8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
EXHIBIT 99.1
The CATO Corporation
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
CATO REPORTS 2Q NET LOSS
CHARLOTTE, N.C. (August 20, 2020) –– The Cato Corporation (NYSE: CATO) today reported a net
loss of $7.2 million or ($0.30) per diluted share for the second quarter ended August 1, 2020,
compared to net income of $11.9 million or $0.48 per diluted share for the second quarter ended
August 3, 2019. Sales for the second quarter were $166.3 million, or a decrease of 21% from sales
of $210.4 million for the second quarter ended August 3, 2019. The Company’s same-store sales for
the quarter decreased 24% to the same period last year.
As previously announced Cato closed all stores due to the COVID-19 pandemic beginning March 19,
2020. On May 1, 2020, the Company began reopening stores in a phased approach, with limited
operating hours, consistent with local health and safety guidelines and regulations. As of June 15,
2020, all stores had reopened.
For the six months ended August 1, 2020, the Company reported a net loss of $35.6 million or ($1.48)
per diluted share, compared to net income of $33.1 million or $1.34 per diluted share for the six
months ended August 3, 2019. Sales for the six months ended August 1, 2020 were $265.1 million,
down 40% to sales of $438.4 million for the six months ended August 3, 2019. Year -to-date same-
store sales decreased 39%.
“Sales softened through the quarter and into early August. As we see this trend continuing, we are
cautious about the second half of the year,” stated John Cato, Chairman, President, and Chief
Executive Officer. “And we remain committed to protecting our customers, associates and the
communities we serve, in light of the unprecedented situation regarding the COVID-19 pandemic.”
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
Gross margin decreased to 20.2% from 38.0% of sales in the quarter, due to a reduction in
merchandise contribution, combined with the effects of deleveraging from the sales decline related to
the phased reopening of stores and limited operating hours. SG&A expenses as a percent of sales
decreased to 26.4% from 31.4% during the quarter primarily due to company-wide expense reduction
initiatives and elimination of incentive compensation. A pre-tax loss and the beneficial effects of the
CARES Act resulted in $3.9 million tax benefit versus $2.1 million expense in the prior year. During
the quarter, the Company paid $30 million on its line of credit, bringing the outstanding balance to $0.
The Company ended the quarter with unrestricted cash and short-term investments of $137.0 million
and full availability on its $35 million revolving line of credit.
Year -to-date gross margin decreased to 18.4% of sales from 39.2% the prior year primarily due to a
reduction in merchandise contribution combined with the effects of deleveraging resulting from the
sales decline. The year-to-date SG&A rate was 36.4% versus 30.0% last year primarily due to the
effects of deleveraging and store impairment charges of $5.3 million, partially offset by company-wide
expense reductions and the elimination of incentive compensation. Income tax benefit for the first
half was $13.0 million compared to an expense of $6.4 million last year.
During the second quarter ended August 1, 2020, the Company opened 36 new stores which were
previously committed, relocated 1 store and permanently closed 3 stores. As of August 1, 2020, the
Company operated 1,333 stores in 31 states, compared to 1,299 stores in 31 states as of August 3,
2019.
The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories
operating three concepts, “Cato,” “Versona” and “It’s Fashion.” The Company’s Cato stores offer
exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices
every day. The Company also offers exclusive merchandise found in its Cato stores at
www.catofashions.com. Versona is a unique fashion destination offering apparel and accessories
including jewelry, handbags and shoes at exceptional prices every day. Select Versona merchandise
can also be found at www.shopversona.com. It’s Fashion offers fashion with a focus on the latest
trendy styles for the entire family at low prices every day.
Statements in this press release not historical in nature
ncluding, without limitation, statements regarding the Company’s
expected or estimated operational and financial results and potential impact of the coronavirus are considered “forward-
looking” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
based on current expectations that are subject to known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those contemplated by the forward-looking statements. Such factors include,
but are not limited to, any actual or perceived deterioration in the conditions that drive consumer confidence and
spending, including, but not limited to, prevailing social, economic, political and public health conditions and uncertainties,
levels of unemployment, fuel, energy and food costs, wage rates, tax rates, interest rates, home values, consumer net
worth and the availability of credit; changes in laws or regulations affecting our business including tariffs; uncertainties
regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing
pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; our ability to
successfully open new stores as planned and our ability of any such new stores to grow and perform as expected;
adverse weather, public health threats (including the global coronavirus (COVID-19) outbreak) or similar conditions that
may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess
inventory at anticipated margins; and other factors discussed under “Risk Factors” in Part I, Item 1A of the Company’s
most recently filed annual report on Form 10-K and in other reports the Company files with or furnishes to the SEC from
time to time. The Company does not undertake to publicly update or revise the forward-looking statements even if
experience or future changes make it clear that the projected results expressed or implied therein will not be realized. The
Company is not responsible for any changes made to this press release by wire or Internet services.
# # #
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED AUGUST 1, 2020 AND AUGUST 3, 2019
(Dollars in thousands, except per share data)
Quarter Ended
Six Months Ended
August 1,
%
August 3,
%
August 1,
%
August 3,
%
2020
Sales
2019
Sales
2020
Sales
2019
Sales
REVENUES
$
166,265
100.0%
$
210,357
100.0%
$
265,078
100.0%
$
438,423
100.0%
1,905
1.1%
2,224
1.1%
3,824
1.4%
4,510
1.0%
168,170
101.1%
212,581
101.1%
268,902
101.4%
442,933
101.0%
GROSS MARGIN (Memo)
33,529
20.2%
79,985
38.0%
48,745
18.4%
171,968
39.2%
COSTS AND EXPENSES, NET
132,736
79.8%
130,372
62.0%
216,333
81.6%
266,455
60.8%
43,957
26.4%
66,066
31.4%
96,468
36.4%
132,056
30.0%
3,488
2.1%
3,836
1.8%
7,494
2.8%
7,679
1.8%
(961)
-0.6%
(1,693)
-0.8%
(2,812)
-1.1%
(2,829)
-0.7%
179,220
107.8%
198,581
94.4%
317,483
119.8%
403,361
92.0%
Income (Loss) Before Income Taxes
(11,050)
-6.7%
14,000
6.7%
(48,581)
-18.3%
39,572
9.0%
Income Tax (Benefit)/Expense
(3,880)
-2.3%
2,134
1.0%
(12,994)
-4.9%
6,450
1.5%
Net Income (Loss)
$
(7,170)
-4.3%
$
11,866
5.6%
$
(35,587)
-13.4%
$
33,122
7.6%
Basic Earnings Per Share
$
(0.30)
$
0.48
$
(1.48)
$
1.34
Diluted Earnings Per Share
$
(0.30)
$
0.48
$
(1.48)
$
1.34
8100 Denmark Road
P.O. Box 34216
Charlotte, NC 28234
(704) 554-8510
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
August 1,
February 1,
2020
2020
(Unaudited)
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
36,565
$
11,824
Short-term investments
100,391
200,387
Restricted cash
3,917
3,896
Accounts receivable - net
39,037
26,088
Merchandise inventories
88,280
115,365
Other current assets
12,460
5,237
Total Current Assets
280,650
362,797
Property and Equipment – net
84,938
88,667
Noncurrent Deferred Income Taxes
5,911
8,636
Other Assets
23,142
24,073
Right-of-Use Assets, net
201,776
200,803
$
596,417
$
684,976
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
$
96,149
$
136,153
Current Lease Liability
57,878
63,149
Noncurrent Liabilities
23,663
21,976
Lease Liability
152,508
147,184
Stockholders' Equity
266,219
316,514
$
596,417
$
684,976