Cato reports 2 percent increase in Q2 net income

The Cato Corporation reported net income of 15.9 million dollars or 0.57 dollar per diluted share for the second quarter ended July 30, 2016, compared to net income of 15.6 million or 0.56 dollar per diluted share for the same quarter last year, representing a rise of 2 percent. Earnings per diluted share increased 2 percent for the quarter. Sales however decreased 5 percent to 236.7 million dollars, while same-store sales were down 6 percent to last year.

“Although same-store sales for the quarter were well below our expectations, our earnings per diluted share increased over last year primarily due to lower incentive compensation and favourable adjustments to the effective tax rate as a result of continuing tax initiatives," stated John Cato, Chairman, President, and CEO.

Gross margin decreased 100 basis points to 37 percent as a percent of sales primarily due to higher buying, distribution and occupancy costs. During the second quarter, the company opened one store and relocated two stores and expects to open 12 new stores during 2016, down from its last estimate of 23 stores. As of July 30, 2016, the company operated 1,373 stores in 33 states, compared to 1,358 stores in 32 states as of August 1, 2015.

"Our expectations for the third quarter remain unchanged from what was included in the original guidance for the full year and reflect same store sales in the range of down 2 percent to flat and earnings per diluted share in the range of 0.13 dollar to 0.18 dollar versus 0.30 dollar last year. After adjusting our original 2016 guidance for second quarter actual results, our estimate of earnings per diluted share for the full year is now a range of 2.32 dollars to 2.41 dollars versus 2.39 dollars last year," added Cato.

Picture:Cato Fashion