Cato in Q2 loss; ‘cautious’ about rest of year

Cato Corp. saw its revenue fall 21% during the second quarter as sales softened.

The women’s apparel retailer reported a net loss of $7.2 million or ($0.30) per diluted share for the second quarter ended August 1, compared to net income of $11.9 million or $0.48 per diluted share for the year-ago period.

Sales fell 21% to $166.3 million. Same-store sales decreased 24%.

"Sales softened through the quarter and into early August,” stated John Cato, chairman, president and CEO. “As we see this trend continuing, we are cautious about the second half of the year.”

For the six months ended August 1, 2020, Cato reported a net loss of $35.6 million or ($1.48) per diluted share, compared to net income of $33.1 million or $1.34 per diluted share for the six months ended August 3, 2019. Sales for the six months ended August 1, 2020 were down 40% to $265.1 million. Year-to-date same-store sales decreased 39%.

During the quarter, the company paid $30 million on its line of credit, bringing the outstanding balance to $0. It ended the quarter with unrestricted cash and short-term investments of $137.0 million and full availability on its $35 million revolving line of credit. 

As of Aug. 1, Cato operated 1,333 stores in 31 states, compared to 1,299 stores at the same time last year.