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Net income at Cato Corp soars 28% in Q4FY16
18
Mar '16
Courtesy: CATO
Courtesy: CATO
Net income at specialty retailer of value priced fashion apparel and accessories, Cato Corporation soared 28 per cent year on year for the three months period ended January 30, 2016.

For the fourth quarter of fiscal 2016, the company reported net income of $11.8 million or $0.42 per diluted share, compared to net income of $9.2 million or $0.33 per diluted share in the fiscal ago quarter.

“Resultantly, net income increased 28 per cent and earnings per diluted share rose 27 per cent, both growing over the prior fiscal's fourth quarter,” Cato said in a press release.

Sales for fourth quarter of fiscal 2016 rose slower at $247.3 million, up 4 per cent from sales of $237.8 million for the fourth quarter of fiscal 2015, while same-store sales rose just 1 per cent.

In the reporting quarter, gross margin declined to 36.1 per cent of sales from 36.5 per cent in the earlier fiscal's fourth quarter.

“Gross margin primarily reduced due to merchandise margins and higher occupancy costs,” the apparel explained in the press release.

SG&A expenses for the reporting quarter were 28.6 per cent of sales as against 30.6 per cent and were down due to lower accrued incentive compensation, which is based upon performance to incentive plan targets.

The company's effective income tax rate for the quarter increased to 29.6 per cent from 19.6 per cent in the last fiscal's same quarter, due to impact of favourable tax adjustments in the fourth quarter of fiscal 2015.

During the fiscal, Cato opened 31 stores, relocated 11 stores and closed five stores and as of January 30, 2016, operated 1,372 stores in 32 states.

“Cato continues to maintain a strong balance sheet, with approximately $283 million in cash and short-term investments and no debt," CEO John Cato said.

In its outlook for fiscal 2017, Cato believes the fiscal could be difficult, due to the continued volatility and overall difficulty in the retail environment.

Cato estimates first quarter of fiscal 2017 same-store sales to be in the range of flat to down 2 per cent, but expects gross margin rate will remain between 42.6-42.8 per cent. (AR)

Fibre2Fashion News Desk – India

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