Alistair Berg/DigitalVision via Getty ImagesCato Corporation (NYSE:CATO) is an American apparel retailer. The company's stock is a deep value battleground because of its low EV and strong balance sheet coupled with dismal last-decade operational results. I analyze Cato's brand value proposition in this review and discuss some operational challenges. The brand seems outdated, the value proposition is not ideal for apparel retailers in the current context, and operational efficiencies are low. On the deep ...

CHARLOTTE, N.C., March 1, 2024 /PRNewswire/ -- The Board of Directors of The Cato Corporation (NYSE: CATO) declared a regular quarterly dividend of $0.17 per share.  The dividend will be payable on April 1, 2024 to shareholders of record on March 26, 2024. The $0.17 dividend, or $0.68 on an annualized basis, represents an annualized yield of 10.3% at the closing market price on February 29, 2024. The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating t ...

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) This is the cover page for The Cato Corporation's Quarterly Report on Form 10-Q for the period ended October 28, 2023, indicating its filing status and outstanding shares - The report is a **Quarterly Report on Form 10-Q** for the period ended **October 28, 2023**[2](index=2&type=chunk) - The registrant is classified as an **'Accelerated filer'**[3](index=3&type=chunk) Outstanding Common Stock as of October 28, 2023 | Class of Stock | Shares Outstanding | | :--------------- | :----------------- | | Class A Common Stock | 18,821,512 | | Class B Common Stock | 1,763,652 | [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section provides an overview of the report's structure, detailing the financial statements, management's discussion, notes, and other information included in the Form 10-Q - The report is structured into **two main parts**: Part I – Financial Information (Unaudited) and Part II – Other Information[5](index=5&type=chunk) - Key financial statements include Condensed Consolidated Statements of Income (Loss), Balance Sheets, Cash Flows, and Stockholders' Equity[5](index=5&type=chunk) - The report also features Management's Discussion and Analysis of Financial Condition and Results of Operations[5](index=5&type=chunk) [PART I – FINANCIAL INFORMATION (UNAUDITED)](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION%20(UNAUDITED)) This section presents the unaudited financial statements and related notes for The Cato Corporation, along with management's discussion and analysis of financial condition and results of operations for the quarter ended October 28, 2023 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited):) This item includes the condensed consolidated financial statements, providing a snapshot of the company's financial performance and position for the three and nine months ended October 28, 2023, and comparable prior periods, along with detailed explanatory notes [Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)) The company reported a net loss for both the three and nine months ended October 28, 2023, with total revenues decreasing compared to the prior year periods, leading to negative basic and diluted EPS Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Dollars in thousands, except per share data) | Metric | 3 Months Ended Oct 28, 2023 | 3 Months Ended Oct 29, 2022 | 9 Months Ended Oct 28, 2023 | 9 Months Ended Oct 29, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $158,256 | $176,626 | $533,177 | $580,211 | | Net Income (Loss) | $(6,077) | $(4,453) | $(523) | $3,020 | | Basic Earnings (Loss) Per Share | $(0.30) | $(0.21) | $(0.02) | $0.14 | | Diluted Earnings (Loss) Per Share | $(0.30) | $(0.21) | $(0.02) | $0.14 | | Comprehensive Income (Loss) | $(5,876) | $(5,082) | $200 | $1,246 | - Total revenues decreased by **10.4%** for the three months and **8.1%** for the nine months ended October 28, 2023, compared to the prior year[8](index=8&type=chunk) - The company shifted from a net income of **$3,020 thousand** for the nine months ended October 29, 2022, to a net loss of **$(523) thousand** for the nine months ended October 28, 2023[8](index=8&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and total stockholders' equity from January 28, 2023, to October 28, 2023, primarily driven by reductions in short-term investments and right-of-use assets Condensed Consolidated Balance Sheets (Dollars in thousands) | Metric | October 28, 2023 | January 28, 2023 | | :------------------------- | :----------------- | :----------------- | | Total Current Assets | $261,062 | $277,673 | | Total Assets | $487,368 | $553,140 | | Total Current Liabilities | $184,224 | $202,957 | | Total Stockholders' Equity | $217,318 | $226,593 | - Total assets decreased by approximately **$65.8 million** from January 28, 2023, to October 28, 2023[28](index=28&type=chunk) - Total stockholders' equity decreased by approximately **$9.3 million** over the same period[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly, while investing activities shifted from net cash used to net cash provided, and financing activities saw a reduction in cash used, primarily due to lower stock repurchases Condensed Consolidated Statements of Cash Flows (Nine Months Ended, Dollars in thousands) | Metric | October 28, 2023 | October 29, 2022 | | :------------------------------------------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $11,670 | $19,298 | | Net cash provided by investing activities | $6,133 | $201 | | Net cash used in financing activities | $(12,663) | $(22,152) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $5,140 | $(2,653) | | Cash, cash equivalents, and restricted cash at end of period | $28,932 | $21,025 | - Net cash provided by operating activities decreased by **$7.6 million (39.5%)** for the nine months ended October 28, 2023, compared to the prior year, primarily due to a net loss[30](index=30&type=chunk)[131](index=131&type=chunk) - Net cash provided by investing activities increased significantly from **$0.2 million** in 2022 to **$6.1 million** in 2023, driven by decreased capital expenditures[30](index=30&type=chunk)[134](index=134&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from January 28, 2023, to October 28, 2023, primarily due to net losses and dividends paid, partially offset by share-based compensation and unrealized gains on available-for-sale securities Total Stockholders' Equity (Dollars in thousands) | Metric | Balance – January 28, 2023 | Balance – October 28, 2023 | | :------------------------- | :------------------------- | :------------------------- | | Total Stockholders' Equity | $226,593 | $217,318 | | Retained Earnings | $104,709 | $91,189 | | Accumulated