Value-apparel retailer posts Q2 loss; pulls back on expansion

The Cato Corp. swung to a loss in the second quarter amid continuing negative sales trends.



The apparel retailer reported a net loss of $0.9 million, or a loss of $0.03 per diluted share, for the quarter ended July 29, compared to net income of $15.9 million, or $.57 per diluted share, for the year ago period.



Sales for the second quarter fell 13% to $205.0 million, down from $236.7 million last year. Same-store sales plunged 14%.



"Negative sales trends continue to put severe pressure on merchandise margins and profitability as we continue to work through our merchandise missteps," stated John Cato, chairman, president, and CEO Officer. "It is taking longer to work through these issues than expected and we expect full year earnings to be significantly below last year."



Cato said it expects to open six new stores during 2017, down from its previous estimate of 13 stores. The company explained the reduction saying "the economics of opening stores is not as feasible with current sales trends."



As of July 29, 2017, the company operated 1,374 stores in 33 states, compared to 1,373 stores in the year-ago period.