29.5% of retail
 
were 29.9% of retail sales
for the first quarter
of fiscal 2021,2022, compared
 
to 53.1%29.9% of retail sales in
the first quarter of
 
of fiscal 2020. 2021.
SG&A as a percent
 
a p
ercent of retail sales
 
decreased
 
primarily
 
due to lower
 
leveragingincentive
expenses as acompensation, partially
 
result ofoffset by increased payroll costs reflecting more normalized
sales and a
decrease in impairment
charges, partially offset
by higher
incentive compensation.
operations.
Depreciation
 
expense
 
was $3.0$2.7
 
million,
 
or 1.4%1.3%
 
of retail
 
sales for
 
the first
 
quarter
 
of fiscal
 
2021,2022, compared
 
to
$4.03.0 million,
 
or 4.1%1.4% of retail sales
 
of retail
sales for
the first
quarter
 
of fiscal
2020. 2021. The
decrease
 
in depreciation
 
expense
is
was attributable
 
to lowerolder
 
net fixedstores
 
assetsbeing
 
primarilyfully depreciated.
Interest and
 
due to $13.7other
 
million
of impairment
charges in
2020.
Interest
and other income
 
was $0.7
$0.4
 
million, or
 
0.2%
of
retail
sales
for
the
first
quarter of
fiscal
2022,
compared to
$0.7
million, or
0.3%
 
of
retail sales
for
the
first quarter
of
fiscal 2021.
The
decrease was
primarily
attributable
to a decrease
in short-term
investments.
Income tax expense
was $1.9 million or
1.0% of retail sales
 
for the first quarter
 
first quarter of fiscal 2022, compared
to
an
income
tax
expense
of
 
fiscal 2$3.1
 
021,
compared
to $1.9 million,
 
or 1.9%
1.5%
of
 
retail
sales
 
for
the
first
 
quarter
 
of
fiscal
 
2020.
The decrease
is primarily
attributable
to lower interest
rates and smaller
gains from the
sale of investments,
partially
offset by an
increase
in short-term
investing.2021.
Income tax expense was $3.1
 
million or 1.5% of retailexpense
 
sales for
the
first
 
quarter of fiscal 2021, compared
to an income tax benefit of $9.1 million, or 9.2% of
 
retail sales for the first quarter fiscal
2022
decreased
primarily
as
a
result
of fiscal 2020. Income
lower
pre-tax
 
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
24
earnings.
 
The effective income
 
25
tax expenserate for
 
the first quarter
 
of fiscal 20212022
 
increased primarily aswas 16.7%
 
a resultcompared to 12.9%
for
the
first
quarter of
 
higher pre-tax earnings.
2021. The effective income tax rate for the first quarter of fiscal
 
2021 was 12.9%increase in
 
(Expense) compared to 24.3%
(Benefit) for the first quarter
of 2020. The decrease in the
 
2021 2022
first
quarter tax
rate was
 
primarily due to
higher pre-tax earnings
 
andto
higher
Global Intangible Low-taxed Income (GILTI), partially offset by the ability
to realize foreign
tax credits, partial
ly offset by
increases in state
income taxes in the first quarter of 2020.credits.
 
LIQUIDITY, CAPITAL
 
RESOURCES
 
AND MARKET
 
RISK:
 
The Company believes
that its cash, cash equivalents
and short-term
 
investments,
 
together
with cash flows
from operations
 
and borrowings
 
available under
 
under its revolving
credit
 
agreement,
 
will be adequate
to fund the
Company’s regular
 
operating
 
requirements
 
and expected
 
capital
expenditures
 
for fiscal 2022
 
2021 and the
next 12
months.
Cash used
 
Cash provided by operating
activities
for the first
 
first three
months
of fiscal 2021
2022 was
 
primarily
 
generated
 
by earnings
earnings
adjusted
 
for depreciation
 
and changes
in working
capital.
 
The increasedecrease
 
in cash provided
of $115.8
$45.3 million
 
for
the first three
 
three months
of fiscal 2021
 
2022 as compared
to the first
 
first three months of
 
of fiscal 2020
2021 was
primarily
 
due to
lower net income versus
and a net loss
,
a decrease in inventory, and an
increase
 
in accounts payable
and accrued
 
payable and
accrued liabilities
from fiscal
2021 year end
versus
an increase
from 2020
year end,
 
partially
 
offset by
 
a decrease
 
in storeprepaid
 
impairmentand other
 
charges.assets.
At
 
April
At May 1, 2021,
30,
2022,
 
the Company
 
Company had working
 
working capital
 
of $130.5
$107.8
 
million
compared
 
to $108.6
$111.5
 
million
at January
30, 2021.January 29, 2022.
 
