Cato(CATO) - 2024 Q4 - Annual Results

Cato Corporation Q4 and Full-Year 2023 Earnings Release The company reported a significant net loss for fiscal 2023, driven by declining sales and a substantial income tax expense Financial Performance Summary The company reported a $23.9 million net loss for fiscal 2023, driven by a 7% sales decline and a large income tax expense Fiscal 2023 vs. 2022 Performance | Metric | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | ($23.4M) | ($3.0M) | ($23.9M) | $0.0M | | Diluted EPS | ($1.14) | ($0.14) | ($1.17) | $0.00 | | Sales | $172.1M | $177.5M | $700.3M | $752.4M | | Sales Change | -3% | | -7% | | - The net loss was significantly impacted by an income tax expense of $10.9 million for Q4 and $10.1 million for the full year, primarily due to a non-cash valuation allowance[3] - Management attributes the negative sales trend to pressure on customers' discretionary spending from higher interest rates and inflation[5] Margin and Expense Analysis (% of Sales) | Metric | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 31.0% | 31.3% | 33.7% | 32.3% | | SG&A Expenses | 39.2% | 33.8% | 36.1% | 32.3% | - The full-year gross margin increased due to lower ocean freight costs and more regular-priced selling, while the increase in SG&A expenses was due to higher payroll, insurance, and impairment expenses[6] Store Operations and Business Outlook The company reduced its store count in 2023 and plans further optimization in 2024 amid a cautious economic outlook - Management remains cautious for 2024, citing the challenging economic environment with high interest rates and inflation impacting customer disposable income[7] - Strategic priorities for 2024 include introducing new merchandise, refining assortments, and investing in productivity and efficiency initiatives[7][8] Store Portfolio Changes | Activity | 2023 (Actual) | 2024 (Planned) | | :--- | :--- | :--- | | Stores Opened | 7 | Up to 15 | | Stores Closed | 109 | Up to 75 | | Total Stores (End of Period) | 1,178 | N/A | Financial Statements The consolidated statements show a pre-tax loss of $13.8 million and a decline in total assets and stockholders' equity Condensed Consolidated Statements of Income (Loss) The statements detail a significant net loss for both Q4 and the full fiscal year 2023 compared to the prior year Full Year Income Statement Highlights (in thousands) | Line Item | Fiscal Year 2023 | Fiscal Year 2022 | | :--- | :--- | :--- | | Total Revenues | $708,059 | $759,260 | | Gross Margin | $236,005 | $242,706 | | SG&A Expenses | $252,777 | $242,648 | | Income Before Income Taxes | ($13,801) | $1,770 | | Income Tax Expense | $10,140 | $1,741 | | Net Income (Loss) | ($23,941) | $29 | Q4 Income Statement Highlights (in thousands) | Line Item | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Total Revenues | $174,882 | $179,049 | | Gross Margin | $53,367 | $55,590 | | Income Before Income Taxes | ($12,481) | ($4,238) | | Income Tax Expense (Benefit) | $10,937 | ($1,246) | | Net Income (Loss) | ($23,418) | ($2,992) | Condensed Consolidated Balance Sheets The balance sheet reflects decreased total assets and stockholders' equity, alongside lower inventory and higher cash levels Balance Sheet Highlights (in thousands) | Account | Feb 3, 2024 | Jan 28, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $23,940 | $20,005 | | Short-term investments | $79,012 | $108,652 | | Merchandise inventories | $98,603 | $112,056 | | Total Current Assets | $243,062 | $277,673 | | Total Assets | $486,817 | $553,140 | | Total Current Liabilities | $188,008 | $202,957 | | Stockholders' Equity | $192,321 | $226,593 |