Cato Net Up in Q4, Cautious on Outlook

Cato Corp. soared past earnings expectations in the fourth quarter while providing a guarded forecast of first-quarter results. In the three months ended Jan. 31, the Charlotte, N.C.-based specialty store chain generated net income of $9.2 million, or 33 cents a diluted share, more than double the $3.8 million, or 13 cents, recorded during the comparable 2013 quarter. Analysts expected a less profitable outcome, estimating, on average, earnings per share of 27 cents. Revenues expanded 10.4 percent, to $240.1 million from $217.6 million, and were up 8 percent on a same-store basis. Lifted by an improvement in merchandise margins, gross margin stepped up to 36.5 percent of revenues from 34.7 percent in the 2013 period. The company ended the fiscal year with inventories of $137.5 million, 8.8 percent below the year-ago level. John Cato, president and chief executive officer, said “favorable weather” contributed to the strong results. However, inclement weather at the start of the first quarter constrained the firm’s guidance. On March 5, Cato, among the small group of publicly held retailers that continue to disclose monthly sales, reported a 10 percent decline in February comps, a result “significantly impacted by winter storms during the last two weeks of the month,” the ceo said. With

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