Other Comprehensive Income | $(1,238) | $(515) | - Retained earnings decreased by **$13.5 million** from January 28, 2023, to October 28, 2023, reflecting net losses and dividends paid[16](index=16&type=chunk) - Accumulated other comprehensive income improved from a loss of **$(1,238) thousand** to a loss of **$(515) thousand**, primarily due to unrealized gains on available-for-sale securities[16](index=16&type=chunk)[64](index=64&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering accounting policies, segment information, stock-based compensation, fair value measurements, and other financial arrangements, all of which are unaudited [NOTE 1 - GENERAL](index=8&type=section&id=NOTE%201%20-%20GENERAL) This note clarifies that the interim financial statements are unaudited and should be read with the annual report. It also details the reclassification of a corporate jet as an asset held for sale and the recovery of repair costs, and confirms the maintenance of the quarterly dividend - A corporate jet, damaged in Q2, was reclassified as an asset held for sale at an estimated fair value of **$4.2 million** as of October 28, 2023[37](index=37&type=chunk) - The company recorded a receivable for the estimated repair cost of **$3.2 million** for the damaged corporate jet[20](index=20&type=chunk) - The Board of Directors maintained the quarterly dividend at **$0.17 per share** on November 16, 2023[36](index=36&type=chunk)[135](index=135&type=chunk) [NOTE 2 - EARNINGS PER SHARE](index=9&type=section&id=NOTE%202%20-%20EARNINGS%20PER%20SHARE) This note explains the calculation of basic and diluted EPS, confirming that the company presents a single EPS amount applicable to both Class A and Class B shares due to historical practice and Board resolution to pay equal dividends - Basic EPS is computed as net income less earnings allocated to non-vested equity awards divided by the weighted average number of common shares outstanding[63](index=63&type=chunk) - The company historically pays and intends to continue paying the same dividends to both Class A and Class B shareholders, resulting in a single EPS computation for both classes[22](index=22&type=chunk) Earnings Per Share Data (Dollars in thousands, except per share data) | Metric | 3 Months Ended Oct 28, 2023 | 3 Months Ended Oct 29, 2022 | 9 Months Ended Oct 28, 2023 | 9 Months Ended Oct 29, 2022 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net earnings (loss) available to common stockholders | $(5,731) | $(4,213) | $(474) | $2,867 | | Basic weighted average common shares outstanding | 19,421,701 | 19,934,592 | 19,373,411 | 20,029,703 | | Basic earnings (loss) per share | $(0.30) | $(0.21) | $(0.02) | $0.14 | | Diluted earnings (loss) per share | $(0.30) | $(0.21) | $(0.02) | $0.14 | [NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME](index=10&type=section&id=NOTE%203%20%E2%80%93%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) This note details the changes in accumulated other comprehensive income (AOCI), primarily driven by unrealized gains and losses on available-for-sale securities, which improved from a larger loss to a smaller loss during the nine months ended October 28, 2023 Changes in Accumulated Other Comprehensive Income (Unrealized Gains and (Losses) on Available-for-Sale Securities, net-of-tax, in thousands) | Period | Beginning Balance | Net Current-Period Other Comprehensive Income | Ending Balance | | :-------------------------------- | :---------------- | :------------------------------------------ | :------------- | | 3 Months Ended Oct 28, 2023 | $(716) | $201 | $(515) | | 9 Months Ended Oct 28, 2023 | $(1,238) | $723 | $(515) | | 3 Months Ended Oct 29, 2022 | $(1,425) | $(629) | $(2,054) | | 9 Months Ended Oct 29, 2022 | $(280) | $(1,774) | $(2,054) | - Reclassifications from AOCI into Interest and other income for net gains on available-for-sale securities were **$20 thousand** (3 months) and **$24 thousand** (9 months) for 2023[41](index=41&type=chunk)[42](index=42&type=chunk) [NOTE 4 – FINANCING ARRANGEMENTS](index=12&type=section&id=NOTE%204%20%E2%80%93%20FINANCING%20ARRANGEMENTS) The company maintains an unsecured revolving credit line of up to $35.0 million, which was amended in October 2023 to link the EBITDAR coverage ratio to cash and investments. The company was in compliance with all covenants and had no outstanding borrowings as of October 28, 2023 - The company has an unsecured revolving credit line of up to **$35.0 million**, committed through May 2027[69](index=69&type=chunk) - On **October 24, 2023**, the revolving credit agreement was amended to link the calculation of the EBITDAR coverage ratio to the amount of the company's cash and investments[69](index=69&type=chunk) - As of **October 28, 2023**, the company was in compliance with the amended credit agreement and had **no outstanding borrowings**, resulting in a **zero weighted average interest rate**[69](index=69&type=chunk) [NOTE 5 – REPORTABLE SEGMENT INFORMATION](index=12&type=section&id=NOTE%205%20%E2%80%93%20REPORTABLE%20SEGMENT%20INFORMATION) The company operates two reportable segments: Retail (aggregating Cato, It's Fashion, and Versona) and Credit. Segment performance is evaluated based on income before income taxes, with certain corporate expenses not allocated to the credit segment - The company has **two reportable segments**: Retail (comprising Cato, It's Fashion, Versona, and e-commerce) and Credit[70](index=70&type=chunk) - The Retail operating segments are aggregated due to similar economic characteristics, products, production processes, clients, and distribution methods[47](index=47&type=chunk)[70](index=70&type=chunk) Segment Revenues and Income (Loss) Before Income Taxes (Dollars in thousands) | Metric | 3 Months Ended Oct 28, 2023 (Retail) | 3 Months Ended Oct 28, 2023 (Credit) | 9 Months Ended Oct 28, 2023 (Retail) | 9 Months Ended Oct 28, 2023 (Credit) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Revenues | $157,595 | $661 | $531,243 | $1,934 | | Income (loss) before income taxes | $(10,604) | $255 | $(2,014) | $694 | | Capital expenditures | $1,801 | - | $10,271 | - | Credit Segment Direct Expenses (Dollars in thousands) | Expense Type | 3 Months Ended Oct 28, 2023 | 3 Months Ended Oct 29, 2022 | 9 Months Ended Oct 28, 2023 | 9 Months Ended Oct 29, 2022 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Payroll | $135 | $120 | $411 | $389 | | Postage | $111 | $107 | $321 | $299 | | Other expenses | $160 | $172 | $507 | $557 | | Total expenses | $406 | $399 | $1,239 | $1,245 | [NOTE 6 – STOCK-BASED COMPENSATION](index=14&type=section&id=NOTE%206%20%E2%80%93%20STOCK-BASED%20COMPENSATION) The company has two long-term incentive plans for