[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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑ 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 ( ...

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 ...

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 July 30, 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 (State ...

UNITED STATES SECURITIES AND EXCHANGECOMMISSION Washington, D.C.20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934 For the quarterlyperiod endedApril 30, 2022 OR ☐ TRANSITIONREPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934 For the transitionperiod from________________to__________________ Commissionfile number 1-31340 | --- | --- | --- | --- | |---------------------------------------------------|------------------------------------ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-31340 The Cato Corporation Registrant Delaware 56-0484485 State of Incorporation I.R.S. Employer Identification Number 8100 Denmark Road Charlotte, North Carolina 28273-5975 Address ...

Sales Performance - Total retail sales for the third quarter of fiscal 2021 were $170.5 million, a 14% increase from $149.2 million in the same period last year[81]. - For the nine months ended October 30, 2021, total retail sales reached $587.7 million, a 42% increase compared to $414.3 million for the same period in the previous year[82]. - Same-store sales increased by 14% in the third quarter and 41% for the nine months ended October 30, 2021, primarily due to stores being open compared to limited hours in the prior year[81][82]. Cost and Expenses - Cost of goods sold was $104.2 million, or 61.1% of retail sales for the third quarter, down from 73.3% in the same period last year[85]. - Gross margin dollars increased by 66.6% to $66.3 million for the third quarter and by 175.9% to $244.2 million for the first nine months of fiscal 2021[85]. - Selling, general and administrative expenses were $62.5 million, or 36.6% of retail sales for the third quarter, compared to $51.9 million, or 34.8% in the prior year[87]. - Depreciation expense was $3.2 million, or 1.9% of retail sales for the third quarter, down from $3.6 million, or 2.4% in the same period last year[88]. Store Operations - The company operated 1,324 stores at October 30, 2021, compared to 1,347 stores at the end of the previous year's third quarter[82]. - The company expects to open fewer than 10 stores and close approximately 25 stores in fiscal 2021[82]. Impact of COVID-19 - The ongoing COVID-19 pandemic continues to impact sales and operations, with uncertainties affecting consumer confidence and supply chain disruptions[78][80]. Income and Tax - Interest and other income decreased to $0.5 million (0.3% of retail sales) for the three months ended October 30, 2021, down from $0.8 million (0.5% of retail sales) in the same period of fiscal 2020[89]. - Income tax benefit for the third quarter was $5.7 million, compared to $9.7 million in the same quarter of fiscal 2020, with an effective tax rate of 4.3% for the first nine months of fiscal 2021 versus 36.7% in 2020[90]. Cash Flow and Working Capital - Cash provided by operating activities increased to $79.4 million in the first nine months of fiscal 2021, compared to a cash outflow of $26.1 million in the same period of fiscal 2020, reflecting a $105.5 million improvement[92]. - Working capital rose to $147.4 million as of October 30, 2021, from $108.6 million at January 30, 2021, primarily due to higher inventory and accounts receivable[93]. Financing and Investments - The company had an unsecured revolving credit agreement allowing borrowings of up to $35.0 million, with no borrowings outstanding as of October 30, 2021[94]. - Capital expenditures totaled $1.8 million in the first nine months of fiscal 2021, significantly lower than $11.2 million in the same period last year, with an expected total of approximately $4.1 million for the full fiscal year[95]. - Net cash used in investing activities was $51.3 million in the first nine months of fiscal 2021, compared to $57.9 million provided in the same period of 2020[96]. - Net cash used in financing activities decreased to $21.3 million in the first nine months of fiscal 2021 from $24.3 million in the comparable period of fiscal 2020, primarily due to lower dividends and stock repurchases[97]. - The company maintained a quarterly dividend of $0.17 per share as of November 18, 2021[99]. - The investment portfolio primarily consists of corporate bonds and government debt securities rated A or better, with maturities ranging from two days to five years[101].

Sales Performance - Total retail sales for the second quarter of fiscal 2021 were $206.0 million, a 24% increase from $166.3 million in the same period last year[81]. - Same-store sales increased by 23% in the second quarter of fiscal 2021, primarily due to stores being open compared to closures in the prior year[81]. - For the six months ended July 31, 2021, total retail sales reached $417.2 million, a 57% increase from $265.1 million in the same period last year[81]. Cost and Expenses - Cost of goods sold for the second quarter was $115.6 million, or 56.1% of retail sales, down from 79.8% in the same quarter of fiscal 2020[85]. - Selling, general and administrative expenses (SG&A) were $71.0 million, or 34.5% of retail sales, compared to $44.0 million, or 26.4% of retail sales in the same quarter last year[86]. Profitability - Gross margin dollars increased by 169.9% to $90.4 million for the second quarter of fiscal 2021, compared to $33.5 million in the prior year[85]. - Net income for the second quarter of fiscal 2021 was $14.0 million, compared to a net loss of $7.2 million in the same quarter of fiscal 2020[77]. - Income tax expense increased to $4.6 million for the second quarter of fiscal 2021, compared to an income tax benefit of $3.9 million in the same quarter of fiscal 2020, reflecting a change in effective tax rate from 26.7% (benefit) to 18.0% (expense)[90]. Store Operations - The company operated 1,325 stores at July 31, 2021, a decrease from 1,333 stores at the end of the previous year's second quarter[82]. - The company expects to open fewer than 10 stores and close approximately 25 stores in fiscal 2021[82]. Cash Flow and Working Capital - Cash provided by operating activities was $82.0 million in the first six months of fiscal 2021, a significant increase of $130.2 million compared to a cash outflow of $48.2 million in the same period of fiscal 2020[92]. - Working capital increased to $148.2 million as of July 31, 2021, up from $108.6 million at January 30, 2021, primarily due to higher short-term investments[93]. Financing and Investments - Interest and other income decreased to $0.5 million (0.3% of retail sales) for the first six months of fiscal 2021, down from $1.0 million (0.6% of retail sales) in the same period of fiscal 2020[89]. - Capital expenditures totaled $1.1 million in the first six months of fiscal 2021, a decrease from $9.8 million in the same period of the previous fiscal year[96]. - Net cash used by investing activities was $64.9 million in the first six months of fiscal 2021, compared to $91.0 million provided in the same period of fiscal 2020[97]. - Net cash used in financing activities decreased to $8.8 million in the first six months of fiscal 2021, down from $17.6 million in the comparable period of fiscal 2020[98]. Share Repurchase and Financial Management - As of July 31, 2021, the company had 1,380,779 shares remaining in open authorizations under its share repurchase program[99]. - The company does not use derivative financial instruments, indicating a conservative approach to financial risk management[100].