The Cato Corporation posted net income of US$12.1m in the second quarter, down 3% from $12.5m in the prior year period, but benefited from tighter inventory management.

Sales for the second quarter were $231.0m, a 5% increase over sales of $219.0m last year. Second quarter same-store sales increased 2%.

For the six months ended 2 August, the company earned net income of $28.9m, compared with net income of $31.2m in the prior year period.

Sales for the first half were $456.7m, an increase of 3% over the prior year's first half sales of $443.1m. Same-store sales for the first half were flat compared to first half 2007.

"Second quarter results benefited from tight inventory management, better sell-throughs of regular priced merchandise and the impact on overall sales from stimulus checks," said John Cato, chairman, president, and chief executive officer.

"We expect the remainder of the year to be difficult as our customer continues to face difficult economic conditions.

"We remain comfortable with our original guidance for the second half of the year with earnings per diluted share in a range of ($.06) to $.04 versus $.03 last year."

Second quarter SG&A costs as a percent of sales increased to 27.5% from 23.9% last year, primarily as a result of the costs associated with closing 47 underperforming stores.

During the first half, the company opened 32 new stores, closed 63 stores and continues to expect to open approximately 70 stores during 2008.

Its same-store sales for both the third and fourth quarters are estimated to be in the range of down 3% to flat.