equity-based awards. Total unrecognized compensation expense for nonvested restricted stock awards was $10.5 million as of October 28, 2023, with a weighted-average vesting period of 2.4 years. The Employee Stock Purchase Plan also contributed to compensation expense - The company has **two long-term compensation plans**: the 2018 Incentive Compensation Plan and the 2013 Incentive Compensation Plan (no longer granting shares)[74](index=74&type=chunk) - As of **October 28, 2023**, there were **3,124,274 options and/or restricted stock shares** available for grant under the 2018 Plan[52](index=52&type=chunk) Restricted Stock Awards Changes (Nine Months Ended Oct 28, 2023) | Metric | Number of Shares | Weighted Average Grant Date Fair Value Per Share | | :---------------------------------------- | :--------------- | :--------------------------------------- | | Restricted stock awards at January 28, 2023 | 1,059,433 | $13.10 | | Granted | 414,502 | $8.29 | | Vested | (217,238) | $13.97 | | Forfeited or expired | (109,705) | $11.94 | | Restricted stock awards at October 28, 2023 | 1,146,992 | $11.31 | - Total unrecognized compensation expense related to nonvested restricted stock awards was **$10,488 thousand** as of October 28, 2023, with a remaining weighted-average vesting period of **2.4 years**[75](index=75&type=chunk) - Compensation expense for the Employee Stock Purchase Plan was approximately **$62 thousand** for the nine months ended October 28, 2023, from selling **50,540 shares** at a **15% discount**[78](index=78&type=chunk) [NOTE 7 – FAIR VALUE MEASUREMENTS](index=15&type=section&id=NOTE%207%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) The company's financial assets and liabilities measured at fair value primarily consist of an investment portfolio in corporate and governmental debt securities (Level 2) and deferred compensation plan assets/liabilities (Level 3) - The investment portfolio is primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities, generally rated **A or better**, classified as available-for-sale[56](index=56&type=chunk)[155](index=155&type=chunk) Fair Value Assets and Liabilities (Dollars in thousands, as of October 28, 2023) | Description | Total | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | State/Municipal Bonds | $15,700 | - | $15,700 | - | | Corporate Bonds | $47,759 | - | $47,759 | - | | U.S. Treasury/Agencies Notes and Bonds | $25,625 | - | $25,625 | - | | Cash Surrender Value of Life Insurance | $9,038 | - | - | $9,038 | | Asset-backed Securities (ABS) | $4,468 | - | $4,468 | - | | Corporate Equities | $788 | $788 | - | - | | **Total Assets** | **$103,378** | **$788** | **$93,552** | **$9,038** | | **Liabilities:** | | | | | | Deferred Compensation | $(8,311) | - | - | $(8,311) | | **Total Liabilities** | **$(8,311)** | **-** | **-** | **$(8,311)** | - Level 3 assets (Cash Surrender Value of Life Insurance) and liabilities (Deferred Compensation) are valued based on factors like underlying asset fair value and discounted cash flow[57](index=57&type=chunk)[103](index=103&type=chunk) [NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS](index=19&type=section&id=NOTE%208%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company has reviewed recent accounting pronouncements and does not expect any to have a material impact on its financial statements - Management believes none of the recent accounting pronouncements will have a **material impact** on the company's financial statements[106](index=106&type=chunk)[138](index=138&type=chunk) [NOTE 9 – INCOME TAXES](index=19&type=section&id=NOTE%209%20%E2%80%93%20INCOME%20TAXES) The effective tax rate for the first nine months of 2023 increased to 60.4% from 49.7% in 2022, primarily due to increases in foreign rate differential and release of reserves for uncertain tax positions, partially offset by other factors - The effective tax rate for the first nine months of 2023 was **60.4%**, compared to **49.7%** for the first nine months of 2022[107](index=107&type=chunk)[149](index=149&type=chunk) - The change in the effective tax rate was primarily due to increases in foreign rate differential and the release of reserves for uncertain tax positions, offset by decreases in GILTI, state income taxes, non-deductible officer's compensation, and foreign tax credits[107](index=107&type=chunk)[149](index=149&type=chunk) - Income tax benefit was **$4.3 million** for the third quarter and **$0.8 million** for the first nine months of fiscal 2023[149](index=149&type=chunk) [NOTE 10 – COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%2010%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in routine litigation incidental to its business, including merchandise, intellectual property, premises, and employment matters. Management does not believe any reasonably possible losses from current pending litigation will have a material adverse effect on the financial statements - The company is involved in routine litigation concerning merchandise, intellectual property, premises, and employment matters[85](index=85&type=chunk) - Management does not believe that any reasonably possible losses from current pending litigation will have a **material adverse effect** on the company's condensed consolidated financial statements[108](index=108&type=chunk) - Liabilities for these matters are accrued when deemed probable and reasonably estimable[108](index=108&type=chunk) [NOTE 11 – REVENUE RECOGNITION](index=19&type=section&id=NOTE%2011%20%E2%80%93%20REVENUE%20RECOGNITION) The company recognizes retail sales when customers take possession of merchandise. Other revenue includes finance charges and late fees on proprietary credit cards, and layaway charges. Gift cards and layaway sales are recorded as deferred revenue until redemption or possession - Sales are recognized at the point of purchase when the customer takes possession of merchandise, or when the risk of loss is transferred for e-commerce sales[109](index=109&type=chunk) - Other revenue primarily consists of finance charges, late fees on customer accounts receivable, and layaway charges[8](index=8&type=chunk)[109](index=109&type=chunk) Receivables and Contract Liabilities (Dollars in thousands) | Metric | October 28, 2023 | January 28, 2023 | | :------------------------- | :----------------- | :----------------- | | Proprietary Credit Card Receivables, net | $11,066 | $10,553 | | Gift Card Liability | $6,622 | $8,523 | - Estimated customer credit losses were **$149 thousand** for the three months and **$421 thousand** for the nine months ended October 28, 2023[110](index=110&type=chunk) [NOTE 12 - LEASES](index=21&type=section&id=NOTE%2012%20-%20LEASES) The company has operating leases for