Net income at specialty retailer of value-priced fashion apparel and accessories - The Cato Corporation rose 6 percent year-on-year for the second fiscal quarter ended August 2, 2014.
Cato posted net income of $15.7 million or $0.56 per diluted share in the second quarter of 2014, compared to net income of $14.8 million or $0.51 per diluted share for the second quarter ended August 3, 2013.
CATO said its earnings per share boosted $0.03 from share repurchases in the second quarter of 2014.
Sales for the second quarter of 2014 went up to $243.8 million, up 6 percent from $229.4 million in the prior year second quarter, while same-store sales increased 3 percent.
Second quarter gross margin touched 38.9 percent in the quarter under review against 36.8 percent in the corresponding quarter of 2013, which Cato said was primarily due to higher merchandise margins.
Second quarter of 2014 SG&A costs as a percent of sales increased to 28.0 percent from 25.7 percent last year, primarily as a result of higher incentive compensation and point-of-sale (POS) equipment upgrades.
The effective tax rate for the second quarter of 2014 was 36.8 percent compared to 36.0 percent, a year earlier. The reduction in tax rate was primarily due to the lack of the Work Opportunity Tax Credit (WOTC) this year, which has not been renewed by Congress, Cato informed.
"Second quarter same-store sales were in line with our year-to-date trend. However, we continue to expect the second half earnings per diluted share will be within our original guidance range, updated for share repurchases, of $.21 to $.30", said CEO John Cato.
During the first half of 2014, Cato Corp opened 11 new stores, relocated one store and closed three stores. It now expects to open 46 stores, down from the original plan of 65 in the current fiscal year.
As of August 2, 2014, Cato operated 1,328 stores in 32 states, compared to 1,306 stores in 31 states as of August 3, 2013.