Cato Fashions cuts Q4 loss, posts higher profits in FY18

The Cato Corporation, for its fourth quarter, reported a net loss of 3.2 million dollars or 13 cents per diluted share compared to a net loss of 15.5 million dollars or 62 cents per diluted share for the prior fourth quarter. Full-year fiscal net income was 30.5 million dollars or 1.23 cents per diluted share compared to 8.5 million dollars or 34 cents per diluted share for 2017. For the year, net income increased 257 percent and earnings per diluted share increased 262 percent from the prior year.

"We took corrective actions over the last 18 months to refine our merchandise and overall we feel the business stabilized in 2018," said John Cato, Chairman, President and CEO of the company in a statement, adding, "Due to the improved merchandise and strong inventory control we were able to increase gross margin and deliver higher profits."

Cato posts decrease in Q4 and FY18 sales

Sales for fiscal fourth quarter were 190.4 million dollars, a decrease of 10 percent, while on a comparable 13-week basis, total sales for the quarter decreased 3 percent and same-store sales decreased 2 percent from last year. For the year, the company's sales decreased 3 percent to 821.2 million dollars, while on a comparable 52-week basis, total sales decreased 1 percent and same-store sales were flat to last year.

Fourth-quarter gross margin increased to 33.1 percent of sales from 32.9 percent of sales in 2017. For 2018, gross margin increased to 36.4 percent of sales from 34.3 percent of sales in 2017. The company maintained its quarterly dividend of 33 cents per share or 1.32 cents over the year. For the fiscal year, the company relocated one store and closed 40 stores and as of February 2, 2019, operated 1,311 stores in 31 states.

For 2019, Cato expects to open 12 stores during the year, while closing up to 50 stores by year-end as leases expire with minimal financial impact.