Cato earnings increase 7 percent in Q1

The Cato Corporation reported net income of 31.1 million dollars or 1.11 dollars per diluted share for the first quarter ended May 2, 2015, compared to net income of 30 million dollars or 1.04 dollars per diluted share for the first quarter ended May 3, 2014. Net income increased 4 percent and earnings per diluted share increased 7 percent for the quarter. Earnings per share benefited 0.03 dollars due to share repurchases in the first quarter of 2014. Sales for the first quarter were 281.6 million dollars, or flat compared to the first quarter ended May 3, 2014. The Company's same-store sales decreased 3 percent in the quarter.

"Although sales for the first quarter were below expectations, our earnings per diluted share increased over last year primarily due to lower incentive compensation expenses and a favorable tax adjustment," stated John Cato, Chairman, President, and Chief Executive Officer, adding, "Our expectations for the second 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 0.54 dollars to 0.57 dollars versus 0.56 dollars last year. Our estimate of earnings per diluted share for the full year is now a range of 2.10 dollars to 2.23 dollars versus 2.15 dollars last year."

Gross margin increased 50 basis points to 42.3 percent of sales primarily due to higher merchandise contribution in the quarter. During the first quarter, the company opened eight stores and closed two stores. As of May 2, 2015, the company operated 1,352 stores in 32 states, compared to 1,324 stores in 32 states as of May 3, 2014.