Yesþx            Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso            Noþx

As of August 19,November 18, 2008, there were 27,821,12627,643,692 shares of Class A common stock and 1,743,525 shares of Class B common stock outstanding.

The condensed consolidated financial statements have been prepared from the accounting records of The Cato Corporation and its wholly-owned subsidiaries (the “Company”), and all amounts shown as of and for the periods ended August 2,November 1, 2008 and August 4,November 3, 2007 are unaudited. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such 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 the entire year.

The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2008.

The year-end condensed consolidated balance sheet data presented for fiscal year ended February 2, 2008 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Cash equivalents consist of highly liquid investments with original maturities of three months or less. Investments with original maturities beyond three months are classified as short-term investments.

Short-term investments are classified as available-for-sale. As they are available for current operations, they are classified in the Condensed Consolidated Balance Sheets as current assets. Available-for-sale securities are carried at estimated fair value, with unrealized gains and temporary losses, net of income taxes, reported as a component of accumulated other comprehensive income. Other than temporary declines in fair value of investments are recorded as a reduction in the cost of the investments in the accompanying Condensed Consolidated Balance Sheets and a reduction of interest and other income in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The amortization of premiums, accretion of discounts and realized gains and losses are included in interest and other income.

Merchandise inventories are stated at the lower of cost (first-in, first-out method) or market as determined by the retail inventory method.

On August 28,December 4, 2008, the Board of Directors maintained the quarterly dividend at $.165 per share or an annualized rate of $.66 per share. The dividend will be payable on January 5, 2009 to shareholders of record of the Company at the close of business on December 22, 2008.

SFAS No. 128,Earnings Per Share, requires dual presentation of basic EPS and diluted EPS on the face of all 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. While the Company’s articles of incorporation provide the right for the Board of Directors to declare dividends on Class A shares without declaration of commensurate dividends on Class B shares, the Company has historically paid the same dividends to both Class A and Class B shareholders and the Board of Directors has resolved to continue this practice. Accordingly, the Company’s allocation of income for purposes of 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.

Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and the Employee Stock Purchase Plan and the potential vestings of restricted stock computed using the treasury stock method.

The Company has two reportable segments: retail and credit. The Company operated its women’s fashion specialty retail stores in 31 states at August 2,November 1, 2008, principally in the southeastern United States. The Company offers its own credit card to its customers and all related credit authorizations, payment processing, and collection efforts are performed by a separate subsidiary of the Company.

The following schedule summarizes certain segment information (in thousands):

The following schedule summarizes the direct expenses of the credit segment which are reflected in selling, general and administrative expenses (in thousands):

The following is a summary of the changes in stock options outstanding during the sixnine months ended August 2,November 1, 2008:

The Company’s Employee Stock Purchase Plan allows eligible full-time employees to purchase a limited number of shares of the Company’s Class A Common Stock during each semi-annual offering period at a 15% discount through payroll deductions. During the sixnine months ended August 2,November 1, 2008 and August 4,November 3, 2007, the Company sold 18,15831,132 and 12,46325,535 shares to employees at an average discount of $2.15$2.26 and $3.30$3.19 per share, respectively, under the Employee Stock Purchase Plan. The compensation expense recognized for the 15% discount given under the Employee Stock Purchase Plan was approximately $39,000$70,000 and $41,000$81,000 for the sixnine months ended August 2,November 1, 2008 and August 4,November 3, 2007, respectively.

In accordance with SFAS No. 123R, the fair value of current restricted stock awards is estimated on the date of grant based on the market price of the Company’s stock and is amortized to compensation expense on a straight-line basis over the related vesting periods. As of August 2,November 1, 2008 and August 4,November 3, 2007, there was $6,342,000$5,860,000 and $5,786,000$5,330,000 of total unrecognized compensation cost related to nonvested restricted stock awards, which have a remaining weighted-average vesting period of 3.453.17 years and 4.013.76 years, respectively. The total fair value of the shares recognized as compensation expense during the secondthird quarter and sixnine months ended August 2,November 1, 2008 was $514,000$511,000 and $950,000$1,447,000 compared to $397,000 and $698,000$1,095,000 for the secondthird quarter and sixnine months ended August 4,November 3, 2007.

