Cato Q3 Profit Up 16%, Lifts 2014 Earnings Outlook

(RTTNews) - Value-priced fashion apparel retailer Cato Corp. (CATO) on Thursday reported a 16 percent increase in profit for the third quarter from last year, reflecting higher revenues and margins. In addition, the company raised its earnings outlook for fiscal 2014.

John Cato, Chairman, President, and Chief Executive Officer said, "Our third quarter results exceeded our latest guidance. This was primarily the result of a stronger sales trend than last year."

Charlotte, North Carolina-based Cato's net income for the third quarter was $5.69 million or $0.20 per share, up from $4.89 million or $0.17 per share in the year-ago period.

Total revenues for the quarter increased 7 percent to $216.01 million from $201.04 million in the prior-year period.

Of the total revenues, retail sales grew 8 percent from last year to $213.79 million. Other income, principally finance, late fees and layaway charges, declined 1 percent to $2.23 million.

Cato's same-store sales for the quarter increased 4 percent year-over-year.

Gross margin rate rose 100 basis points from last year to 36.2 percent of sales, primarily due to higher merchandise margin.

Total costs and expenses for the quarter were $208.85 million, up 7 percent from $194.56 million in the year-ago period.

Year-to-date, Cato has opened 27 new stores, relocated two stores, and closed four stores. As of November 1, 2014, the company operated 1,343 stores in 32 states, compared to 1,318 stores in 32 states a year ago.

Cato now expects to open 33 stores during 2014, down from its last estimate of 46 due to a lack of shopping center development and increased competition for available space.

Looking ahead to the fourth quarter, Cato forecasts earnings within its original guidance range, updated for share repurchases, in a range of $0.13 to $0.17 per share.

For fiscal 2014, Cato forecasts earnings per share in a range of $1.95 to $1.99 per share. Earlier, the company projected earnings within an adjusted range of $1.82 to $1.91 per share.

CATO is trading at $37.77, up $0.88 or 2.39 percent on a volume of 52,837 shares.