Sales for the third quarter ended October 27, 2012 were $197.6 million, a 2% increase over sales of $194.1 million for the third quarter ended October 29, 2011. Same-store sales for the quarter decreased 2%.
For the nine months ended October 27, 2012, the Company earned net income of $53.7 million, compared to net income of $54.7 million for the nine months ended October 29, 2011, a decrease of 2%. Earnings per diluted share were $1.84 compared to $1.86 last year, a decrease of 1%.
Sales for the nine months ended October 27, 2012 were $701.8 million, up slightly from sales of $699.1 million for the nine months ended October 29, 2011. Year-to-date same-store sales decreased 2%.
For the quarter, the gross margin rate decreased to 34.0% from 35.2% last year primarily due to lower merchandise margin and higher occupancy costs related to store development. The SG&A rate for the quarter decreased slightly to 29.5% from 29.6% last year primarily due to lower accrued incentive compensation offset by higher payroll costs. The Company's effective tax rate for the third quarter was 31.6% vs. 31.4% last year.
Year-to-date, the gross margin rate was flat to the prior year at 38.6% of sales. The year-to-date SG&A rate was 25.5% versus 25.7% last year primarily due to lower accrued incentive compensation somewhat offset by higher payroll costs. The year-to-date effective tax rate increased to 37.3% vs. 35.4% last year, primarily due to the elimination of the benefit of the Work Opportunity Tax Credit for 2012.
"Our third quarter same-store sales reflect the difficult environment we have seen for much of the year and EPS for the quarter was in line with expectations," stated John Cato, Chairman, President, and Chief Executive Officer. "Our third quarter gross margin fell due to the deleveraging of costs related to growth in new stores.
"We continue to manage our costs well. We expect fourth quarter earnings per diluted share will be within our original guidance of $0.38 to $0.42 versus $0.35 last year, a 9% to 20% increase. For the year, earnings per diluted share are estimated to be in the range of $2.22 to $2.26 vs. $2.21 last year, a slight increase to an increase of 2%."
The Company's fourth quarter includes 14 weeks compared to 13 weeks in 2011 and the fiscal year includes 53 weeks compared to 52 weeks in 2011. Earnings guidance for both the fourth quarter and year reflects the impact of the additional week.
Year-to-date, the Company has opened 25 new stores, relocated seven stores, and closed seven stores, one of which was the closing of an It's Fashion store to open an It's Fashion Metro store in the same market. The Company now expects to open 37 stores during 2012. As of October 27, 2012, the Company operated 1,306 stores in 31 states, compared to 1,292 stores in 31 states as of October 29, 2011.
The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating three concepts, "Cato", "Versona" and "It's Fashion".
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