stores, offices, warehouse space, and equipment, with terms up to 10 years. Lease costs for the three and nine months ended October 28, 2023, were $17.5 million and $53.2 million, respectively, for operating leases - The company has operating leases for stores, offices, warehouse space, and equipment, with remaining lease terms of up to **10 years**[112](index=112&type=chunk) Components of Lease Cost (Dollars in thousands) | Metric | 3 Months Ended Oct 28, 2023 | 3 Months Ended Oct 29, 2022 | 9 Months Ended Oct 28, 2023 | 9 Months Ended Oct 29, 2022 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease cost | $17,498 | $17,919 | $53,174 | $53,521 | | Variable lease cost | $544 | $707 | $1,642 | $2,053 | - Cash paid for amounts included in the measurement of lease liabilities was **$50,696 thousand** for the nine months ended October 28, 2023[115](index=115&type=chunk) - As of **October 28, 2023**, the weighted-average remaining lease term was **1.8 years** and the weighted-average discount rate was **3.30%**[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, highlighting the impact of macroeconomic factors like inflation and interest rates on consumer behavior and operational results [FORWARD-LOOKING INFORMATION](index=23&type=section&id=FORWARD-LOOKING%20INFORMATION) This subsection outlines the nature of forward-looking statements within the report, emphasizing that actual results may differ materially due to various known and unknown risks, including economic conditions, competitive factors, and changes in consumer demand - Forward-looking statements are identified by specific words such as 'will,' 'expects,' 'anticipates,' 'believes,' and 'intends'[93](index=93&type=chunk) - Actual results may differ materially due to factors including consumer confidence, economic conditions, competitive factors, fashion trends, and supply chain disruptions[93](index=93&type=chunk) - The company expressly declines any obligation to update forward-looking information contained in the report[93](index=93&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=24&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section discusses the significant accounting estimates and assumptions made in preparing the financial statements, which require management judgment and are reviewed with the Audit Committee - Significant accounting estimates include potential asset impairment, reserves for self-insured health insurance, workers' compensation, general and auto insurance liabilities, uncertain tax positions, allowance for customer credit losses, and inventory shrinkage[94](index=94&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions about future events, which may differ materially from actual results[94](index=94&type=chunk) - The company's critical accounting policies and estimates are discussed with the Audit Committee[140](index=140&type=chunk) [RESULTS OF OPERATIONS](index=25&type=section&id=RESULTS%20OF%20OPERATIONS) The company experienced a decline in total retail sales and a shift to net loss for the three and nine months ended October 28, 2023, primarily due to decreased same-store sales and store closures, despite some improvements in cost of goods sold as a percentage of retail sales Key Financial Ratios (as a percentage of total retail sales) | Metric | 3 Months Ended Oct 28, 2023 | 3 Months Ended Oct 29, 2022 | 9 Months Ended Oct 28, 2023 | 9 Months Ended Oct 29, 2022 | | :------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total retail sales | 100.0% | 100.0% | 100.0% | 100.0% | | Cost of goods sold (exclusive of depreciation) | 67.5% | 70.7% | 65.4% | 67.5% | | Selling, general and administrative (exclusive of depreciation) | 39.4% | 35.1% | 35.1% | 31.8% | | Net income (loss) | (3.9)% | (2.5)% | (0.1)% | 0.5% | [Comparison of the Three and Nine Months ended October 28, 2023 with October 29, 2022](index=26&type=section&id=Comparison%20of%20the%20Three%20and%20Nine%20Months%20ended%20October%2028,%202023%20with%20October%2029,%202022) Total retail sales decreased by 10% for the third quarter and 8% for the nine months ended October 28, 2023, driven by an 8% and 6% decrease in same-store sales, respectively, and store closures. Cost of goods sold improved as a percentage of retail sales, while SG&A expenses increased - Total retail sales decreased by **10% to $156.7 million** for the third quarter and by **8% to $528.2 million** for the nine months ended October 28, 2023, compared to the prior year[125](index=125&type=chunk) - Same-store sales decreased by **8%** in the third quarter and **6%** in the first nine months of fiscal 2023[125](index=125&type=chunk) - The company opened **nine stores** and closed **44 stores** in the first nine months of fiscal 2023, with an expectation to close approximately **110 stores** in total for the full fiscal year[126](index=126&type=chunk) - Cost of goods sold as a percentage of retail sales decreased to **67.5%** in Q3 2023 (from 70.7% in Q3 2022) and to **65.4%** in 9M 2023 (from 67.5% in 9M 2022), primarily due to lower ocean freight costs and increased sales of regular priced goods[127](index=127&type=chunk) - Selling, general and administrative (SG&A) expenses increased to **39.4% of retail sales** in Q3 2023 (from 35.1% in Q3 2022) and to **35.1% in 9M 2023** (from 31.8% in 9M 2022), mainly due to higher payroll and insurance expense[147](index=147&type=chunk) [Inflationary Cost Pressure and High Interest Rates](index=26&type=section&id=Inflationary%20Cost%20Pressure%20and%20High%20Interest%20Rates) High prices and interest rates negatively impacted the company's performance in the first three quarters of fiscal 2023 and are expected to continue affecting consumer behavior and discretionary spending, despite some reduction in overall inflationary pressures - High prices and interest rates negatively impacted the first three quarters of fiscal 2023 and are expected to continue affecting consumer behavior and results[98](index=98&type=chunk) - Increased costs for fuel, food, housing, and other consumables, relative to flattening wage rates, negatively impact customers' disposable income and willingness to purchase discretionary items[144](index=144&type=chunk) - The Federal Reserve's commitment to reducing inflation through high interest rates has adversely affected the availability and cost of credit for both businesses and consumers[124](index=124&type=chunk) [LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK](index=28&type=section&id=LIQUIDITY,%20CAPITAL%20RESOURCES%20AND%20MARKET%20RISK) The company believes its cash, investments, and revolving credit line are sufficient to fund operations and capital expenditures for the next 12 months. Working capital increased, while operating