Store Operations - The Company operated 1,117 fashion specialty stores as of February 1, 2025, down from 1,178 stores in fiscal 2023, representing a decrease of approximately 5.2%[35] - The Company opened 5 new stores and closed 66 stores in fiscal 2024, resulting in a net decrease of 61 stores[35] - The Company’s stores average approximately 4,500 square feet in size and are primarily located in strip shopping centers[31][32] - The Company's ability to open new stores is dependent on securing suitable locations and navigating economic downturns in the commercial real estate industry[62][63] Financial Performance - Retail sales decreased by 8.3% to $642.1 million in fiscal 2024 compared to $700.3 million in fiscal 2023[135] - Total revenues decreased by 8.2% to $649.8 million in fiscal 2024 compared to $708.1 million in fiscal 2023[135] - Same-store sales decreased by 3.2% in fiscal 2024, primarily due to lower transactions[135] - The net loss for the fiscal year ended February 1, 2025, was $18.1 million, compared to a net loss of $23.9 million in fiscal 2024[187] - Basic and diluted earnings per share for fiscal 2025 were both $(0.97), compared to $(1.17) in fiscal 2024[187] Cost and Expenses - Cost of goods sold increased to 68.0% of retail sales in fiscal 2024, up from 66.3% in fiscal 2023[134] - Total gross margin dollars decreased by 12.8% to $205.7 million in fiscal 2024 from $236.0 million in fiscal 2023[138] - Selling, general and administrative expenses (SG&A) were $231.5 million in fiscal 2024, down 8.4% from $252.8 million in fiscal 2023, maintaining SG&A as 36.1% of retail sales[139] - Dividends paid decreased to $10,516,000 in fiscal 2024 from $13,954,000 in fiscal 2023, a decline of approximately 25%[192] Inventory and Merchandise - Merchandise inventories increased to $110.7 million as of February 1, 2025, compared to $98.6 million in the previous year, reflecting a 12.6% increase[189] - Merchandise inventories decreased by $12,136,000 in fiscal 2024, compared to an increase of $13,453,000 in fiscal 2023, indicating a significant shift in inventory management[191] Credit and Sales - Credit and layaway sales accounted for 6% of retail sales in fiscal 2024, with the Company's credit card program representing 3.4% of retail sales[36] - Layaway sales represented approximately 2.8% of retail sales in fiscal 2024, slightly down from 3.0% in fiscal 2023[40] - Credit revenue increased to $2.7 million, representing 0.4% of total revenue in fiscal 2024[137] Risks and Challenges - The Company is subject to supply chain disruptions, including increased ocean freight costs and delays due to geopolitical tensions and natural disasters, which may adversely affect its ability to sell merchandise[49][50] - Increased costs from tariffs on Chinese products and inflationary pressures on labor and raw materials may negatively impact the Company's financial condition and results of operations[51][54] - Continued high interest rates are expected to reduce customers' discretionary income, adversely affecting their willingness to purchase discretionary items[53] - The Company faces risks related to consumer confidence and spending, which can be influenced by economic conditions, inflation, and public health threats[52] - The women's retail apparel industry is highly competitive, with significant pressure from discount stores, mass merchandisers, and internet-based retailers, potentially impacting market share and financial condition[67] Cybersecurity and Compliance - The company faces risks related to cybersecurity, with potential breaches leading to increased costs and damage to reputation[78] - The company has increased investments in cybersecurity risk management, including an enterprise cybersecurity program to mitigate threats[106] - Compliance with the Payment Card Industry Data Security Standard is maintained, and third-party providers are regularly assessed for cybersecurity compliance[108] - Legal compliance and regulatory risks may lead to increased costs and liabilities, diverting management's attention and adversely affecting business operations[85] Shareholder and Governance - The principal shareholder holds 53.3% of the voting power, which may limit other shareholders' influence and affect corporate governance[104] - The Board of Directors authorized an increase of 1,000,000 shares in the Company's share repurchase program on December 23, 2024[209] Cash Flow and Investments - Cash used in operating activities was $19.7 million in fiscal 2024, a decrease of $20.2 million compared to fiscal 2023[157] - Net cash provided by investing activities was $29.0 million in fiscal 2024, compared to $19.8 million in fiscal 2023[164] - The company had an unsecured revolving credit agreement for borrowings of up to $35.0 million, which was terminated on March 13, 2025, in favor of a new asset-backed revolving line of credit[160] Other Financial Metrics - The Company reported a provision for customer credit losses of $654,000 in fiscal 2024, up from $554,000 in fiscal 2023, marking an increase of about 18%[191] - The company incurred asset impairment charges of $786,000 in fiscal 2024, down from $1,811,000 in fiscal 2023, showing a reduction of about 57%[200] - The Company recognized $1,447,934 in income from unredeemed gift cards in fiscal 2024, compared to $1,116,000 in fiscal 2023 and $256,000 in fiscal 2022, reflecting a significant increase in gift card breakage revenue[205]

