• Net income up 4% to US$31.7m
  • Sales flat at $272.8m
  • Same store sales fell 2%

Cato has reported a 4% increase in first quarter net income as the company said it sold more higher margin merchandise.

The US clothing retailer said yesterday (17 May) that net income reached US$31.7m against $30.5m in the same period of the prior year.

Sales were broadly flat on the previous year at US$272.8m, as same-store sales declined 2% over the quarter. Gross margin increased 60 basis points to 42.1% due to a higher merchandise contribution over the quarter.

"Although the level of sales by month varied due to unexpected circumstances including early warm weather and the delay of tax refunds, first quarter sales overall were within our expectations and reflect the continuing difficult economic environment for our customers," said chairman, president and CEO John Cato.

"Higher merchandise margin and lower accrued incentive compensation had the largest impact in the quarter.