Cato net income rises 10 percent in FY15

The Cato Corporation reported net income of 11.8 million dollars or 0.42 dollar per diluted share. For the quarter, net income increased 28 percent and earnings per diluted share increased 27 percent from the prior year. Full year fiscal 2015, net income was 66.8 million dollars or 2.39 dollars per diluted share. For the year, net income increased 10 percent and earnings per diluted share increased 11percent from the prior year.

"In 2015, Cato delivered its highest earnings and earnings per diluted share in Company history," commented John Cato, Chairman, President and Chief Executive Officer. "We were also able to achieve over $1 billion in sales, a major milestone for the company."

Detailed summary of fourth quarter and fiscal year

Sales were 247.3 million dollars, an increase of 4 percent from sales of 237.8 million dollars for the fourth quarter ended January 31, 2015. For the quarter same-store sales increased 1 percent from last year. For the year, the company's sales increased 2 percent to 1,001.4 million dollars from 2014 sales of 977.9 million dollars. Same-store sales for the year were flat to 2014.

Fourth quarter gross margin decreased to 36.1 percent of sales from 36.5 percent of sales in 2014 primarily due to reduced merchandise margins and higher occupancy costs. For 2015, gross margin decreased to 38.4 percent of sales from 38.6 percent of sales in 2014 due to higher buying and occupancy costs partially offset by higher merchandise margins.

The company maintained its quarterly dividend of 0.30 dollar per share or 1.20 dollars per year. For the fiscal year ended January 30, 2016, the company opened 31 stores, relocated 11 stores and closed five stores. As of January 30, 2016, the company operated 1,372 stores in 32 states.

Q1 outlook and 2016 estimate

Due to the continued volatility and overall difficulty in the retail environment, the Company believes 2016 could be a difficult year. The company estimates first quarter same-store sales to be in the range of flat to down 2 percent and its gross margin rate will increase to 42.8 percent to 42.6 percent from 42.3 percent in 2015 resulting in net income to be in a range of 32.2 million dollars to 31.2 million dollars, an increase of 4 percent to flat compared to 31.1 million dollars in the first quarter 2015.

The company estimates earnings per diluted share will be in a range of 1.16 dollars to 1.12 dollars, an increase of 5 percent to 1 percent compared to 1.11 dollars in first quarter 2015. For 2016, the company estimates same-store sales will be in a range of flat to down 2 percent and its gross margin rate be the range of 38.8 percent to 38.2 percent compared to 38.4 percent in 2015, resulting in net income in a range of 62.4 million dollars to 57.8 million dollars, a decrease of 7 percent to a decrease of 13 percent compared to 66.8 million dollars in 2015.

The company estimates earnings per diluted share will be in a range of 2.24 dollars to 2.07 dollars, a decrease of 6 percent to a decrease of 13 percent compared to 2.39 dollars in 2015. The company plans to open 23 new stores during the year. The company anticipates closing up to 17 stores by year-end.