Cato reports 2 percent rise in Q2 sales

The Cato Corporation reported that sales for the second quarter ended August 1, 2015 were 249.2 million dollars, up 2 percent from sales of 243.8 million dollars last year. Second quarter same-store sales were flat to last year.

Net income for the quarter was 15.6 million dollars or 0.56 dollar per diluted share, compared to net income of 15.7 million dollars or 0.56 dollar per diluted share for the second quarter ended August 2, 2014. Net income and earnings per diluted share were flat to the prior year.

“Sales continue to be challenging in the current retail environment,” said John Cato, Chairman, President, and Chief Executive Officer, adding, “We expect second half earnings per diluted share will be within our original guidance range of 0.46 dollar to 0.55 dollar.”

For the six months ended August 1, 2015, the company earned net income of 46.7 million dollars or 1.67 dollars per diluted share, compared with net income of 45.7 million dollars or 1.61 dollars per diluted share for the six months ended August 2, 2014. Net income increased 2 percent and earnings per diluted share increased 4 percent. Sales for the first half were 530.8 million dollars, up 1 percent to the prior year's first half sales of 526.2 million dollars. Same-store sales were down 2 percent from the prior year.

Second quarter gross margin was 38 percent compared to 39 percent last year due primarily to lower merchandise margins. While earnings guidance per diluted share for the second half remains unchanged, by quarter, earnings per share are estimated to be in the range of 0.12 dollar to 0.16 dollar against 0.20 dollar last year for the third quarter and 0.35 dollar to 0.39 dollar versus 0.33 dollar last year for the fourth quarter. Comparable store sales for both the third and fourth quarters are estimated to be in the range of down 2 percent to flat. Based on year-to-date results and this guidance for the second half, earnings per diluted share are expected to be within the range of 2.10 dollars to 2.23 dollars versus 2.15 dollars last year, a decrease of 2 percent to an increase of 4 percent.

During the first half, the company opened 14 new stores, relocated five stores and closed two stores. The company now expects to open 40 stores, down from the original plan of 45. As of August 1, 2015, the Cato Corporation operated 1,358 stores in 32 states, compared to 1,328 stores in 32 states as of August 2, 2014.