Cato Reports 2012 4Q And Full Year Earnings

                 Cato Reports 2012 4Q And Full Year Earnings

Provides 2013 Outlook

PR Newswire

CHARLOTTE, N.C., March 21, 2013

CHARLOTTE, N.C., March 21, 2013 /PRNewswire/ -- The Cato Corporation (NYSE:
CATO) today reported net income for the fourth quarter and year ended February
2, 2013. For the fourth quarter, the Company reported net income of $7.9
million or $0.27 per diluted share, compared to net income of $10.1 million or
$0.35 per diluted share for the fourth quarter ended January 28, 2012. For
the quarter, net income decreased 22% and earnings per diluted share decreased
23% from the prior year. Full year fiscal 2012 net income was $61.7 million
or $2.11 per diluted share compared to $64.8 million or $2.21 per diluted
share for 2011. For the year, both net income and earnings per diluted share
decreased 5% from the prior year.

Sales for fiscal fourth quarter ended February 2, 2013 were $232.0 million, an
increase of 5% over sales of $221.5 million for the fourth quarter ended
January 28, 2012. On a comparable 14-week basis, total sales for the quarter
decreased 4% and same-store sales decreased 7% from last year. For the year,
the Company's sales increased 1% to $933.8 million over 2011 sales of $920.6
million. On a comparable 53-week basis, total sales for the fiscal year ended
February 2, 2013 decreased 1% and same-store sales decreased 4% from last
year.

"Cato faced a very difficult year in 2012," stated John Cato, Chairman,
President and Chief Executive Officer. "The already weak economic environment
was further impacted by political uncertainty, tax changes and higher costs
that negatively impacted our customer."

4Q AND 2012 REVIEW

In the fourth quarter, gross margin increased 20 basis points over the prior
year to 34.8%  of sales primarily due to higher merchandise margin, somewhat
offset by higher store occupancy costs. Selling, general and administrative
expenses were 28.3%  of sales, compared to 26.7% in the prior year. SG&A
costs as a percent of sales were higher primarily due to the deleveraging of
store payroll costs and higher impairment costs, partially offset by lower
accrued incentive compensation. The Company's effective income tax rate
increased to 40.0% from 35.2% last year due to higher state taxes and a
correction of an immaterial prior period error.

For 2012, gross margin increased 10 basis points to 37.7%  of sales primarily
due to higher merchandise margin, partially offset by higher store occupancy
costs. Selling, general and administrative expenses increased to 26.2%  of
sales due to the same reasons as the fourth quarter. The Company's effective
income tax rate increased to 37.7% from 35.3% last year primarily due to the
reasons discussed above for the fourth quarter.

"Cato continues to maintain a strong balance sheet, with approximately $200
million in cash and short-term investments and no debt," commented Mr. Cato.
During 2012, the Company returned $87.2 million in profits to shareholders
through dividends. The dividends paid in 2012 include the acceleration of
2013's full dividend of $1.00 and a special dividend of $1.00. In late
February 2013, the Company increased its dividend by an annualized amount of
$0.20, a 20% increase over the annualized dividend rate for 2012, exclusive of
the special dividend and accelerated 2013 dividend discussed above. 

For the fiscal year ended February 2, 2013, the Company opened 34 stores,
relocated nine stores and closed 12 stores. The closings for the year include
two It's Fashion stores closed to open It's Fashion Metro stores in the same
market. As of February 2, 2013, the Company operated 1,310 stores in 31
states.

2013 OUTLOOK

The Company believes that the sales environment in 2013 will continue to be
difficult due to the ongoing negative economic environment, including slow job
growth, higher gasoline and food prices and increased payroll taxes, all of
which are squeezing our customers' discretionary budgets. In addition,
continued cooler weather conditions through the Easter selling season and
additional markdowns from weak sales are anticipated to negatively impact
first quarter results.

Earnings Estimates

For 2013, the Company estimates same-store sales will be in a range of down 3%
to down 1% and its gross margin rate will decrease to 37.1% from 37.7% in
2012, resulting in net income in a range of $48.1 million to $56.8 million, a
decrease of 22% to 8% compared to $61.7 million in 2012. The Company
estimates earnings per diluted share will be in a range of $1.64 to $1.93, a
decrease of 22% to 9% compared to $2.11 in 2012. Fiscal 2013 includes 52
weeks versus 53 weeks in 2012.

The Company estimates first quarter 2013 net income to be in a range of $30.3
million to $33.3 million, or $1.03 to $1.14 per diluted share, a decrease of
5% to an increase of 5% compared to $1.09 in first quarter 2012. This
estimate is based on same-store sales of down 4% to down 2%.

The Company's net income estimates for 2013 also reflect the following
assumptions:

  oThe Company expects to open 65 new stores during the year. The expected
    new store openings include 40 new Cato stores, 15 Versona Accessories
    stores, five It's Fashion stores and five It's Fashion Metro stores
    (including opening an estimated two Metro stores while simultaneously
    closing an existing It's Fashion store in the same market).
  oThe Company anticipates closing up to 15 stores by year-end, including the
    two It's Fashion store closings mentioned above. At this time, only six
    specific stores have been identified for closure.
  oCapital expenditures are projected to be approximately $44 million,
    including $26 million for store development, $10 million for home office
    renovation and additional investment into our e-commerce initiative as
    well as continued investment to enhance and upgrade our existing systems.
    The anticipated Distribution Center expansion has been delayed past 2013
    based on current needs.
  oDepreciation is expected to be approximately $23 million for the year.
  oThe effective tax rate is expected to be approximately 35.7%.