The following summary shows the changes in the shares of restricted stock outstanding during the sixnine months ended August 2,November 1, 2008:

For the quarter ended August 2,November 1, 2008, the Company’s effective tax rate was 34%35.4%. During the next 12 months, various taxing authorities’ statutes of limitations will expire which could result in a potential reduction of unrecognized tax benefits. In addition, certain federal and state examinations may close, the ultimate resolution of which could materially affect the effective tax rate.

In September 2006, the FASB issued SFAS 157,Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. Applicable provisions of SFAS 157 were adopted by the Company effective February 3, 2008. In February 2008, the FASB issued FASB Staff Position 157-2,Effective date of FASB Statement No. 157, which delayed for one year the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company has not yet determined the impact on its financial statements of the February 1, 2009 adoption of SFAS No. 157-2 as it pertains to non-financial assets and liabilities.

The following table sets forth information regarding the Company’s financial assets that are measured at fair value (in thousands).

auctions as of August 2,November 1, 2008. The Company has experienced continued reductions in its failed ARS and reasonably expects all remainingthe last ARS to either experience a successful auctionsauction or be called within a year and so has classified themit as a short term investments.

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 beliefs, intentions, plans and objectives for future operations, including those contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (4) statements relating to our operations or activities for fiscal 2008 and beyond, including, but not limited to, statements regarding expected amounts of capital expenditures and store openings, relocations, remodelings and closures; and (5) statements relating to our future contingencies. When possible, we have attempted to identify forward-looking statements by using words such as “expects,” “anticipates,” “approximates,” “believes,” “estimates,” “hopes,” “intends,” “may,” “plans,” “should” and variations of such words and similar expressions. We can give 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 date of this report, but subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements. Such factors include, but are not limited to, the following: general economic conditions including, but not limited to, the continuation or worsening of (i) the current adverse or recessionary conditions affecting the U.S. and global economies and consumer spending and (ii) the current adverse conditions in the U.S. and global credit markets; uncertainties regarding the impact of any governmental responses to the foregoing adverse economic and credit market conditions; competitive factors and pricing pressures; our ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions; inventory risks due to shifts in market demand; and other factors discussed under “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended February 2, 2008 (fiscal 2007), as amended or supplemented, and in other reports we file with or furnish to the SEC from time to time. We do not undertake, and expressly decline, any obligation to update any such forward-looking information contained in this report, whether as a result of new information, future events, or otherwise.

The Company’s accounting policies are more fully described in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K. As disclosed in Note 1 of Notes to Consolidated Financial Statements, the preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect 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 doubtful accounts receivable, reserves relating to workers’ compensation, general and auto insurance liabilities, reserves for group health insurance, reserves for inventory markdowns, calculation of asset impairment, shrinkage accrual and reserves for uncertain tax positions.

The Company’s critical accounting policies and estimates are discussed with the Audit Committee.

The following table sets forth, for the periods indicated, certain items in the Company’s unaudited Condensed Consolidated Statements of Income and Comprehensive Income as a percentage of total retail sales:

Total retail sales for the secondthird quarter were $231.0$179.8 million compared to last year’s secondthird quarter sales of $219.0$181.9 million, a 5% increase.1.2% decrease. Same-store sales increased 2%decreased 2.4% in the secondthird quarter of fiscal 2008. For the sixnine months ended August 2,November 1, 2008, total retail sales were $456.7$636.6 million compared to last year’s first sixnine months sales of $443.1$625.0 million, a 1.9% increase, and same-store sales remained flatdecreased 0.6% for the comparable sixnine month period. Total revenues, comprised of retail sales and other income (principally, finance charges and late fees on customer accounts receivable and layaway fees), were $233.9$182.8 million and $462.7$645.5 million for the secondthird quarter and sixnine months ended August 2,November 1, 2008, respectively, compared to $221.9$184.8 million and $449.2$634.0 million for the secondthird quarter and sixnine months ended August 4,November 3, 2007, respectively. The Company operated 1,2871,305 stores at August 2,November 1, 2008 compared to 1,3061,321 stores at the end of last year’s secondthird quarter. For the first sixnine months of 2008 the Company opened 3257 new stores, relocated 4 stores and closed 6370 stores.