Core Viewpoint - The Cato Corporation's stock has significantly outperformed the S&P 500 following its earnings report, reflecting positive investor sentiment due to a narrowed quarterly loss and operational improvements [1] Financial Performance - For the fourth quarter, Cato reported a net loss of $0.74 per share, an improvement from a net loss of $1.14 per share in the same quarter last year [2] - Quarterly sales decreased by 10% year-over-year to $155.3 million, down from $172.1 million; however, on a comparable 13-week basis, the decline was only 5.1% [2] - The company incurred a net loss of $14.1 million, which is narrower than the $23.4 million loss reported in the prior-year quarter [3] Key Business Metrics - Cato's gross margin contracted to 28% from 31% year-over-year, attributed to increased markdowns and higher distribution costs [4] - SG&A expenses fell by $8.8 million, improving as a percentage of sales to 37.8% from 39.2% in the prior-year quarter, mainly due to reductions in various costs [4] Management Insights - The CEO highlighted ongoing macroeconomic challenges affecting discretionary spending and operational disruptions earlier in the year, but noted improvements in the fourth quarter [5] - The company has initiated cost-efficiency measures, including the elimination of approximately 40 corporate positions and plans for further expense reductions [6] Sales and Market Pressures - Weaker sales performance was linked to consumer budget pressures and external disruptions, with increased markdowns and logistics costs impacting margins [7] - A significant drop in income tax expense was noted, from $10.9 million in Q4 2023 to $0.3 million in Q4 2024, due to a non-cash valuation allowance against deferred tax assets [8] Full Year Overview - For fiscal 2024, Cato's net loss narrowed to $18.1 million or $0.97 per share from $23.9 million or $1.17 per share in 2023; annual sales declined by 8.3% to $642.1 million [9] - Gross margin for the full year dropped to 32% from 33.7%, while SG&A expenses decreased by $21.3 million [9] - The company reported $11.8 million in interest and other income for the year, more than doubling from $5.1 million the previous year [9] Operational Developments - Cato closed 62 underperforming stores during fiscal 2024, while opening one and relocating four, resulting in a total of 1,117 stores as of February 1, 2025 [10] - For fiscal 2025, the company plans to open up to 15 new stores and close up to 50 additional underperforming locations, expecting minimal financial impact from these closures [10]

