Cato ups store closings, cites 'current economic environment’
Value-priced women's apparel retailer The Cato Corp. has added more stores to its list of planned closures for its current fiscal year.
The company plans to close approximately 70 additional underperforming stores in the third and fourth quarters, bringing its total planned stores closures to approximately 120 stores in fiscal 2026. (As of Aug. 1, Cato had 1,057 stores in 31 states,)
Cato has struggled with slumping sales in recent quarters as its customers deal with economic pressures and cut back on discretionary spending. Sales fell 6% to $163.9 million the company’s most recent quarter. Net income fell to $1.1 compared to $6.8 million in the year-ago quarter.
In a statement, Cato chairman, president and CEO John Cato said the company annually reviews approximately one-third of its stores to exercise available lease options or negotiate an extension based on each store's performance including store sales trend and current and projected store profitability.
"In years past, marginal stores were renewed for an additional year to give the store more time to improve its sales trend and profitability," he said. "In light of the current economic environment, especially with the negative pressure on our customers' discretionary income, we do not expect these marginal stores to improve appreciably. As a result, we are closing more stores than expected this year. We believe that closing these additional stores will have a positive impact on our operating results in fiscal 2027 and beyond."
The company expects to incur between $1.0 million and $1.3 million in costs to exit the additional stores through the end of 2026. These costs relate primarily to expenses for the disposal of external signage and fixtures and returning store systems back to corporate. As these stores are all at the end of their lease term, Cato noted it will not be paying rent for these locations beyond 2026.
In addition to its namesake banner, Cato operates stores under the Versona and It's Fashion brands. The company is headquartered in Charlotte, N.C.