This increasedecrease is primarily
 
is primarily attributable
 
to higherlower short-term
 
investments,
 
partially
offset
 
by higher
lower accrued
 
incentive
 
compensation.
At
 
April
At May 1, 2021 and January
30,
 
2021, 2022,
the
Company
had
an
unsecured
 
revolving
credit
agreement,
which
provided
for
borrowings of up to $35.0 million less the balance of letters
of credit agreement, whichdiscussed below and was committed
provides for borrowthrough
 
ings ofMay
2022.
In
May
2022,
the
Company
signed
a
new
unsecured
revolving
credit
agreement,
which replaces
the prior
credit agreement,
provides up
 
to $35.0 million
 
less the balancemillion in
 
of letters ofcommitted availability
 
credit discussed below.and is
committed
through
May
2027.
 
The
prior
revolving
credit
 
agreement is
 
committed throughcontained
 
May 2023.various
financial
covenants
and
limitations,
including
the
maintenance
of
specific
financial
ratios
with
which
the
Company
was
in
compliance as of April 30, 2022.
 
The new credit
agreement also contains
various
financial covenants and
limitations,
including the maintenance of
specific financial ratios with
which the
Company was in compliance as
of May 1, 2021.ratios.
 
There were no outstanding borrowings outstanding
under the prior credit
facility as of May 1, 2021April 30, 2022 or January 30, 2021.29, 2022.
 
At
 
April
At May 1, 2021
30,
2022
 
and
January
 
30, 2021,29,
2022,
 
the
Company
 
had no outstanding
 
no
outstanding letters
 
of
credit
 
relating to
purchase
 
to purchase
commitments.
Expenditures for
 
for proproperty
 
perty and
 
equipment
totaled
 
$0.6 4.4
million
in
the
first
three
months
of
fiscal
2022,
compared to $0.6
million in
 
the first
three months of
fiscal 2021,
compared
to $5.3 million
in last year’s
 
first three
 
months.
 
The increase in
expenditures for property and
equipment was primarily due
to
costs associated with
opening five
new stores
and capital
investments in
information technology
and the
distribution center.
For the full
 
full fiscal 20212022
 
year, the Company
 
Company expects to
to invest
 
approximately
 
$3.1 22.6
million
 
in capital
 
expenditures.
expenditures,
 
including
distribution
center
automation
projects.
Net
cash
 
usedprovided by
 
investing
activities
 
totaled
 
$34.219.6
million in
the
first
three
months
of
fiscal
2022
compared
to $34.2 million
 
used in the firstcomparable
 
three months
period of fiscal
 
2021, compared
to
$76.9 million provided
in the comparable period of fiscal 2020,
primarily
 
due to alower purchases
 
decrease
in the sale of
short-term
 
investments
and an
increase
in the
purchase
of short
-term investments,
 
partially
 
offset by
 
a
decreasean increase
 
in capital
 
expenditures.
Net cash used
by financing
 
activities
 
totaled
$5.5 $12.7 million
 
in the first
three months
 
of fiscal 2022 compared
to $5.5
 
2021 compared
to
$12.4 million
 
providedused in
 
in the comparable
 
period
 
of fiscal
 
2020,2021, primarily
 
due to a decrease
an increase
 
in proceedsshare
 
fromrepurchases
the line of
credit,
partially
offset by no
and dividends
 
paid in the
first quarter of fiscal 2021
and fewer stock
repurchases.
paid.
On May 20,
 
2021, the19, 2022,
 
the Board of
 
of Directors
 
declared
 
the quarterly
 
dividend
 
at $0.11 per$0.17
 
per share.
 
 
THE CATO CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
(CONTINUED)
25
As
 
of
 
April 30,
 
26
As of May
1, 2021,2022, the
 
Company had
 
had 1,445,488840,119 shares
remaining in open
 
open authorizations under its
 
under its share
repurchase
 
program.
The Company
 
does not
 
use derivative
 
financial
 
instruments.
The Company’s investment
 
portfolio
was primarily
 
invested
in corporate
 
bonds and tax-exempt
 
and taxable
governmental
debt securities
 
held in managed
 
managed accounts
with underlying
ratings
of A or better
 
better at May 1, 2021April
30,
2022 and
January 30, 2021.29,
2022.
 
The state,
municipal and corporate bonds
have contractual maturities which range
range from four one day to 4.6 years. The U.S. Treasury Notes have contractual
maturities which
range from 46
days
 
to 4.5 years.
 
The U.S. Treasury2.4
 
Notes have
contractual
maturities
which range
from 14 days
to 2.5 years.
 
