Cato(CATO) - 2023 Q2 - Quarterly Report

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]