8100 Denmark Road
(704) 554-8510
Gross margin decreased to 20.2% from 38.0% of sales in the quarter, due to a reduction in
merchandise contribution, combined with the effects of deleveraging from the sales decline related to
the phased reopening of stores and limited operating hours.
SG&A expenses as a percent of sales
decreased to 26.4% from 31.4% during the quarter primarily due to company-wide expense reduction
initiatives and elimination of incentive compensation.
A pre-tax loss and the beneficial effects of the
CARES Act resulted in $3.9 million tax benefit versus $2.1 million expense in the prior year.
During
the quarter, the Company paid $30 million on its line of credit, bringing the outstanding balance to $0.
The Company ended the quarter with unrestricted cash and short-term investments of $137.0 million
and full availability on its $35 million revolving line of credit.
Year
-to-date gross margin decreased to 18.4% of sales from 39.2% the prior year primarily due to a
reduction in merchandise contribution combined with the effects of deleveraging resulting from the
sales decline.
The year-to-date SG&A rate was 36.4% versus 30.0% last year primarily due to the
effects of deleveraging and store impairment charges of $5.3 million, partially offset by company-wide
expense reductions and the elimination of incentive compensation.
Income tax benefit for the first
half was $13.0 million compared to an expense of $6.4 million last year.
During the second quarter ended August 1, 2020, the Company opened 36 new stores which were
previously committed, relocated 1 store and permanently closed 3 stores.
As of August 1, 2020, the
Company operated 1,333 stores in 31 states, compared to 1,299 stores in 31 states as of August 3,
2019.
The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories
operating three concepts, “Cato,” “Versona” and “It’s
Fashion.”
The Company’s Cato stores offer
exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices
every day.
The Company also offers exclusive merchandise found in its Cato stores at
www.catofashions.com.
Versona is a unique fashion destination offering apparel
and accessories
including jewelry, handbags and
shoes at exceptional prices every day.
Select Versona merchandise
can also be found at www.shopversona.com.
It’s Fashion offers fashion with
a focus on the latest
trendy styles for the entire family at low prices every day.
Statements in this press release not historical in nature
ncluding, without limitation, statements regarding the Company’s
expected or estimated operational and financial results
and potential impact of the coronavirus are considered
“forward-
looking” within the meaning of The Private Securities Litigation
Reform Act of 1995.
Such forward-looking statements are