The Cato Corporation is a leading specialty retailer of value-priced fashion
apparel and accessories operating three concepts, "Cato", "Versona" and "It's
Fashion". The Company's Cato stores offer exclusive merchandise with fashion
and quality comparable to mall specialty stores at low prices every day.
Versona is a unique fashion destination offering accessories and apparel
including jewelry, handbags and shoes at exceptional prices every day. It's
Fashion offers fashion with a focus on the latest trendy styles for the entire
family at low prices every day. Additional information on The Cato
Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature including, without
limitation, statements regarding the Company's expected financial results and
operational activities for fiscal 2013 and the first quarter of 2013,
including statements under the headings "2013 Outlook" and "Earnings
Estimates," are considered "forward-looking" within the meaning of The Private
Securities Litigation Reform Act of 1995. These statements include, but are
not limited to, stated expectations, results and underlying assumptions
regarding future events, conditions and results, including consumer spending
and its underlying drivers, same-store sales, gross margin rates, net income,
earnings per diluted share, store openings and closings, capital expenditures,
depreciation and effective tax rates. Such forward-looking statements are
based on current expectations that are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those contemplated by the forward-looking statements. Such
factors include, but are not limited to, the following: any actual or
perceived deterioration in, or uncertainties regarding, prevailing U.S. and
global economic, political or financial market conditions or changes in other
factors that drive consumer or corporate confidence and spending, including,
but not limited to, levels of unemployment, fuel, energy and food costs, wage
rates, tax rates, home values, consumer net worth and the availability of
credit; uncertainties regarding the impact of any governmental responses to
the foregoing conditions; competitive factors and pricing pressures; our
ability to predict fashion trends; consumer apparel and accessory buying
patterns; adverse weather or similar conditions that may affect our sales or
operations; inventory risks due to shifts in market demand; and other factors
discussed under "Risk Factors" in Part I, Item 1A of our annual report on Form
10-K for the fiscal year ended January 28, 2012, as amended or supplemented,
and in other reports we file with or furnish to the SEC from time to time. We
do not undertake, and expressly decline, any obligation to update any such
forward-looking information contained in this report, whether as a result of
new information, future events, or otherwise, even if experience or future
changes make it clear that the projected results expressed or implied therein
will not be realized. The Company is not responsible for any changes made to
this press release by wire or internet services.

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED FEBRUARY 2, 2013 AND JANUARY 28, 2012
(Dollars in thousands, except per share data)
               Quarter Ended                       Twelve Months Ended
               February  %       January   %       February  %       January   %
               2,                28,               2,                28,
               2013      Sales   2012      Sales   2013      Sales   2012      Sales
REVENUES
 Retail sales $ 231,967 100.0%  $ 221,518 100.0%  $ 933,782 100.0%  $ 920,622 100.0%
 Other income
(principally
finance,
 late fees
and layaway      2,669   1.1%      2,789   1.2%      10,266  1.1%      10,836  1.2%
charges)
 Total        234,636 101.1%    224,307 101.2%    944,048 101.1%    931,458 101.2%
revenues
GROSS MARGIN     80,696  34.8%     76,721  34.6%     351,821 37.7%     346,446 37.6%
(Memo)
COSTS AND
EXPENSES, NET
 Cost of        151,271 65.2%     144,797 65.4%     581,961 62.3%     574,176 62.4%
goods sold
 Selling,
general and      65,616  28.3%     59,227  26.7%     244,443 26.2%     239,003 25.9%
administrative
 Depreciation   5,595   2.4%      5,729   2.6%      22,455  2.4%      21,825  2.4%
 Interest and   (1,077) -0.5%     (1,050) -0.5%     (3,782) -0.4%     (3,817) -0.4%
other income
 Cost and     221,405 95.4%     208,703 94.2%     845,077 90.5%     831,187 90.3%
expenses, net
Income Before    13,231  5.7%      15,604  7.0%      98,971  10.6%     100,271 10.9%
Income Taxes
Income Tax       5,287   2.3%      5,499   2.5%      37,303  4.0%      35,437  3.9%
Expense
Net Income     $ 7,944   3.4%    $ 10,105  4.5%    $ 61,668  6.6%    $ 64,834  7.0%
Basic Earnings $ 0.27            $ 0.35            $ 2.11            $ 2.21
Per Share
Diluted
Earnings Per   $ 0.27            $ 0.35            $ 2.11            $ 2.21
Share



THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                             February 2,   January 28,   January 28
                             2013          2012          2012
                             (Unaudited)   (Unaudited)   (Unaudited)
ASSETS
Current Assets
 Cash and cash equivalents  $  31,069     $  34,893     $   34,893
 Short-term investments        157,578       205,771        205,771
 Restricted Cash               5,999         5,325          5,325
 Accounts receivable - net     40,016        43,024         43,024
 Merchandise inventories       140,738       130,382        130,382
 Other current assets          14,814        9,737          9,737
Total Current Assets            390,214       429,132        429,132
Property and Equipment - net    134,227       115,445        115,445
Other Assets                    8,205         6,512          6,512
 TOTAL                  $  532,646    $  551,089    $   551,089
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities          $  159,602    $  156,993    $   156,993
Noncurrent Liabilities          27,810        27,417         27,417
Stockholders' Equity            345,234       366,679        366,679
 TOTAL                  $  532,646    $  551,089    $   551,089



SOURCE The Cato Corporation

Website: http://www.catocorp.com
Contact: John R. Howe, Executive Vice President, Chief Financial Officer,
+1-704-551-7315
 
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