Financial Performance - Cato Corporation reported a net loss of $14.1 million or $0.74 per diluted share for Q4 2024, an improvement from a net loss of $23.4 million or $1.14 per diluted share in Q4 2023[2]. - Total sales for Q4 2024 were $155.3 million, a decrease of 10.0% from $172.1 million in Q4 2023; on a comparable 13-week basis, total sales decreased 5.1%[3]. - For the full year 2024, sales decreased 8.3% to $642.1 million from $700.3 million in 2023, with same-store sales down 3.1%[3]. - Gross margin for Q4 2024 decreased to 28.0% from 31.0% in Q4 2023, attributed to increased markdowns and higher distribution costs[4]. - Income tax expense for Q4 2024 was $0.3 million, significantly lower than $10.9 million in Q4 2023, due to a non-cash valuation allowance recorded last year[4]. Expenses and Cost Management - Selling, general and administrative (SG&A) expenses as a percentage of sales decreased from 39.2% in Q4 2023 to 37.8% in Q4 2024, with total SG&A expenses down by $8.8 million[4]. - The company eliminated approximately 40 corporate positions in February 2025 as part of its focus on reducing expenses[5]. Asset Management - Cato Corporation's total current assets decreased to $223.2 million as of February 1, 2025, down from $243.1 million as of February 3, 2024[11]. - Cato Corporation's stockholders' equity decreased to $162.3 million as of February 1, 2025, compared to $192.3 million as of February 3, 2024[11]. Future Plans - The company plans to open up to 15 new stores and close up to 50 underperforming stores in 2025, anticipating minimal financial impact from these closures[6].

Core Viewpoint - Pomerantz LLP is investigating claims on behalf of investors of The Cato Corporation regarding potential securities fraud or unlawful business practices by the company and its officers or directors [1]. Group 1: Company Actions - On November 22, 2024, Cato announced the suspension of its regular quarterly dividend due to current economic conditions and sales trends, which led to a significant drop in its stock price during intraday trading [1]. Group 2: Legal Context - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of fighting for victims of securities fraud and corporate misconduct [2].

Core Viewpoint - Palo Alto Networks has demonstrated strong financial performance and growth potential in the cybersecurity market, particularly in the SASE (Secure Access Service Edge) sector, despite facing competition from Cato Networks [2][3][10]. Financial Performance - Fiscal 2025 Q1 revenue reached $2.14 billion, reflecting a 13.8% increase year-over-year and exceeding the Visible Alpha consensus estimate by $20 million [7]. - Fiscal 2025 Q1 profit was $350.7 million, up over 80% and $78.6 million more than Wall Street estimates [7]. - The revenue outlook for fiscal 2025 is projected at $9.145 billion, which is $20 million higher than previous estimates [7]. - The adjusted earnings per share (EPS) outlook for fiscal 2025 is $6.325, which is eight cents more than the previous midpoint estimate [7]. Market Position and Strategy - Palo Alto Networks is recognized as a leader in the SASE market, alongside Cato Networks, according to Gartner's Magic Quadrant [4][10]. - The company is pursuing a "platformization" strategy to consolidate and bundle services, which is seen as a potential game changer for enhancing sales and customer satisfaction [5][8]. - Despite competition, analysts believe that the growth of the SASE market, projected to reach $25 billion by 2027 with a 30% annual growth rate, presents significant opportunities for both Palo Alto and Cato [10]. Competitive Landscape - Cato Networks claims a 70% win rate against Palo Alto in competitive bids, indicating strong competition in the SASE market [4][15]. - While Palo Alto's services are perceived as more expensive, they are recognized for strong security and networking features, which contribute to its positive market position [11]. - Cato Networks has reported $200 million in annual recurring revenue for 2024, doubling its 2023 figure, and has a customer base of 2,500 [13]. Future Outlook - The average price target for Palo Alto Networks from 36 Wall Street analysts is $424.15, suggesting a 7.4% upside potential [19]. - Increased customer spending driven by cloud migrations, zero-trust security shifts, and automation in cybersecurity is expected to benefit Palo Alto significantly [20]. - Cato Networks may consider going public next year if market conditions are favorable, indicating potential shifts in the competitive landscape [21].

