Exhibit 99.1
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NEWS RELEASE | ||
FOR IMMEDIATE RELEASE | ||
CEO Approval ____________ |
For Further Information Contact:
Stuart L. Uselton
Executive Vice President
Chief Administrative Officer
704-940-7832
Stuart L. Uselton
Executive Vice President
Chief Administrative Officer
704-940-7832
CATO REPORTS 1Q EPS DOWN 2%
Provides 2Q and Updates 2008 Guidance
Provides 2Q and Updates 2008 Guidance
Charlotte, NC (May 22, 2008) — The Cato Corporation (NYSE: CTR) today reported net income of $16.9 million or $.58 per diluted share for the first quarter ended May 3, 2008, compared to net income of $18.7 million or $.59 per diluted share for the first quarter ended May 5, 2007. Net income decreased 10% and earnings per diluted share decreased 2%. The favorable comparison between the net income change and the earnings per diluted share change is due to last year’s repurchase of over 3 million shares. Sales for the first quarter were $225.8 million, a 1% increase over sales of $224.1 million for the first quarter last year. The Company’s first quarter comparable store sales decreased 2%.
“Gross margin was above expectations due to tight inventory management and somewhat offset the impact of the 2% decrease in comp store sales,” said John Cato, Chairman, President, and Chief Executive Officer. “We continue to see weakness in the women’s specialty apparel segment, and still expect 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 remain comfortable with our original guidance for the balance of the year including our estimate of second quarter earnings per diluted share in the range of $.28 to $.33 versus $.39 last year. After adjusting our original guidance for first quarter results, our estimate of earnings per diluted share for the full year is now a range of $.80 to $.95 versus $1.03 last year.”
The Company’s effective tax rate for the first quarter was above expectations due to FIN 48
8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510
adjustments which unfavorably impacted earnings per diluted share by approximately $.02. The Company still estimates its effective tax rate for the year will be 35.3%.
During the first quarter, the Company opened 19 stores and closed 11 stores. As of May 3, 2008, the Company operated 1,326 stores in 32 states, compared to 1,286 stores in 31 states as of May 5, 2007.
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 2008 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 onForm 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.
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8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED MAY 3, 2008 AND MAY 5, 2007
(Dollars in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED MAY 3, 2008 AND MAY 5, 2007
(Dollars in thousands, except per share data)
Quarter Ended | ||||||||||||||||
May 3, | % | May 5, | % | |||||||||||||
2008 | Sales | 2007 | Sales | |||||||||||||
REVENUES | ||||||||||||||||
Retail sales | $ | 225,791 | 100.0 | % | $ | 224,134 | 100.0 | % | ||||||||
Other income (principally finance, late fees and layaway charges) | 3,037 | 1.4 | % | 3,094 | 1.4 | % | ||||||||||
Total revenues | 228,828 | 101.4 | % | 227,228 | 101.4 | % | ||||||||||
GROSS MARGIN (Memo) | 84,171 | 37.3 | % | 80,712 | 36.0 | % | ||||||||||
COSTS AND EXPENSES, NET | ||||||||||||||||
Cost of goods sold | 141,620 | 62.7 | % | 143,422 | 64.0 | % | ||||||||||
Selling, general and administrative | 56,317 | 24.9 | % | 51,136 | 22.8 | % | ||||||||||
Depreciation | 5,610 | 2.5 | % | 5,391 | 2.4 | % | ||||||||||
Interest and other income | (1,901 | ) | -0.8 | % | (1,893 | ) | -0.8 | % | ||||||||
Cost and expenses, net | 201,646 | 89.3 | % | 198,056 | 88.4 | % | ||||||||||
Income Before Income Taxes | 27,182 | 12.1 | % | 29,172 | 13.0 | % | ||||||||||
Income Tax Expense | 10,329 | 4.6 | % | 10,502 | 4.7 | % | ||||||||||
Net Income | $ | 16,853 | 7.5 | % | $ | 18,670 | 8.3 | % | ||||||||
Basic Earnings Per Share | $ | 0.58 | $ | 0.60 | ||||||||||||
Basic Weighted Average Shares | 29,095,913 | 31,352,592 | ||||||||||||||
Diluted Earnings Per Share | $ | 0.58 | $ | 0.59 | ||||||||||||
Diluted Weighted Average Shares | 29,163,031 | 31,897,676 | ||||||||||||||
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
May 3, | May 5, | February 2, | ||||||||||
2008 | 2007 | 2008 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS | ||||||||||||
Current Assets | ||||||||||||
Cash and cash equivalents | $ | 42,091 | $ | 21,164 | $ | 21,583 | ||||||
Short-term investments | 85,138 | 132,450 | 92,995 | |||||||||
Accounts receivable — net | 45,570 | 45,287 | 45,282 | |||||||||
Merchandise inventories | 116,869 | 117,037 | 118,679 | |||||||||
Other current assets | 14,496 | 14,429 | 14,511 | |||||||||
Total Current Assets | 304,164 | 330,367 | 293,050 | |||||||||
Property and Equipment — net | 122,936 | 126,809 | 123,190 | |||||||||
Other Assets | 4,548 | 4,361 | 4,552 | |||||||||
TOTAL | $ | 431,648 | $ | 461,537 | $ | 420,792 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current Liabilities | $ | 147,616 | $ | 137,464 | $ | 148,936 | ||||||
Noncurrent Liabilities | 24,106 | 32,115 | 24,486 | |||||||||
Stockholders’ Equity | 259,926 | 291,958 | 247,370 | |||||||||
TOTAL | $ | 431,648 | $ | 461,537 | $ | 420,792 | ||||||