The Cato Corporation reported net income of $16.9 million or $.58 per diluted share for the first quarter ended May 3, 2008, compared to net income of $18.7 million or $.59 per diluted share for the first quarter ended May 5, 2007. Net income decreased 10% and earnings per diluted share decreased 2%.
The favorable comparison between the net income change and the earnings per diluted share change is due to last year's repurchase of over 3 million shares. Sales for the first quarter were $225.8 million, a 1% increase over sales of $224.1 million for the first quarter last year. The Company's first quarter comparable store sales decreased 2%.
"Gross margin was above expectations due to tight inventory management and somewhat offset the impact of the 2% decrease in comp store sales," said John Cato, Chairman, President, and Chief Executive Officer. "We continue to see weakness in the women's specialty apparel segment, and still expect comparable store sales to be in the range of down 3% to flat for the second quarter and for the balance of the year.
We remain comfortable with our original guidance for the balance of the year including our estimate of second quarter earnings per diluted share in the range of $.28 to $.33 versus $.39 last year. After adjusting our original guidance for first quarter results, our estimate of earnings per diluted share for the full year is now a range of $.80 to $.95 versus $1.03 last year."
The Company's effective tax rate for the first quarter was above expectations due to FIN 48 adjustments which unfavorably impacted earnings per diluted share by approximately $.02. The Company still estimates its effective tax rate for the year will be 35.3%.
During the first quarter, the Company opened 19 stores and closed 11 stores. As of May 3, 2008, the Company operated 1,326 stores in 32 states, compared to 1,286 stores in 31 states as of May 5, 2007.