Sales Performance - Total retail sales for Q3 2024 were $144.6 million, an 8% decrease from $156.7 million in Q3 2023[88] - For the nine months ended November 2, 2024, total retail sales were $486.8 million, down 8% from $528.2 million in the same period last year[89] - Same-store sales decreased by 3% in Q3 2024 and 4% for the first nine months of fiscal 2024[89] Cost and Expenses - Cost of goods sold was $103.0 million, or 71.2% of retail sales for Q3 2024, compared to $105.8 million, or 67.5% for Q3 2023[92] - Gross margin dollars decreased by 18.1% to $41.7 million for Q3 2024, and by 11.1% to $162.3 million for the first nine months of fiscal 2024[92] - SG&A expenses were $57.9 million, or 40.0% of retail sales for Q3 2024, compared to $61.8 million, or 39.4% for Q3 2023[93] Store Operations - The company operated 1,167 stores as of November 2, 2024, down from 1,245 stores on October 28, 2023[89] - The company expects to close approximately 65 stores in total during fiscal 2024[89] Revenue and Income - Credit revenue for Q3 2024 was $0.7 million, representing 0.5% of total revenues, unchanged from the previous year[90] - Interest and other income for the three months ended November 2, 2024, was $2.6 million, or 1.8% of retail sales, compared to $1.5 million, or 1.0% of retail sales for the same period in fiscal 2023[96] Tax and Cash Flow - Income tax expense for the first nine months of fiscal 2024 was $1.6 million, compared to a tax benefit of $0.8 million for the same period in fiscal 2023, resulting in an effective income tax rate of (67.5%) compared to 60.4% in fiscal 2023[97] - Cash used in operating activities during the first nine months of fiscal 2024 was $13.3 million, an increase of $25.0 million compared to $11.7 million provided in the same period of fiscal 2023[99] Working Capital and Financing - Working capital increased to $60.7 million at November 2, 2024, from $55.1 million at February 3, 2024, primarily due to a decrease in current lease liability and an increase in inventory[100] - The Company had a revolving credit agreement allowing borrowings of up to $35.0 million, with no outstanding borrowings as of November 2, 2024[101] Capital Expenditures and Cash Flow from Investments - Expenditures for property and equipment totaled $6.5 million in the first nine months of fiscal 2024, down from $10.3 million in the same period of the previous year[103] - Net cash provided by investing activities was $21.5 million in the first nine months of fiscal 2024, compared to $6.1 million in the same period of fiscal 2023[104] - Net cash used in financing activities totaled $12.6 million in the first nine months of fiscal 2024, slightly down from $12.7 million in the comparable period of fiscal 2023[105] Investment Portfolio - The Company's investment portfolio primarily consists of corporate bonds and U.S. Treasury/Agencies notes and bonds, with underlying ratings of A or better[107] - Deferred compensation plan assets increased to $9.1 million at November 2, 2024, from $8.6 million at February 3, 2024[108] Economic Factors - Inflationary pressures and high interest rates have negatively impacted customer disposable income and purchasing behavior[85]

Core Insights - Cato Corporation's shares have declined 40.3% since the earnings report for the quarter ended Nov. 2, 2024, significantly underperforming the S&P 500 index's 0.6% growth during the same period [1] - The company reported a net loss of 79 cents per share for the third quarter, which is wider than the net loss of 30 cents per share in the same quarter of 2023 [2] - Quarterly sales fell 8% year over year to $144.6 million, down from $156.7 million in the prior-year period [2] Financial Performance - Cato's gross margin for the quarter decreased to 28.8% of sales, down from 32.5% in the same quarter last year, attributed to increased markdowns, higher freight and distribution expenses, and elevated occupancy costs [4] - Selling, general, and administrative (SG&A) expenses represented 40% of sales, slightly up from 39.4% in the third quarter of 2023, mainly due to deleveraging payroll costs, although SG&A expenses decreased by $3.9 million year over year [5] - The net loss widened to $15.1 million from $6.1 million in the prior-year period [6] Management Commentary - The chairman, president, and CEO, John Cato, noted several challenges affecting performance, including three major hurricanes, supply chain disruptions, and pressure on customers' disposable income [7] - The bankruptcy of a logistics carrier servicing 50% of Cato's stores further complicated distribution, increasing costs [7] - Management anticipates continued headwinds in the fourth quarter due to sustained cost pressures and challenging economic conditions [8] Operational Developments - During the quarter, Cato opened one new store but closed 13 year to date, reducing its total store count to 1,167 across 31 states as of Nov. 2, 2024, compared to 1,245 stores as of Oct. 28, 2023 [9]

