Inventory and cost control help Cato to Q4 pro

US: Inventory and cost control help Cato to Q4 profit

By just-style.com | 20 March 2009

Careful control of inventory and costs, coupled with lower markdowns, has helped women's fashion retailer The Cato Corporation to a fourth quarter profit.

The Charlotte, North Carolina based retailer posted a net income of $3.9m or $0.13 per share for the three months to 31 January, compared to a loss of $1.8m or $0.06 per share in the same period last year.

Sales for quarter were $209.1m, flat to sales of $209.4m last time, while comparable store sales fell 3%.

For the full year, profit rose 4% to $33.6m or $1.15 per share, compared to $32.3m, or $1.03 per share in the prior year.

Annual sales at the retailer, which operates 1,282 Cato and It's Fashion stores, were up 1% to $845.7m from $834.3m, and same-store sales fell 1%.

"We are pleased with our 2008 results given the difficult environment," said John Cato, chairman, president and chief executive officer.

"We were able to manage our inventory and control costs throughout the year, increasing net income and EPS while closing 102 stores."

For the year, gross margin increased 210 basis points to 33.5% of sales due to higher merchandise margin as a result of lower markdowns.

Cato Corp said it expects the difficult economic environment to continue in 2009, with same-store sales in a range of down 3% to flat resulting in a net income of $28.8m to $34.7m.

For the year, earnings per share are seen in a range of $.98 to $1.17, a decrease of 14% to an increase of 3% over 2008.

For the first quarter, net income is forecast in a range of $14.4m to $16.0m, or $.49 to $.54 per share, a decrease of 14% to 5%, and is based on comparable store sales of down 3% to flat.

Sectors: Apparel, Finance, Retail

Companies: Cato