For the quarter, net income decreased 22% and earnings per diluted share decreased 23% from the prior year. Full year fiscal 2012 net income was $61.7 million or $2.11 per diluted share compared to $64.8 million or $2.21 per diluted share for 2011. For the year, both net income and earnings per diluted share decreased 5% from the prior year.
Sales for fiscal fourth quarter ended February 2, 2013 were $232.0 million, an increase of 5% over sales of $221.5 million for the fourth quarter ended January 28, 2012. On a comparable 14-week basis, total sales for the quarter decreased 4% and same-store sales decreased 7% from last year.
For the year, the Company's sales increased 1% to $933.8 million over 2011 sales of $920.6 million. On a comparable 53-week basis, total sales for the fiscal year ended February 2, 2013 decreased 1% and same-store sales decreased 4% from last year.
"Cato faced a very difficult year in 2012," stated John Cato, Chairman, President and Chief Executive Officer. "The already weak economic environment was further impacted by political uncertainty, tax changes and higher costs that negatively impacted our customer."
4Q AND 2012 REVIEW
In the fourth quarter, gross margin increased 20 basis points over the prior year to 34.8% of sales primarily due to higher merchandise margin, somewhat offset by higher store occupancy costs. Selling, general and administrative expenses were 28.3% of sales, compared to 26.7% in the prior year. SG&A costs as a percent of sales were higher primarily due to the deleveraging of store payroll costs and higher impairment costs, partially offset by lower accrued incentive compensation. The Company's effective income tax rate increased to 40.0% from 35.2% last year due to higher state taxes and a correction of an immaterial prior period error.
For 2012, gross margin increased 10 basis points to 37.7% of sales primarily due to higher merchandise margin, partially offset by higher store occupancy costs. Selling, general and administrative expenses increased to 26.2% of sales due to the same reasons as the fourth quarter. The Company's effective income tax rate increased to 37.7% from 35.3% last year primarily due to the reasons discussed above for the fourth quarter.
"Cato continues to maintain a strong balance sheet, with approximately $200 million in cash and short-term investments and no debt," commented Mr. Cato. During 2012, the Company returned $87.2 million in profits to shareholders through dividends.
The dividends paid in 2012 include the acceleration of 2013's full dividend of $1.00 and a special dividend of $1.00. In late February 2013, the Company increased its dividend by an annualized amount of $0.20, a 20% increase over the annualized dividend rate for 2012, exclusive of the special dividend and accelerated 2013 dividend discussed above.
For the fiscal year ended February 2, 2013, the Company opened 34 stores, relocated nine stores and closed 12 stores. The closings for the year include two It's Fashion stores closed to open It's Fashion Metro stores in the same market. As of February 2, 2013, the Company operated 1,310 stores in 31 states.
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