Financial Performance - The Cato Corporation reported a net loss of $15.1 million or ($0.79) per diluted share for Q3 2024, compared to a net loss of $6.1 million or ($0.30) per diluted share for Q3 2023[3]. - For the nine months ended November 2, 2024, the company reported a net loss of $4.0 million or ($0.24) per diluted share, compared to a net loss of $0.5 million or ($0.02) per diluted share for the same period in 2023[5]. Sales Performance - Sales for Q3 2024 were $144.6 million, an 8% decrease from $156.7 million in Q3 2023, with same-store sales down 3%[4]. - Year-to-date sales were $486.8 million, an 8% decrease from $528.2 million in the prior year, with same-store sales down 4%[5]. Cost and Margin Analysis - Gross margin decreased from 32.5% to 28.8% of sales in Q3 2024 due to higher markdowns and increased freight, distribution, and occupancy costs[6]. - Year-to-date gross margin decreased to 33.3% from 34.6% in the prior year, primarily due to increased occupancy, freight, and distribution costs[7]. - SG&A expenses as a percentage of sales increased from 39.4% to 40.0% in Q3 2024, primarily due to payroll cost deleveraging[6]. Operational Changes - The company opened one store in Q3 2024, resulting in a total of 1,167 stores as of November 2, 2024, down from 1,245 stores a year earlier[8]. Challenges and Outlook - The company is facing challenges in Q4 2024 due to supply chain issues and higher costs associated with moving inventory[6]. - Tax expense for Q3 2024 was $0.3 million compared to a tax benefit of $4.3 million in the prior year, mainly due to valuation allowances against net deferred tax assets[6].

Company Summary - The Cato Corporation has suspended its regular quarterly dividend due to current economic conditions and sales trends [1] Industry Context - The suspension of dividends reflects broader economic challenges that may impact consumer confidence and discretionary spending [2]

Core Points - The Cato Corporation reported a net loss of $15.1 million or ($0.79) per diluted share for Q3 2024, compared to a net loss of $6.1 million or ($0.30) per diluted share for Q3 2023 [1][3] - Sales for Q3 2024 were $144.6 million, an 8% decrease from $156.7 million in Q3 2023, with same-store sales down 3% [2][4] - For the nine months ended November 2, 2024, the company reported a net loss of $4.0 million or ($0.24) per diluted share, compared to a net loss of $0.5 million or ($0.02) per diluted share for the same period in 2023 [3][5] Financial Performance - Gross margin for Q3 2024 decreased to 28.8% from 32.5% in Q3 2023, attributed to higher markdowns and increased freight, distribution, and occupancy costs [4][5] - Selling, general and administrative (SG&A) expenses as a percentage of sales increased from 39.4% to 40.0% during Q3 2024, primarily due to payroll cost deleveraging [4][5] - Year-to-date gross margin decreased to 33.3% from 34.6% in the prior year, with SG&A rate at 35.5% compared to 35.1% [5] Operational Insights - The company opened one store in Q3 2024, with a total of 1,167 stores as of November 2, 2024, down from 1,245 stores a year earlier [6] - The decline in sales was influenced by three major hurricanes, supply chain issues, and negative pressure on customers' disposable income [4] - The company is managing SG&A expenses and inventory levels in line with current sales trends, but anticipates continued challenges in Q4 2024 [4] Market Position - The Cato Corporation operates as a specialty retailer of value-priced fashion apparel and accessories under three concepts: "Cato," "Versona," and "It's Fashion" [7] - The company offers exclusive merchandise comparable to mall specialty stores at low prices, targeting value-conscious consumers [7]