cash flow decreased, and investing cash flow improved due to lower capital expenditures - The company believes its cash, cash equivalents, short-term investments, and available borrowings are adequate to fund operating requirements and expected capital expenditures for fiscal 2023 and the next **12 months**[150](index=150&type=chunk) - Working capital increased to **$76.8 million** at October 28, 2023, from **$74.7 million** at January 28, 2023, primarily due to a decrease in current lease liability and an increase in cash[151](index=151&type=chunk) - Cash provided by operating activities decreased by **$7.6 million** to **$11.7 million** for the first nine months of fiscal 2023, primarily due to a net loss and higher accounts receivable[131](index=131&type=chunk) - Net cash provided by investing activities increased to **$6.1 million** for the first nine months of fiscal 2023, from **$0.2 million** in 2022, mainly due to a decrease in capital expenditures[134](index=134&type=chunk) - Capital expenditures totaled **$10.3 million** in the first nine months of fiscal 2023, down from **$14.4 million** in 2022, and are expected to be approximately **$12.0 million** for the full fiscal year[152](index=152&type=chunk) - Net cash used in financing activities decreased to **$12.7 million** for the first nine months of fiscal 2023, from **$22.2 million** in 2022, primarily due to lower stock repurchases[153](index=153&type=chunk) - As of **October 28, 2023**, the company had **909,653 shares** remaining in open authorizations under its share repurchase program, with no repurchases made in Q3 2023[154](index=154&type=chunk)[174](index=174&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=29&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company has reviewed recent accounting pronouncements and believes none will have a material impact on its financial statements - Management believes none of the recent accounting pronouncements will have a **material impact** on the company's financial statements[156](index=156&type=chunk)[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market rate risk from changes in interest rates related to its financing, investing, and cash management activities, but does not believe this exposure is material, and it does not use derivative financial instruments - The company is subject to market rate risk from exposure to changes in interest rates based on its financing, investing, and cash management activities[139](index=139&type=chunk) - The company does not believe its market rate risk exposure is **material**[139](index=139&type=chunk) - The company does not use derivative financial instruments[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of October 28, 2023. No material changes in internal control over financial reporting occurred during the quarter [Disclosure Controls and Procedures](index=30&type=section&id=Disclosure%20Controls%20and%20Procedures) The Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the company's disclosure controls and procedures as of October 28, 2023, and concluded they were effective in ensuring timely and accurate reporting - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were **effective** as of **October 28, 2023**[181](index=181&type=chunk) - These controls ensure that information required for SEC filings is recorded, processed, summarized, and reported within specified time periods[181](index=181&type=chunk) [CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING](index=30&type=section&id=CHANGES%20IN%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) No changes in the company's internal control over financial reporting occurred during the fiscal quarter ended October 28, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting - No **material changes** in the company's internal control over financial reporting occurred during the fiscal quarter ended **October 28, 2023**[182](index=182&type=chunk) [PART II – OTHER INFORMATION](index=31&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers non-financial information, including legal proceedings, risk factors, equity security sales, defaults, mine safety disclosures, other information, and exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company states that this item is 'Not Applicable,' indicating no material legal proceedings to report under this section - This item is marked as **'Not Applicable'**[162](index=162&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive discussion of risk factors in the company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023, noting that additional unknown or immaterial risks could also adversely affect the business - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended **January 28, 2023**[163](index=163&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial may also **materially adversely affect** the business[163](index=163&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states 'Not Applicable' for unregistered sales of equity securities. It also details issuer purchases of equity securities, indicating no repurchases during the three months ended October 28, 2023, with 909,653 shares remaining authorized - This item is marked as **'Not Applicable'** for unregistered sales of equity securities[165](index=165&type=chunk) [ISSUER PURCHASES OF EQUITY SECURITIES](index=32&type=section&id=ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company did not repurchase any common stock during the three months ended October 28, 2023. As of this date, 909,653 shares remained authorized under its share repurchase program, with no specified expiration date - The company did not repurchase any shares of common stock during August, September, or October 2023[166](index=166&type=chunk) - As of **October 28, 2023**, **909,653 shares** remained in open authorizations under the company's share repurchase program[166](index=166&type=chunk)[174](index=174&type=chunk) - There is no specified expiration date for the company's repurchase program[174](index=174&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company states that this item is 'Not Applicable,' indicating no defaults upon senior securities to report - This item is marked as **'Not Applicable'**[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company states that this item is 'Not Applicable,' indicating no mine safety disclosures are required - This item is marked as **'Not Applicable'**[177](index=177&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) This item states 'Not Applicable,' indicating no other information to report under this section. It also notes that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - This item is marked as **'Not