Credit revenue of $2.5$2.6 million represented 1.1%1.4% of total revenues in the secondthird quarter of 2008, compared to 2007 credit revenue of $2.6 million or 1.2%1.4% of total revenues. The slight reduction in creditCredit revenue wasremained flat for the comparable periods due to lower finance charge andincome offset by slightly higher late fee income from lower sales under the Company’s proprietary credit card, partially offset by improved collections compared to the prior year.card. Credit revenue is comprised of interest earned on the Company’s private label credit card portfolio and related fee income. Related expenses include principally bad debt expense, payroll, postage and other administrative expenses and totaled $1.4$2.0 million in the secondthird quarter of 2008, flat compared to last year’s secondthird quarter expenses of $1.4$1.5 million. BadThe increase was due to a $0.5 million charge to bad debt expense was higheras other administrative expenses remained flat compared to the secondthird quarter and first six months of 2007, partially offset by lower administrative expenses.2007.

Other income in total, as included in total revenues, was $2.9 million and $5.9$8.9 million for the secondthird quarter and first sixnine months of fiscal 2008, compared to $3.0 million and $6.1$9.0 million for the prior year’s comparable three and six month period,nine months periods, respectively. The slight overall decrease resulted primarily from lower finance charges offset by an increase in layaway charges.

Cost of goods sold was $148.0$127.2 million, or 64.1%70.7% of retail sales and $289.6$416.8 million or 63.4%65.5% of retail sales for the secondthird quarter and first sixnine months of fiscal 2008, compared to $147.5$126.1 million, or 67.4%69.3% of retail sales and $290.9$417.0 million, or 65.7%66.7% of retail sales for the prior year’s comparable three and sixnine month period,periods, respectively. The overall increase in cost of goods sold as a percent of retail sales for the third quarter of fiscal 2008 resulted primarily from higher markdowns and buying and occupancy costs. The overall decrease in cost of goods sold as a percent of retail sales for the second quarter and first sixnine months of fiscal 2008 resulted primarily from lower markdowns partially offset by higher occupancy costs. The decrease in markdowns was primarily attributable to tight inventory management and higher sell-throughs of regular priced merchandise. Cost of goods sold includes merchandise costs, net of discounts and allowances, buying costs, distribution costs, occupancy costs, freight and inventory shrinkage. Net merchandise costs and in-bound freight are capitalized as inventory costs.

Depreciation expense was $5.7$5.6 million, or 2.5%3.1% of retail sales and $11.3$16.9 million or 2.5%2.6% of retail sales, for the secondthird quarter and first sixnine months of fiscal 2008, compared to $5.6$5.7 million, or 2.6%3.1% of retail sales and $11.0$16.7 million, or 2.5%2.7 % of retail sales, for prior year’s comparable three and sixnine month periods, respectively.

Interest and other income was $1.7$2.2 million, or 0.7%1.2% of retail sales and $3.6$5.8 million, or 0.8%0.9% of retail sales for the secondthird quarter and first sixnine months of fiscal 2008, compared to $2.3$2.2 million, or 1.1%1.2% of retail sales and $4.2$6.4 million, or 1.0% of retail sales, for the prior year’s comparable three and sixnine month periods, respectively. The decrease in the first nine months of fiscal 2008 resulted primarily from lower interest rates and lower investment balances.

