2007 results reflect difficult retail environment, Cato Chairman

20 Mar '08

4 min read

The Cato Corporation reported net income for the fourth quarter and year ended February 2, 2008. For the fourth quarter, the Company reported a loss of $1.8 million or ($.06) per diluted share compared to net income of $12.7 million or $.40 per diluted share for the fourth quarter ended February 3, 2007.

Full year 2007 net income was $32.3 million or $1.03 per diluted share compared to $51.5 million or $1.62 per diluted share for 2006. For the year, net income and earnings per diluted share decreased 37% and 36% from 2006, respectively.

Sales for fiscal fourth quarter ended February 2, 2008 were $209.4 million as compared to sales of $230.7 million for the fourth quarter ended February 3, 2007, a decrease of 9%. Fourth quarter 2007 includes 13 weeks compared to 14 weeks in fourth quarter 2006.

On an equivalent 13-week basis, comparable store sales decreased 6% from last year. The Company's fiscal 2007 sales were $834.3 million as compared to fiscal 2006 sales of $862.8 million, a 3% decrease. Fiscal 2007 includes 52 weeks compared to 53 weeks in 2006. On an equivalent 52-week basis, comparable store sales decreased 4% from 2006.

"Our 2007 results reflect the difficult retail environment," said John Cato, Chairman, President and Chief Executive Officer. "Our comparable store sales decrease and the resulting markdowns were the primary contributors to the lower earnings."

2007 Review:
For 2007, gross margin decreased 220 basis points to 31.4% of sales due to lower sales and higher markdowns; selling, general and administrative expenses increased 70 basis points to 25.3% of sales primarily due to de-leveraging of expenses on a lower sales base with the increase partially offset by a reduction in incentive compensation; and net income decreased to 3.9% of sales from 6.0% in fiscal 2006.

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