Applicable'**[177](index=177&type=chunk) - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended **October 28, 2023**[160](index=160&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate organizational documents, amendments to the credit agreement, and certifications from executive officers - Exhibits include the Registrant's Amended and Restated Certificate of Incorporation and By-Laws[171](index=171&type=chunk) - The Second and Third Amendments to the Credit Agreement, dated **August 9, 2023**, and **October 24, 2023**, respectively, are filed as exhibits[171](index=171&type=chunk) - Rule 13a-14(a)/15d-14(a) and Section 1350 Certifications of the Principal Executive Officer and Principal Financial Officer are included[171](index=171&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) This section contains the required signatures from the company's authorized officers, including the Chairman, President, and Chief Executive Officer, and the Executive Vice President and Chief Financial Officer, certifying the report's submission - The report is signed by **John P. D. Cato**, Chairman, President and Chief Executive Officer, and **Charles D. Knight**, Executive Vice President and Chief Financial Officer[173](index=173&type=chunk)[180](index=180&type=chunk) - The report was signed on **November 21, 2023**[173](index=173&type=chunk)[180](index=180&type=chunk)

Not Applicable. | --- | --- | |---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

☑ QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934 For the quarterly period ended April 29, 2023 OR ☐ TRANSITIONREPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934 For the transition period from ________________to__________________ Commission file number 1-31340 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or ...

Store Operations - In fiscal 2022, the Company opened 19 new stores and closed 50 stores, indicating a net reduction of 31 locations[168]. Financial Performance - Total revenues for the fiscal year ended January 28, 2023, were $759,260,000, a decrease of 1.3% from $769,271,000 in fiscal 2021[352]. - The Company reported a net income of $29,000 for fiscal 2022, a significant decline from $36,844,000 in fiscal 2021[352]. - Basic and diluted earnings per share for fiscal 2022 were both $0.00, compared to $1.65 in fiscal 2021[352]. - The Company reported a net loss of $(5,902) thousand in interest and other income for the fiscal year ended January 28, 2023, compared to $(2,141) thousand for the fiscal year ended January 29, 2022[401]. - The Company reported finance charge and late charge revenue of $2,243,000 for the fiscal year ended January 28, 2023, an increase from $2,066,000 in the previous year[417]. Costs and Expenses - Cost of goods sold increased to $509,664,000 in fiscal 2022 from $453,065,000 in fiscal 2021, reflecting a rise of 12.5%[352]. - Advertising expenses rose to approximately $6,868,000 in fiscal 2022, up from $6,037,000 in fiscal 2021, marking an increase of 13.7%[343]. - The Company faced higher operating costs due to inflation, impacting shipping, supplies, wages, and fuel, which affects customers' disposable income and willingness to purchase discretionary items[164]. Tax and Refunds - The Company reported a refund of $29.206 million in income tax payments for the fiscal year ended January 28, 2023, compared to a payment of $13.176 million in the previous year[331]. Equity and Liabilities - The Company's total stockholders' equity as of January 28, 2023, was $226.593 million, a decrease from $254.196 million as of January 29, 2022[326]. - The Company had total liabilities of $(8,903) thousand as of January 28, 2023, with no outstanding borrowings under its $35 million revolving credit agreement[393]. - The company’s total liabilities related to deferred compensation decreased from $(10,020,000) at January 29, 2022, to $(8,903,000) at January 28, 2023, indicating improved financial health[413]. Assets and Investments - The total assets of the company as of January 28, 2023, amounted to $158,288,000, compared to $145,998,000 in the previous year, reflecting an increase of approximately 8.4%[408]. - The investment portfolio primarily consisted of corporate bonds and governmental debt securities, with a fair value of $108,652 thousand as of January 28, 2023[403]. - The Company’s cash surrender value of life insurance decreased to $9,274 thousand as of January 28, 2023, from $11,472 thousand as of January 29, 2022[386]. - The cash surrender value of life insurance assets was reported at $11,472,000 as of January 28, 2023, compared to $18,556,000 in the previous year[408]. - The Company’s short-term investments are classified as available-for-sale and are carried at fair value, impacting the overall financial position[330]. Management and Internal Controls - The Company maintained effective internal control over financial reporting as of January 28, 2023, based on established criteria[313]. - The Company’s management is responsible for the consolidated financial statements and the effectiveness of internal control over financial reporting[314]. Employee and Compensation - The total accrued employment and related items increased to $7,377 thousand as of January 28, 2023, from $6,388 thousand as of January 29, 2022[391]. - The Company contributed $32,510,000 to the Employee Stock Ownership Plan (ESOP) for the year ended January 28, 2023, up from $29,430,000 in the previous year[424]. Other Financial Metrics - The Company estimated customer credit losses of $349,000 for the twelve months ended January 28, 2023, on proprietary credit card sales of $23.3 million[367]. - The Company’s allowance for customer credit losses was approximately $280,000 for the fiscal year ended January 28, 2023, down from $429,000 in the previous year[417]. - The unrealized net gain/loss on short-term investments was $(1,609,000) for the year ended January 28, 2023, compared to $(1,238,000) in the previous year[405]. - The accumulated unrealized gains and losses in short-term investments were reported as part of accumulated other comprehensive income, reflecting the fair value of investments[381]. Government Assistance - The Company received $1.4 million from North Carolina's Business Recovery Program in fiscal 2022 due to COVID-19 impacts[351]. - The Company adopted new accounting standards for government assistance disclosures effective January 30, 2022, enhancing transparency regarding government assistance received[375].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 29, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________to__________________ Commission file number 1-31340 THE CATO CORPORATION (Exact name of registrant as specified in its charter) Delaware 56-0484485 (St ...