These
securities
 
are
classified
 
as available-for-sale
 
available-for-sale and
are
recorded
 
as Short-term
 
investments,Short-term
investments,
Restricted
 
cash Restrictedand
 
short-term
investments
and Other assets
 
on the accompanying
 
Condensed
Consolidated
 
Balance
 
Sheets.
These assets
are carried
at fair value with
unrealized
 
gains and
losses reported
net of taxes in Accumulated
other comprehensive
 
income. The
 
The asset-backed
 
securities
 
are bonds comprised
of auto loans and bank
 
and bank credit
cards that
carry AAA
ratings.
 
The auto loan
asset-backed
 
securities
 
are backed
by static
pools of auto loans
that were
 
loans that
were originated
 
and serviced
 
by captive
 
auto finance
 
units, banks
 
or finance
companies.
 
The bank
 
credit
card asset
-backed
asset-backed securities
 
are backed by
 
revolving
pools of
credit
card
receivables
generated
by account
holders
 
of cards
 
from American
Express,
 
Citibank,
 
JPMorgan
Chase,
Capital
 
One, and
 
Discover.
Additionally,
 
at May 1,
 
2021,April
30,
2022,
 
the
Company
 
had $0.8
$0.8
 
million
 
of
corporate
 
equities
 
and deferred
 
compensationdeferred
compensation
plan assets
of $11.6$11.0 million.
 
At January 30, 2021,
29, 2022, the
Company
 
had $0.7$0.8 million
 
of corporate
equities
 
and
deferred
 
compensation
 
plan assets
 
of $11.3$11.5 million.
 
All
of these
 
assets are
 
are recorded
 
within Other
assets
 
assets in the
 
the
Condensed
 
Consolidated
 
Balance
 
Sheets.
 
See Note
 
7, Fair
 
Value Measurements.
RECENT
 
ACCOUNTING
 
PRONOUNCEMENTS:
 
See Note 8, Recent Accounting Pronouncements.
 
 
 
 
THE CATO CORPORATION
QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
27
26
ITEM 3. QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK:
The
 
The Company
 
is
subject
 
to
market
 
rate
risk
 
from
exposure
 
to
changes
 
in
interest
 
rates
based
 
on
its
financing, investing and cash
 
cash management activities,
but the Company
 
Company does not believe
 
believe such exposure
is
material.
ITEM 4. CONTROLS AND PROCEDURES:
We carried out
 
an evaluation,
 
with the
 
participation
 
of our
Principal
 
Executive
 
Officer
 
and Principal
 
Financial
Officer, of the
 
effectiveness
 
of our disclosure controls and proc
eduresprocedures as of
May 1, 2021
. April 30, 2022.
 
Based on this
evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of
April 30,
2022,
 
our Principal
Executive
Officer and
Principal
Financial
Officer concluded
that, as
of May 1,
2021,
our disclosure
controls
and procedures,
as defined in Rule 13a-15(e), under the
 
under the Securities Exchange
Act of
 
1934 (the
“Exchange
 
Act of
1934 (the “Exchange Act”), were
 
were effective to
 
to ensure
 
that information
we are
 
required
 
to disclose in
 
in the
reports that
 
that we
file
 
or
submit under
 
the
Exchange Act
 
is
recorded, processed, summarized and
 
reported
within the time
 
time periods
specified
 
in the SEC’s rules and forms
 
forms and that such
 
such information
 
is accumulated
 
and
communicated
 
to our management,
 
including
 
our Principal
 
Executive
 
Officer
 
and Principal
 
Financial
 
Officer,
as appropriate
 
to allow
 
timely
 
decisions
 
regarding
 
required
 
disclosure.
CHANGES
 
IN INTERNAL
 
CONTROL
 
OVER FINANCIAL
 
REPORTING:
No change in
 
in the Company’s
 
internal
 
control over
 
over financial
 
reporting
 
(as defined
 
in Exchange
 
Act Rule
13a-
15(f)) has
 
occurred
 
during the
 
the Company’s fiscal
 
fiscal quarter
 
ended MayApril
 
1, 2021 that30,
 
2022 that has
materially
 
affected,
 
or is
is
reasonably
 
likely
to
materially
 
affect,
the
Company’s
 
internal
 
control
 
over
financial
 
reporting.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE CATO CORPORATION
PART
 
II OTHER
 
INFORMATION
28
27
ITEM 1.
 
LEGAL PROCEEDINGS:
Not Applicable
ITEM 1A.
 
RISK FACTORS:
In addition
 
to the
other
 
information
 
in this
 
report,
 
you should
 
carefully
 
consider
 
the factors
 
discussed
 
in Part
 
I,
“Item 1A. Risk
Factors” in our
 
Annual Report on Form
 
Report10-K for
 
on Form 10-K
for our fiscal year
ended January 30,
2021.29, 2022.
 
These risks could materially
 
affect our business,
financial
 
condition
or future results;
 
however, they are not
the only
 
risks we
 
face.
 
