Home / Knowledge / News / Apparel/Garments / Higher merchandise costs upset specialty apparel firm Cato
Higher merchandise costs upset specialty apparel firm Cato
16
Mar '12
The Cato Corporation reported net income for the fourth quarter and year ended January 28, 2012. For the fourth quarter, the Company reported net income of $10.1 million or $0.35 per diluted share, compared to net income of $10.9 million or $0.37 per diluted share for the fourth quarter ended January 29, 2011 (the fourth quarter and fiscal year ended January 29, 2011 results have been restated to reflect the January 30, 2011 adoption of the cost method of accounting for merchandise inventories).

For the quarter, net income decreased 7% and earnings per diluted share decreased 5% from the prior year. Full year 2011 net income was a record $64.8 million or $2.21 per diluted share compared to $58.9 million or $2.00 per diluted share for 2010. For the year, net income increased 10% and earnings per diluted share increased 11% over the prior year.

Sales for fiscal fourth quarter ended January 28, 2012 were $221.5 million, a 1% decrease from sales of $224.0 million for the fourth quarter ended January 29, 2011. For the quarter, same-store sales decreased 4%. The Company's sales for 2011 were $920.6 million, an increase of 1% over 2010 sales of $913.1 million. For the year, same-store sales decreased 1%.

"In 2011, Cato delivered its second consecutive year of record earnings," commented John Cato, Chairman, President and Chief Executive Officer. "However, the second half of the year was very difficult both in terms of the sales environment and the increased merchandise costs we faced. In spite of these obstacles, our associates delivered another strong year by continuing to offer excellent customer service, great fashion and exceptional value. In the fourth quarter, sales were below expectations but we were able to generate earnings within our original guidance."

In the fourth quarter, gross margin decreased 70 basis points compared to the prior year to 34.6% of sales primarily due to the deleveraging of store occupancy and other fixed costs. Selling, general and administrative expenses were 26.7% of sales, flat to the prior year. The Company's effective income tax rate decreased to 35.2% from 38.6% last year primarily due to lower state taxes.

For 2011, gross margin decreased 70 basis points to 37.6% of sales primarily due to slightly lower merchandise margin and the deleveraging of store occupancy costs. Selling, general and administrative expenses decreased 160 basis points to 25.9% of sales primarily due to lower insurance costs and incentive compensation. The Company's effective income tax rate decreased to 35.3% from 36.6% last year primarily due to lower state taxes. Net income was 7.0% of sales vs. 6.4% last year.

"Cato continues to maintain a strong financial foundation with approximately $245 million in cash and short-term investments and no debt," commented Mr. Cato. During 2011, the Company returned $25.7 million in profits to shareholders through dividends and repurchased approximately 440,000 shares. The Company's annualized dividend is $0.92 per share after a 24% increase in 2011. This annualized dividend represents a yield of approximately 3.3% based on the March 14 closing price of $27.56.


Must ReadView All

Chinese firm sets up textile-garment chain in Vietnam

Apparel/Garments | On 13th Dec 2017

Chinese firm sets up textile-garment chain in Vietnam

Worldon Vietnam Co. Ltd under the Chinese Shenzhou Group is likely to ...

Courtesy: SATO Global Solutions

Information Technology | On 13th Dec 2017

Sensor networks improve inventory management

Sensor networks like radio frequency identification (RFID) and smart...

CMAI hails review of FTP as 'progressive package'

Apparel/Garments | On 13th Dec 2017

CMAI hails review of FTP as 'progressive package'

The Clothing Manufacturers' Association of India (CMAI) has hailed...

Interviews View All

Rahuul Jashnani
Jashn

‘Online economy has changed the whole dynamics of buying habits.’

C Kamatchisundaram
Voltas

ITME is an occasion not only to receive new leads but also to work on...

Priyanka
Studio Priyanka Rajiv

‘To reinvent the age-old tradition of embroidery to suit demographics and...

Hardik Sanghvi

Idealin Fogging Systems has been engaged in designing and manufacturing...

Harmeet Singh

New Delhi-based Jogindra Industries Private Limited provides an assortment ...

Ravindra Jain, Ashish Baid

Oswal Prints Private Limited has been manufacturing and exporting ethnic...

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

Vaanee Bhatia
Gritstones Clothing

<div>Delhi-based Gritstones Clothing offers quality and exemplary style...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

December 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.6%
No
12.0%
Skip
18.5%

Total Votes: 92

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
62.0%
No
30.4%
Skip
7.6%

Total Votes: 92

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.0%
No
9.8%
Skip
3.3%

Total Votes: 92

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
81.5%
No
8.7%
Skip
9.8%

Total Votes: 92


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search