Income tax expense was $6.2$0.5 million, or 0.3% of retail sales and $17.0 million, or 2.7% of retail sales, and $16.6 million, or 3.6% of retail sales, for the secondthird quarter and first sixnine months of fiscal 2008, compared to $6.1$1.0 million, or 2.8%0.6% of retail sales and $16.6$17.7 million, or 3.8%2.8% of retail sales, for the prior year’s comparable three and sixnine month periods. The slight increasedecrease for the secondthird quarter resulted from lower pre-tax income offset by a higher effective tax rate primarily due to lower tax credits. The effective income tax rate for the secondthird quarter of fiscal 2008 was 34.0%35.4% compared to 32.9%25.6% for the secondthird quarter of 2007. The decrease for the sixnine month period resulted from lower pre-tax income offset by a higher effective tax rate. The effective income tax rate for the first sixnine months of fiscal 2008 was 36.4% compared to 34.8%34.1% for the sixnine months of fiscal 2007.

The Company believes that its cash, cash equivalents and short-term investments, together with cash flows from operations and borrowings available under its revolving credit agreement, will be adequate to fund the Company’s planned capital expenditures, dividends, share repurchasespurchase of treasury stock and other operating requirements for fiscal 2008 and for the foreseeable future.

At August 2,November 1, 2008, the Company had working capital of $165.8$159.5 million compared to $209.6$193.2 million at August 4,November 3, 2007. Additionally, the Company had $2.2 million and $1.9 million invested in privately managed investment funds at August 2,November 1, 2008 and August 4,November 3, 2007, respectively, which are included in other assets on the Condensed Consolidated Balance Sheets.

At August 2,November 1, 2008, the Company had an unsecured revolving credit agreement, which providedprovides for borrowings of up to $35 million. The revolving credit agreement is committed until August 2010. The credit agreement contains various financial covenants and limitations, including the maintenance of specific financial ratios with which the Company was in compliance as of August 2,November 1, 2008. There were no borrowings outstanding under thisthese credit facilityfacilities during the first sixnine months ended August 2,November 1, 2008 or the fiscal year ended February 2, 2008.

At August 2,November 1, 2008 and August 4,November 3, 2007, the Company had approximately $4.8$5.9 million and $6.6$2.5 million, respectively, of outstanding irrevocable letters of credit relating to purchase commitments.

Expenditures for property and equipment totaled $10.5$17.4 million in the first sixnine months of fiscal 2008, compared to $9.6$14.3 million in last year’s first sixnine months. The expenditures for the first sixnine months of 2008 were primarily for store development and investments in new technology. For the full fiscal 2008 year, the Company is planningexpects to invest approximately $22.3$19.7 million for capital expenditures. This includes expenditures to openfor 70 planned new stores and to relocate 9 stores.

At August 2,November 1, 2008, the Company’s investment portfolio was primarily invested in governmental and other debt securities with maturities less than 36 months. These securities are classified as available-for-sale and are recorded on the balance sheet at fair value, with unrealized gains and temporary losses reported net of taxes as accumulated other comprehensive income. The Company does not use derivative financial instruments.

Other than temporary declines in fair value of investments are recorded as a reduction in the cost of investments in the accompanying Condensed Consolidated Balance Sheets. As of November 1, 2008, the Company had no other than temporary declines in investments.

The Company had 76 stores closed due to Hurricane Gustav. Of those 76 stores, only two were closed over thirty days and were reopened in November 2008. The Company is in the process of determining any loss due to damages incurred.business interruption losses.

The Company is subject to market rate risk from exposure to changes in interest rates based on its financing, investing and cash management activities, but the Company does not believe such exposure is material.

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 procedures as of August 2,November 1, 2008. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of August 2,November 1, 2008, our disclosure controls and procedures, as defined in Rule 13a-15(e), under the Securities Exchange Act of 1934 (the “Exchange Act”), were effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that 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.

No change in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a — 15(f)13a-15(f)) has occurred during the Company’s fiscal quarter ended August 2,November 1, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

     Not Applicable

     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 10-K for our fiscal year ended February 2, 2008. 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 and adversely affect our business, financial condition or results of operations.

     Not ApplicableThe following table summarizes the Company’s purchases of its common stock for the three months ended November 1, 2008:

     Not Applicable

     Following are the results of the matters voted upon and approved at the Company’s Annual Meeting which was held on May 22, 2008.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.