CATO REPORTS 2Q RESULTS

Core Viewpoint - The Cato Corporation reported a decline in net income and sales for the second quarter of 2024, primarily due to store closures and decreased same-store sales, indicating ongoing challenges in the retail environment. Financial Performance - For the second quarter ended August 3, 2024, net income was $0.1 million or $0.01 per diluted share, down from $1.1 million or $0.06 per diluted share in the same quarter of 2023 [1][9]. - Sales for the second quarter were $166.9 million, an 8% decrease from $181.2 million in the prior year, attributed to closed stores and a 2% decline in same-store sales [2][9]. - Year-to-date net income for the six months ended August 3, 2024, was $11.1 million or $0.54 per diluted share, compared to $5.6 million or $0.27 per diluted share for the same period in 2023 [3][9]. - Year-to-date sales were $342.2 million, an 8% decrease from $371.5 million in the previous year, primarily due to closed stores and a 4% decline in same-store sales [3][9]. Cost and Margin Analysis - Gross margin for the second quarter decreased from 35.1% to 34.6% of sales, impacted by higher distribution costs and deleveraging of occupancy and buying costs, partially offset by higher merchandise margins [4][5]. - Selling, general and administrative (SG&A) expenses as a percentage of sales increased from 34.0% to 34.9% during the quarter, primarily due to payroll cost deleveraging, although total SG&A expenses were $3.4 million lower than the previous year [4][5]. - Year-to-date gross margin decreased from 35.5% to 35.2%, with SG&A expenses at 33.6% compared to 33.3% in the prior year, reflecting similar trends in cost management [5]. Store Operations - The company closed five stores during the second quarter, resulting in a total of 1,166 stores in 31 states as of August 3, 2024, down from 1,247 stores in the same period of the previous year [6][9]. Company Overview - The Cato Corporation operates as a specialty retailer of value-priced fashion apparel and accessories under three concepts: "Cato," "Versona," and "It's Fashion," offering exclusive merchandise at competitive prices [7].