• Q1 net profit up 22% to US$30.5m
  • Net sales up 5% to $270.9m
  • Margins drop 70 basis points

Value apparel retailer The Cato Corporation recorded a 22% rise in first quarter net profit, driven by a 5% sales increase despite falling margins.

Comparable store sales were up 2% in the three months to 30 April, but gross margin fell 70 basis points to 41.5%, primarily thanks to lower merchandise contribution and higher freight expenses.

“First quarter sales, including a strong February, were above expectations,” said John Cato, company chairman, president and CEO.

“Higher sales and a reduction in incentive compensation drove our record quarter.”