Cato(US:CATO)2025-11-25 18:47Sales Performance - Total retail sales for Q3 2025 were $153.7 million, a 6% increase from $144.6 million in Q3 2024, driven by a 10% increase in same-store sales [72]. - For the nine months ended November 1, 2025, total retail sales reached $496.8 million, a 2% increase from $486.8 million in the same period last year [72]. Cost and Expenses - Cost of goods sold for Q3 2025 was $104.5 million, or 68.0% of retail sales, down from 71.2% in Q3 2024, reflecting lower buying and distribution costs [74]. - Selling, general and administrative expenses were $57.0 million, or 37.1% of retail sales in Q3 2025, compared to $57.9 million, or 40.0% in Q3 2024 [75]. - Gross margin increased by 18.0% to $49.2 million in Q3 2025, compared to $41.7 million in Q3 2024 [74]. Store Operations - The company operated 1,101 stores as of November 1, 2025, down from 1,167 stores at the end of the previous fiscal year's third quarter, with an expectation to close approximately 50 stores in fiscal 2025 [72]. Revenue and Other Income - Other revenue for Q3 2025 was $1.7 million, slightly up from $1.5 million in Q3 2024, with credit revenue remaining flat at $0.7 million [73]. Tax and Income - The effective income tax rate for the first nine months of fiscal 2025 was (11.9%), compared to (67.5%) for the same period in fiscal 2024, primarily due to a reduction in foreign income taxes [78]. Financial Outlook - The company anticipates that product acquisition costs will be negatively impacted by tariffs, particularly on products sourced from China and Southeast Asia [70]. - The company believes its cash and cash equivalents, along with cash flows from operations, will be adequate to fund regular operating requirements for the next 12 months [79]. Cash Flow and Working Capital - Cash provided by operating activities increased by $16.5 million to $3.2 million in the first nine months of fiscal 2025, compared to a net loss in the prior year [80]. - Working capital rose to $58.3 million as of November 1, 2025, up from $34.9 million at February 1, 2025, primarily due to increased cash and cash equivalents [81]. Credit Facilities and Capital Expenditures - The Company established an asset-based revolving credit facility of up to $35.0 million, with $30.0 million available as of November 1, 2025 [82][83]. - Capital expenditures for the first nine months of fiscal 2025 totaled $2.9 million, down from $6.5 million in the same period last year, with an expected total of approximately $5.9 million for the full fiscal year [84][85]. Investment Activities - Net cash used in investing activities was negligible in the first nine months of fiscal 2025, compared to $21.5 million net cash provided in the same period of 2024 [86]. Financing Activities - Net cash used in financing activities decreased to $0.9 million in the first nine months of fiscal 2025, down from $12.6 million in the comparable period of fiscal 2024, primarily due to the elimination of dividend payments [87]. Deferred Compensation and Risk Management - Deferred compensation plan assets increased to $9.8 million as of November 1, 2025, up from $9.3 million at February 1, 2025 [89]. - The Company does not use derivative financial instruments and maintains an investment portfolio primarily in corporate bonds and taxable governmental debt securities [88]. - The ABL Credit Agreement is committed through May 2027 and is secured primarily by inventory and third-party credit card receivables [83]. - The Company does not believe its exposure to market rate risk from interest rate changes is material [91].