CHARLOTTE, N.C., Nov. 17, 2022 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported a net loss of $4.5 million or ($0.21) per diluted share for the third quarter ended October 29, 2022, compared to net income of $8.6 million or $0.39 per diluted share for the third quarter ended October 30, 2021. 

Sales for the third quarter ended October 29, 2022 were $174.9 million, an increase of 3% from sales of $170.5 million for the third quarter ended October 30, 2021.  The Company's same-store sales for the quarter increased 3% compared to 2021.

For the nine months ended October 29, 2022, the Company reported net income of $3.0 million or $0.14 per diluted share, compared to net income of $43.3 million or $1.93 per diluted share for the nine months ended October 30, 2021.  Sales for the nine months ended October 29, 2022 were $574.9 million, a decrease of 2% to sales of $587.7 million for the nine months ended October 30, 2021.  Year-to-date same-store sales decreased 2% compared to 2021.

"We are appreciative of the ongoing support of our customers, especially considering the unrelenting pressure inflation has had on their ability to spend on discretionary items such as fashion apparel.  The actions we've taken to improve our inventory levels, including increased markdowns, has put pressure on our financial performance during the quarter, as anticipated," stated John Cato, Chairman, President, and Chief Executive Officer.  "We've made good progress, but we will continue to make adjustments to improve our inventory position and to offer our customers great fashion and customer service at a compelling value.  We anticipate the remainder of the year to be challenging, given the unusual economic environment."

Gross margin decreased from 38.9% to 29.3% of sales in the quarter due to lower merchandise margins driven by increased markdowns taken in an effort to align inventory with sales trends and increased freight and distribution costs.  SG&A expenses as a percent of sales decreased from 36.6% to 35.1% of sales during the quarter primarily due to reduced incentive compensation expense, partially offset by increased store payroll expense, reflecting more normalized operations, coupled with a higher wage environment. Tax benefit for the quarter was $4.7 million versus a $5.7 million tax benefit in the prior year.

Year-to-date gross margin decreased to 32.5% of sales from 41.6% the prior year primarily due to decreased merchandise margins driven by increased markdowns taken to align inventory with sales trends and to clear late merchandise, coupled with increased freight and distribution costs.  The year-to-date SG&A rate was 31.8% versus 33.5% primarily due to lower incentive compensation expense, partially offset by increased store payroll expense, which is a reflection of more normalized operations and a higher wage environment.  Income tax expense for the nine-month period was $3.0 million, compared to $1.9 million last year.

During the third quarter ended October 29, 2022, the Company opened 7 stores and closed 2 stores.  As of October 29, 2022, the Company has 1,317 stores in 32 states, compared to 1,324 stores in 32 states as of October 30, 2021.

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 that express a belief, expectation or intention, as well as those that are not a historical fact, including, without limitation, statements regarding the Company's expected or estimated operational financial results, activities or opportunities, and potential impacts and effects of the coronavirus 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, 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 and food costs, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of credit; changes in laws or regulations affecting our business including but not limited to tariffs; uncertainties regarding the impact of any governmental action regarding, or responses to, the foregoing conditions; competitive factors and pricing pressures; our ability 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 the ability of any such new stores to grow and perform as expected; adverse weather, public health threats (including the global coronavirus (COVID-19) outbreak) or similar conditions that may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess inventory at anticipated margins; and other factors discussed under "Risk Factors" in Part I, Item 1A  of the Company's most recently filed annual report on Form 10-K and in other reports the Company files with or furnishes to the SEC from time to time.  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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SOURCE The Cato Corporation