Additional
 
risks and
 
uncertainties
 
not currently
 
known to
 
us or that
 
we currently
 
deem
to
be
immaterial
 
may
also
materially
 
adversely
 
affect
our
business,
 
financial
 
condition
 
or
results
of
operations.
ITEM 2.
 
UNREGISTERED SALES OF EQUITY SECURITIES
 
AND USE OF PROCEEDS:
The following table summarizes the Company’s purchases of its common stock for the three months
ended May 1, 2021:
April 30, 2022:
ISSUER
 
PURCHASES
 
OF EQUITY
 
SECURITIES
Total Number of
Maximum Number
Shares Purchased as
(or Approximate Dollar
Total Number
Average
Part of Publicly
Value)
 
of Shares that may
of Shares
Price Paid
Announced Plans or
Yet be Purchased
 
Under
Period
Purchased
per Share (1)
Programs (2)
The Plans or Programs (2)
February 20212022
-70,967
$
-16.61
-70,967
March 20212022
122,119327,897
11.7715.01
122,119327,897
April 20212022
303,542211,064
13.8114.50
303,542211,064
Total
425,661609,928
$
13.2215.02
425,661609,928
1,445,488
840,119
(1)
Prices include trading costs.
(2)
As of January
 
30, 2021,29, 2022, the
 
Company’s share
 
repurchase program had
 
1,871,149450,047 shares remaining
remaining in
 
open
authorizations.
The
Board
of
Directors
authorized
an
additional
1,000,000
shares
for
repurchase under
the
program at
its
February 24,
2022 meeting.
 
During the
 
first quarter
 
quarter ended May
April
 
1, 2021,30,
2022,
 
the
Company
repurchased
repurchased
and
 
retired 425,661
609,928
shares
 
under
this
 
program for approximately
 
$5,629,130for
approximately $9,161,613 or an
 
an
average market price of $13.22
$15.02 per share.
 
As of May 1, 2021, the Company had 1,445,488 sharesApril 30,
2022,
the
Company
had
840,119
shares
remaining
in
 
open
authorizations.
 
There
is
 
no specified
 
specified
expiration date
for the
Company’s
repurchase program.
ITEM 3.
 
DEFAULTS
 
UPON SENIOR SECURITIES:
Not Applicable
 
 
 
 
 
 
THE CATO CORPORATION
PART
 
II OTHER
 
INFORMATION
29
28
ITEM 4.
 
MINE SAFETY DISCLOSURES:
Not Applicable
ITEM 5.
 
OTHER INFORMATION:
Not Applicable
 
ITEM 6.
 
EXHIBITS:
 
Exhibit
 
No.
Item
 
3.1
 
3.2
10.1
 
31.1*
 
31.2*
 
32.1*
 
32.2*
101.1*
The following materials from Registrant’s Quarterly Report on
Form
10-Q for
 
for the fiscal
 
fiscal quarter ended April
 
May 1,30, 2022,
 
2021, formatted in
Inline
XBRL:
 
(i)
Condensed
 
Consolidated
 
Statements
 
of Income
(Loss) and
Comprehensive
 
Income
 
(Loss)and
Comprehensive Income for
 
for the Three
 
Three Months
 
ended May 1,
2021 andApril
 
30,
2022
and May 2, 2020;
1, 2021;
 
(ii) Condensed
 
Consolidated
 
Balance
 
Sheets at
May 1,
 
2021 at April
30,
2022
and
 
January
 
30,29,
 
2021;2022;
 
(iii)
Condensed
Consolidated
Statements
 
of Cash Flows for the Three
 
Three Months Ended May 1, 2021
April 30, 2022
and May 2,
 
2020;May
1,
2021;
 
(iv)
Condensed
Consolidated
 
Statements
 
of
Stockholders’
 
Equity for the
Three Months Ended April 30, 2022 and
May
 
1, 2021 and
2021;
May 2, 2020;
and
 
(v)
Notes
 
to
Condensed
 
Consolidated
Financial
Statements.
104.1
Cover
Page
 
Interactive
Data
 
File (Formatted
(Formatted
 
in
Inline
 
XBRL
and
contained in the Interactive Data Files submitted as Exhibit 101.1*)
 
* Submitted electronically herewith.
 
 
 
 
 
 
 
THE CATO CORPORATION
PART
 
II OTHER
 
INFORMATION
30
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant
 
Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
 
authorized.
 
THE CATO
 
CORPORATION
May 27, 202126, 2022
/s/ John P.
 
D. Cato
Date
John P.
 
D. Cato
Chairman, President and
Chief Executive Officer
May 27, 202126, 2022
/s/ John R. HoweCharles D. Knight
Date
John R. HoweCharles D. Knight
Executive Vice President
Chief Financial Officer