Cato Fashions swings to Q2 profit but sales drop

The Cato Corporation reported net income of 1.1 million dollars or 6 cents per diluted share for the second quarter compared to a net loss of 2.3 million dollars or 11 cents loss per diluted share for the same quarter of 2022.

Sales for the quarter were 181.2 million dollars or a decrease of 7 percent, while the same-store sales decreased 5 percent compared to 2022. For the six months, the company reported net income of 5.6 million dollars or 27 cents per diluted share, while sales were 371.5 million dollars, a decrease of 7 percent. Year-to-date same-store sales decreased 5 percent compared to 2022.

"Our year-to-date sales trend continues to be negatively impacted by pressure on our customers' discretionary spending," stated John Cato, the company’s chairman, president and CEO, adding, "Our gross margin improved as we took steps to right size our inventory. However, we believe the back half of the year will remain challenging."

Gross margin increased to 35.1 percent and year-to-date gross margin increased to 35.5 percent. During the second quarter, the company opened two new stores, relocated one store and closed 19 stores. As of July 29, 2023, the company operated 1,247 stores in 31 states.