Sales Performance - Total retail sales for Q2 2022 were $195.0 million, a 5% decrease from $206.0 million in Q2 2021, primarily due to a 5% decrease in same-store sales[77] - For the first six months of fiscal 2022, total retail sales were $399.9 million, down 4% from $417.2 million in the same period last year, also driven by a 4% decrease in same-store sales[77] - E-commerce sales accounted for less than 5% of total sales for the first six months of fiscal 2022[77] Cost and Expenses - Cost of goods sold for Q2 2022 was $131.7 million, or 67.6% of retail sales, compared to $115.6 million, or 56.1% of retail sales in Q2 2021[80] - Gross margin dollars decreased by 30.0% to $63.3 million for Q2 2022, and by 23.6% to $135.9 million for the first six months of fiscal 2022[81] - Selling, general and administrative expenses (SG&A) were $60.8 million, or 31.2% of retail sales for Q2 2022, down from $71.0 million, or 34.5% of retail sales in Q2 2021[82] Income and Revenue - Interest and other income increased to $1.9 million, or 1.0% of retail sales for Q2 2022, compared to $0.5 million, or 0.3% of retail sales in Q2 2021[84] - Credit revenue for Q2 2022 was $0.6 million, representing 0.3% of total revenues, compared to $0.5 million or 0.2% in Q2 2021[78] - Other revenue for Q2 2022 was $1.9 million, slightly up from $1.8 million in Q2 2021, primarily due to increases in layaway charges[79] Tax and Cash Flow - Income tax expense for Q2 2022 was $5.7 million, up from $4.6 million in Q2 2021, with an effective tax rate of 50.6% compared to 18.0% in the prior year[85][87] - Cash provided by operating activities decreased to $17.0 million in the first six months of fiscal 2022 from $82.0 million in the same period of fiscal 2021, a decline of $65.0 million[87] Working Capital and Investments - Working capital as of July 30, 2022, was $106.2 million, down from $111.5 million at January 29, 2022, primarily due to decreases in short-term investments and accounts receivable[89] - Capital expenditures totaled $10.4 million in the first six months of fiscal 2022, significantly higher than $1.1 million in the same period last year, driven by opening eight new stores and IT investments[91] - Net cash provided by investing activities was $10.1 million in the first six months of fiscal 2022, compared to $64.9 million used in the same period of 2021, reflecting a net decrease in short-term investment purchases[92] Financing Activities - Net cash used in financing activities increased to $16.7 million in the first six months of fiscal 2022 from $8.8 million in the comparable period of fiscal 2021, mainly due to higher dividends and stock repurchases[93] - The Board of Directors declared a quarterly dividend of $0.17 per share on August 25, 2022[94] Store Operations - The company operated 1,312 stores at the end of Q2 2022, down from 1,325 stores at the end of Q2 2021, with plans to open approximately 25 stores and close about 40 stores in fiscal 2022[77] Corporate Assets - As of July 30, 2022, the Company had $0.7 million in corporate equities and deferred compensation plan assets of $11.0 million, down from $0.8 million and $11.5 million, respectively, at January 29, 2022[99]

Sales Performance - Total retail sales for the first quarter of fiscal 2022 were $204.9 million, a decrease from $211.2 million in the first quarter of fiscal 2021[87]. - Same-store sales decreased primarily due to cooler, wetter weather, late merchandise shipments, and inflationary pressure on disposable income[87]. - Total revenues for the first quarter were $206.7 million, down from $213.1 million in the prior year[88]. Cost and Expenses - Cost of goods sold was $132.2 million, or 64.5% of retail sales, compared to $123.7 million, or 58.5% of retail sales in the first quarter of fiscal 2021[91]. - Gross margin dollars decreased by 17.0% to $72.7 million for the first quarter of fiscal 2022 compared to $87.6 million in the first quarter of fiscal 2021[91]. - Selling, general and administrative expenses were 29.5% of retail sales for the first quarter of fiscal 2022, a slight decrease from 29.9% in the prior year[92]. Profitability - Net income for the first quarter was 4.8% of total revenues, down from 9.8% in the first quarter of fiscal 2021[82]. - The effective income tax rate for the first quarter of fiscal 2022 was 16.7%, compared to 12.9% for the same period in 2021[96]. Store Operations - The company operated 1,315 stores at April 30, 2022, down from 1,325 stores at the end of the previous fiscal year's first quarter[88]. - The company expects to close approximately 25 stores in fiscal 2022[88]. Capital Expenditures and Investments - Expenditures for property and equipment totaled $4.4 million in the first three months of fiscal 2022, up from $0.6 million in the same period last year, primarily due to opening five new stores and IT investments[102]. - The Company expects to invest approximately $22.6 million in capital expenditures for the full fiscal 2022 year, including distribution center automation projects[102]. Cash Flow - Net cash provided by investing activities was $19.6 million in the first three months of fiscal 2022, compared to $34.2 million used in the same period of fiscal 2021[103]. - Net cash used by financing activities totaled $12.7 million in the first three months of fiscal 2022, compared to $5.5 million used in the same period of fiscal 2021, primarily due to increased share repurchases and dividends paid[104]. Shareholder Returns - The Board of Directors declared a quarterly dividend of $0.17 per share on May 19, 2022[105]. - As of April 30, 2022, the Company had 840,119 shares remaining in open authorizations under its share repurchase program[106]. Investment Portfolio - The Company's investment portfolio primarily consists of corporate bonds and government debt securities with underlying ratings of A or better[108]. - At April 30, 2022, the Company had $0.8 million of corporate equities and deferred compensation plan assets of $11.0 million[109]. - The Company does not believe its exposure to market rate risk from interest rate changes is material[112].

