Cato Fashions foresees challenging Q4

The Cato Corporation reported net income of 8.6 million dollars or 39 cents per diluted share for the third quarter ended October 30, 2021, compared to a net loss of 3.6 million dollars or 15 cents per diluted share for the third quarter ended October 31, 2020.

The company said in a statement that due to the impact of the unprecedented store closures, sales for the third quarter were 170.5 million dollars or an increase of 14 percent compared to Q32020 but compared to the same period in 2019, sales decreased 10 percent. The company’s same-store sales for the quarter increased 14 percent compared to 2020 and decreased 13 percent when compared to the same period in 2019.

“Third quarter sales softened due to decreasing inventory levels caused by worsening supply chain disruption.As we see these conditions persisting, coupled with the effects of rising inflation and potential government vaccine mandates, we believe the fourth quarter will be very challenging,” stated John Cato, the company’s chairman, president and chief executive officer.

Review of cato Fashions’ results

For the nine months ended October 30, 2021, the company reported net income of 43.3 million dollars or 1.93 dollars per diluted share compared to a net loss of 39.2 million dollars or 1.64 dollars per diluted share for the nine months ended October 31, 2020.

Sales for the nine months period were 587.7 million dollars, an increase of 42 percent. Compared to the same period in 2019, sales decreased 6 percent. Year-to-date same-store sales increased 41 percent to 2020 and decreased 9 percent compared to the same period in 2019.

Gross margin increased from 26.7 percent to 38.9 percent of sales in the quarter due to higher merchandise margins. Year-to-date, the company permanently closed six stores. As of October 30, 2021, the company operates 1,324 stores in 32 states, compared to 1,347 stores in 33 states as of October 31, 2020.