US' Cato posts $18.1 mn loss for 2024, eyes cost cuts in 2025

On a comparable 52-week basis, total sales decreased 6.8 per cent and same-store sales declined 3.1 per cent. Gross margin for the year decreased from 33.7 per cent of sales in 2023 to 32.0 per cent in 2024, primarily due to higher distribution and freight costs and the deleveraging of occupancy costs, the company said in a press release.

Selling, general and administrative (SG&A) expenses decreased to 36.0 per cent of sales in 2024 compared to 36.1 per cent in 2023, reflecting lower incentive compensation, insurance, closed store and impairment expenses, partially offset by increased payroll expenses as a percentage of sales. SG&A expenses fell by $21.3 million year-on-year. Income tax expense for the year was $1.9 million, down from $10.1 million in 2023, primarily due to a non-cash valuation allowance recorded against US federal and state deferred tax assets last year.

"Our fiscal 2024 sales trend was negatively impacted by continued pressure on our customers' discretionary spending levels, and a difficult third quarter which included three hurricanes and supply chain interruptions," said John Cato, chairman, president and chief executive officer.

For the fourth quarter ended February 1, 2025, the company reported a net loss of $14.1 million or $0.74 per diluted share, compared to a net loss of $23.4 million or $1.14 per diluted share for the same quarter a year earlier. Fourth-quarter sales were $155.3 million, down 10.0 per cent from $172.1 million in the prior-year quarter.

On a comparable 13-week basis, total sales decreased 5.1 per cent and same-store sales declined 0.8 per cent. Gross margin declined from 31.0 per cent of sales in 2023 to 28.0 per cent in 2024, reflecting increased markdowns, higher distribution and domestic freight costs, and the deleveraging of occupancy costs.

SG&A expenses as a percentage of sales decreased from 39.2 per cent in 2023 to 37.8 per cent in 2024, mainly due to lower incentive compensation, insurance, closed store and impairment expenses, partially offset by increased professional fees. SG&A expenses for the quarter declined by $8.8 million. Income tax expense for the quarter was $0.3 million, down from $10.9 million in the same quarter last year, also due to the prior year's non-cash valuation allowance.

"Our fourth quarter sales trend improved compared to our full year and third quarter sales trend. This was partly due to improvements in our supply chain and our Distribution Centre (DC) efficiency as we worked through our DC automation conversion issues. During the year we continued to focus on controlling expenses and improving our merchandise offering," the chairman said.

In 2024, the company opened one store, relocated four stores, and permanently closed 62 stores. As of February 1, 2025, Cato operated 1,117 stores across 31 states, down from 1,178 stores at the same point in the previous year. For 2025, the company plans to open up to 15 new stores and close up to 50 underperforming locations as leases expire, with these closures expected to have minimal financial impact.

"As we look ahead to 2025, we remain cautious in this challenging economic environment with pressures related to newly implemented tariffs and the uncertainty of potential additional tariffs. In 2025, we will continue our focus on reducing expenses. To this end, we eliminated approximately 40 corporate positions in February. We also expect expense reductions in other areas of our business as we continue our productivity and efficiency initiatives including reductions in our distribution and domestic freight expenses. We will continue our initiatives on improving our merchandise assortment, including introducing new offerings," stated Cato.

Fibre2Fashion News Desk (HU)