The Cato Corporation reported record net income of $27.1 million or $.92 per diluted share for the first quarter ended May 1, 2010, compared to net income of $18.8 million or $.64 per diluted share for the first quarter ended May 2, 2009. Net income increased and earnings per diluted sharebothincreased 44% for the quarter. Sales for the first quarter were $259.8 million, a 9% increase over sales of $238.1 million for the first quarter ended May 2, 2009. The Company's same store sales increased 8% in the first quarter.
"Strong Easter sales and favorable weather were driving factors in generating a record quarter," commented John Cato, Chairman, President, and Chief Executive Officer. "A significant degree of uncertainty remains in the economic outlook in many of our markets and for many of our customers. Based on that uncertainty, we are continuing to take a conservative position with our sales expectations and estimate same store sales will be in the range of down 3% to flat for the second quarter."
"Considering those sales expectations and a strong second quarter last year, we are maintaining our estimate of second quarter earnings per diluted share reflected in our 2010 guidance in the range of $.43 to $.46 versus $.56 last year. After adjusting our original 2010 guidance for first quarter actual results, our estimate of earnings per diluted share for the full year is now a range of $1.72 to $1.81 versus $1.55 last year."
Gross margin in the quarter increased 310 basis points to 43.5% principally as a result of lower markdowns in the quarter. SG&A expenses as a percent of sales decreased during the quarter primarily as a result of leveraging higher sales. On a dollar basis, SG&A increased 6% principally due to higher accrued incentive compensation and health and workers' compensation insurance costs slightly offset by lower store closing and legal costs. The Company's cash and short-term investments increased by $21.8 million during the quarter to $222.7 million.
During the first quarter, the Company opened four stores, relocated one store and closed three stores. Two of the closings were It's Fashion stores closed to open an It's Fashion Metro store in the same market. As of May 1, 2010, the Company operated 1,272 stores in 31 states, compared to 1,285 stores in 31 states as of May 2, 2009.
The Cato Corporation is a leading specialty retailer of value-priced women's fashion apparel and accessories operating two divisions, "Cato" and "It's Fashion".