Store Operations - The Company operated 1,311 fashion specialty stores as of January 29, 2022, with a focus on offering quality fashion apparel and accessories at low prices[13]. - The Company opened 6 new stores and closed 25 stores in fiscal 2021, resulting in a total of 1,311 stores at the end of the year[33]. - The Company's stores are primarily located in strip shopping centers, with 93% of stores in such locations[30]. - The ability to open new stores is contingent on identifying suitable locations and negotiating acceptable lease terms, which may present challenges in new regions[67]. Financial Performance - In fiscal 2021, retail sales increased by 34.2% to $761.4 million compared to $567.5 million in fiscal 2020, driven by a 34% increase in same-store sales[149]. - Total revenues rose by 33.8% to $769.3 million in fiscal 2021 from $575.1 million in fiscal 2020[149]. - Net income for fiscal 2021 was 4.8%, a significant improvement from a net loss of 8.4% in fiscal 2020[148]. - The comprehensive income for the year ended January 29, 2022, was $35.4 million, compared to a comprehensive loss of $47.8 million in the previous year[210]. - Basic and diluted earnings per share for the year ended January 29, 2022, were both $1.65, a significant improvement from a loss of $2.01 per share in the prior year[210]. Cost Management - Cost of goods sold decreased to $453.1 million, or 59.5% of retail sales, in fiscal 2021, down from 76.3% in fiscal 2020[152]. - Selling, general and administrative expenses (SG&A) rose by 29.2% to $267.0 million in fiscal 2021, representing 35.1% of retail sales[155]. - Increased product costs, freight costs, and wage increases due to inflation are expected to adversely affect the Company's margins and financial condition[56]. - Increased production costs from vendors may impact the company's ability to maintain or grow margins, affecting overall financial performance[79]. Customer Engagement - The loyalty program introduced in October 2021 allows customers to earn points for purchases, although its impact on fiscal 2021 financial statements was immaterial[36]. - The Company emphasizes customer service, with trained staff to assist in merchandise selection and wardrobe coordination[17]. Economic and Market Conditions - The COVID-19 pandemic has adversely impacted the Company's business, financial condition, and operating results through fiscal 2021, with expectations of continued effects into fiscal 2022 and possibly beyond[49]. - Consumer spending on apparel and accessories is influenced by economic conditions, with adverse perceptions potentially leading to decreased sales[76]. - The women's retail apparel industry is highly competitive, with many competitors having greater resources, leading to potential pricing pressures and loss of market share[74]. Supply Chain and Inventory - The Company sources a majority of its merchandise directly from manufacturers overseas, primarily in Southeast Asia, with 12% of total purchases coming from its largest vendor in fiscal 2021[24]. - The Company is subject to supply chain disruptions, including increased costs and delays in merchandise arrivals, which could adversely affect sales and increase markdowns[63]. - Fluctuating comparable sales and inventory management issues could negatively impact the Company's gross margin and overall results of operations[71]. Human Resources - The Company employs approximately 7,500 full-time and part-time associates as of January 29, 2022[45]. - High associate turnover rates, particularly among store sales associates, could increase recruiting and training costs, impacting operational efficiency[83]. - The Company is committed to promoting diversity and providing opportunities for advancement, with over 80% of store and field management promoted from within[46]. Financial Management - The Company provided cash from operating activities of $59.8 million in fiscal 2021, a significant increase of $90.5 million compared to a cash outflow of $30.7 million in fiscal 2020[172]. - Working capital as of January 29, 2022, was $111.5 million, slightly up from $108.6 million in the previous year, primarily due to higher short-term investments and inventory[173]. - The Company plans to invest $23.0 million in capital expenditures for fiscal 2022, alongside $71.3 million in lease obligations[171]. - The Company had no outstanding borrowings under its unsecured revolving credit agreement as of January 29, 2022, which allows for borrowings of up to $35.0 million[174]. Risks and Compliance - Security breaches resulting in unauthorized access to sensitive information could adversely affect the company's reputation and financial condition[93]. - The company faces payment-related risks, including potential increases in transaction fees and compliance costs associated with various payment methods[96]. - Changes in accounting rules and regulations may significantly impact the company's reported financial results and position[99]. - The company faces potential lawsuits regarding private label merchandise, which could adversely affect its financial condition and operations[110]. Shareholder Information - As of March 23, 2022, John P. D. Cato owned approximately 49.8% of the voting power, potentially limiting other shareholders' influence and affecting corporate governance[121]. - The trading price of the company's common stock has experienced significant volatility due to various factors, including market conditions and operational results[123]. - The cumulative total shareholder return for the company has fluctuated significantly over the past five fiscal years, with a base value of 100 on January 27, 2017, and a value of 87 on January 28, 2022[139].