Cato(US:CATO)2024-08-29 18:00Sales Performance - Total retail sales for Q2 2024 were $166.9 million, an 8% decrease from $181.2 million in Q2 2023, primarily due to a 2% decrease in same-store sales and store closures [55]. - For the first six months of fiscal 2024, total retail sales were $342.2 million, down 8% from $371.5 million in the same period last year, driven by a 4% decrease in same-store sales [55]. Store Operations - The company operated 1,166 stores as of August 3, 2024, down from 1,247 stores a year earlier, with plans to close approximately 65 stores in total during fiscal 2024 [56]. Cost and Expenses - Cost of goods sold for Q2 2024 was $109.1 million, or 65.4% of retail sales, compared to $117.6 million, or 64.9% of retail sales in Q2 2023 [58]. - Selling, general and administrative expenses (SG&A) were $58.2 million, or 34.9% of retail sales in Q2 2024, down from $61.6 million, or 34.0% of retail sales in Q2 2023 [59]. Income and Tax - Net income for Q2 2024 was $0.2 million, or 0.1% of total revenues, compared to $1.2 million, or 0.6% in Q2 2023 [51]. - Income tax expense for Q2 2024 was $0.6 million, down from $1.3 million in Q2 2023, with an effective tax rate of 10.5% compared to 38.5% in the prior year [62]. Other Income and Revenue - Interest and other income increased to $1.7 million, or 1.0% of retail sales in Q2 2024, from $1.3 million, or 0.7% in Q2 2023, primarily due to higher interest earned on investments [61]. - Other revenue for the first six months of fiscal 2024 was $3.5 million, slightly up from $3.4 million in the same period last year, driven by increases in gift card breakage income and finance charges [57]. Financial Position - Cash provided by operating activities decreased to $8.8 million in the first six months of fiscal 2024 from $21.6 million in the same period of fiscal 2023, a decline of $12.8 million [64]. - Working capital increased to $69.9 million as of August 3, 2024, up from $55.1 million at February 3, 2024, primarily due to a decrease in current lease liability and an increase in cash [64]. Capital Expenditures - Expenditures for property and equipment totaled $4.8 million in the first six months of fiscal 2024, down from $8.5 million in the same period last year [66]. Cash Flow Activities - Net cash provided by investing activities was $6.7 million in the first six months of fiscal 2024, compared to $23.8 million in the same period of 2023, reflecting higher purchases of short-term investments [67]. - Net cash used in financing activities totaled $9.1 million in the first six months of fiscal 2024, slightly down from $9.3 million in the comparable period of fiscal 2023 [67]. Dividends and Credit Facilities - The Company maintained a quarterly dividend of $0.17 per share as of August 29, 2024 [67]. - The Company has an unsecured revolving credit agreement allowing borrowings of up to $35.0 million, with no outstanding borrowings as of August 3, 2024 [65]. Investment Portfolio - The investment portfolio primarily consists of corporate bonds and government debt securities rated A or better, with maturities ranging from six days to 2.9 years [69]. Deferred Compensation - Deferred compensation plan assets increased to $8.9 million as of August 3, 2024, up from $8.6 million at February 3, 2024 [70]. Economic Environment - The company experienced inflationary cost pressures and high interest rates, negatively impacting consumer behavior and disposable income in the first half of fiscal 2024 [53]. - Merchandise supply chain disruptions, including reduced transits through the Panama Canal and increased shipping costs due to regional hostilities, have negatively impacted operations [54].