The Cato Corporation (CATO) 8-K CATO REPORTS 1Q EPS DOWN 9% Revises 2007 Guidance

Exhibit 99.1

The CATO Corporation

NEWS RELEASE

FOR IMMEDIATE RELEASE

CEO Approval ________

For Further Information Contact:

Thomas W. Stoltz
Executive Vice President
Chief Financial Officer
704-551-7201

CATO REPORTS 1Q EPS DOWN 9%
Revises 2007 Guidance

Charlotte, NC (May 24, 2007) — The Cato Corporation (NYSE: CTR) today reported net income of $18.7 million or $.59 per diluted share for the first quarter ended May 5, 2007, compared to net income of $20.8 million or $.65 per diluted share for the first quarter ended April 29, 2006. Net income decreased 10% and earnings per diluted share decreased 9% from the prior year (the difference in percentage change is due to rounding). Sales for the first quarter were $224.1 million, a 2% decrease from sales of $229.7 million for the first quarter last year. The Company’s first quarter comparable store sales decreased 5%.

“Lower sell-throughs of regular priced goods had a negative impact on sales and gross margin in the first quarter,” said John Cato, Chairman, President, and Chief Executive Officer. “As a result of higher than planned inventories at the end of the first quarter, we expect higher markdowns in the second quarter. Also, after two quarters of continuing weakness in our sales and the softness in the women’s specialty apparel segment, we are forecasting that trend to continue and now estimate comparable store sales to be in the range of down 3% to flat for the second quarter and for the balance of the year. We now expect second quarter earnings per diluted share to be in the range of $.27 to $.31 versus $.38 last year. For the year, we are estimating earnings per diluted share to be in the range of $1.11 to $1.31 versus $1.62 last year.”

During the first quarter, the Company opened 10 stores and relocated six stores. The Company

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

5

now expects to open an additional 70 new stores and close 10 for the balance of the year. As of May 5, 2007, the Company operated 1,286 stores in 31 states, compared to 1,252 stores in 31 states as of April 29, 2006.

The Cato Corporation is a leading specialty retailer of value-priced women’s fashion apparel operating two divisions, “Cato” and “It’s Fashion!”. The Company offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices, every day. Additional information on The Cato Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected financial results for the second quarter and year 2007 are considered “forward-looking” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations that are 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; competitive factors and pricing pressures; the Company’s ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand. Additional information concerning these and other important factors can be found in Item 1A. “Risk Factors” of the Company’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized. The Company is not responsible for any changes made to this press release by wire or Internet services.

# # #

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

6

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED MAY 5, 2007 AND APRIL 29, 2006
(Dollars in thousands, except per share data)

	Quarter Ended
	May 5,			%			April 29,			%
	2007			Sales			2006			Sales
REVENUES
Retail sales	$	224,134			100.0	%	$	229,741			100.0	%
Other income (principally finance, late fees and layaway charges)		3,094			1.4	%		3,319			1.5	%
Total revenues		227,228			101.4	%		233,060			101.5	%
GROSS MARGIN (Memo)		80,712			36.0	%		87,628			38.2	%
COSTS AND EXPENSES, NET
Cost of goods sold		143,422			64.0	%		142,113			61.8	%
Selling, general and administrative		51,132			22.8	%		54,567			23.8	%
Depreciation		5,391			2.4	%		5,168			2.3	%
Interest expense		4			0.0	%		10			0.0	%
Interest and other income		(1,893	)		-0.8	%		(1,552	)		-0.7	%
Cost and expenses, net		198,056			88.4	%		200,306			87.2	%
Income Before Income Taxes		29,172			13.0	%		32,754			14.3	%
Income Tax Expense		10,502			4.7	%		11,955			5.2	%
Net Income	$	18,670			8.3	%	$	20,799			9.1	%
Basic Earnings Per Share	$	0.60					$	0.67
Basic Weighted Average Shares		31,352,592						31,084,206
Diluted Earnings Per Share	$	0.59					$	0.65
Diluted Weighted Average Shares		31,897,676						31,814,193

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

	May 5,		April 29,		February 3,
	2007		2006		2007
	(Unaudited)		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	21,164	$	25,319	$	24,833
Short-term investments		132,450		95,752		98,709
Accounts receivable — net		45,287		47,791		45,958
Merchandise inventories		117,037		103,145		115,918
Other current assets		14,429		11,379		14,095
Total Current Assets		330,367		283,386		299,513
Property and Equipment — net		126,809		131,516		128,461
Other Assets		4,361		10,799		4,348
TOTAL	$	461,537	$	425,701	$	432,322
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities	$	137,464	$	135,515	$	123,049
Noncurrent Liabilities		32,115		32,787		32,480
Stockholders’ Equity		291,958		257,399		276,793
TOTAL	$	461,537	$	425,701	$	432,322

7