Cato(CATO) - 2021 Q2 - Quarterly Report

Sales Performance - Total retail sales for Q2 2020 were $166.3 million, a 21.0% decrease from $210.4 million in Q2 2019[80] - Same-store sales decreased by 22% in Q2 2020 and 39% for the first six months of fiscal 2020[80] - Total revenues for Q2 2020 were $168.2 million, down from $212.6 million in Q2 2019, and $268.9 million for the first six months, compared to $442.9 million in the prior year[81] Cost and Expenses - Cost of goods sold was $132.7 million (79.8% of retail sales) for Q2 2020, compared to $130.4 million (62.0% of retail sales) in Q2 2019[84] - Gross margin dollars decreased by 58.1% to $33.5 million for Q2 2020, down from $80.0 million in Q2 2019[84] - SG&A expenses were $44.0 million (26.4% of retail sales) for Q2 2020, compared to $66.1 million (31.4% of retail sales) in Q2 2019[85] Store Operations - The company operated 1,333 stores as of August 1, 2020, compared to 1,299 stores at the end of the previous year's second quarter[81] - The company expects to open 76 stores and close approximately 40 stores in fiscal 2020[81] E-commerce Performance - E-commerce sales were less than 6% of total sales for the six months ended August 1, 2020[80] Financial Management - The company suspended its quarterly dividend and significantly reduced capital expenditures due to COVID-19[78] - Income tax benefit for Q2 2020 was $3.9 million, compared to an expense of $2.1 million in Q2 2019, with a year-to-date effective tax rate of 26.7%[89] - Cash used by operating activities in the first six months of fiscal 2020 was $48.2 million, compared to cash provided of $45.2 million in the same period of fiscal 2019[92] - Working capital decreased to $126.6 million as of August 1, 2020, from $163.5 million at February 1, 2020, primarily due to reduced short-term assets and lower inventories[95] Capital Expenditures and Investments - Expenditures for property and equipment totaled $9.8 million in the first six months of fiscal 2020, up from $2.2 million in the same period last year, with an expected total of approximately $13.0 million for the full fiscal year[97] - Net cash provided by investing activities was $91.0 million in the first six months of fiscal 2020, compared to $23.4 million used in the same period of 2019[98] - Net cash used in financing activities totaled $17.6 million in the first six months of fiscal 2020, a decrease from $18.8 million in the comparable period of fiscal 2019[99] Credit and Risk Management - The company maintains a $35.0 million unsecured revolving credit facility, with no outstanding borrowings as of August 1, 2020[92] - The company recorded a valuation allowance against deferred tax assets due to the likelihood of not realizing state net operating losses[90] - The investment portfolio primarily consists of corporate bonds and government debt securities rated A or better, with maturities ranging from six days to seven years[101] - The company does not use derivative financial instruments, indicating a conservative approach to financial risk management[100]