Weather, promotions hurt Cato Q4 net income; 64 new stores planned
Charlotte, N.C. – The Cato Corporation cited weather, holiday promotions and a 53rd week in fiscal 2012 as impacting its net income during the fourth quarter of fiscal 2013. The retailer also said it plans to open 64 new stores and close 17 existing stores during fiscal 2014.
Net income fell 52% to $3.8 million from $7.9 million in the same period the prior year, within previously announced guidance range, while sales dropped 7% to $215.2 million from $232 million.
Full year fiscal 2013 net income was $54.3 million, down 12% from $61.7 million for 2012. For the year, the company's sales decreased 2% to $910.5 million from 2012 sales of $933.8 million. Same-store sales declined 3%.
The company believes that 2014 could be another tough year, saying the sales environment may be difficult due to continuing slow job growth and higher costs which reduce customers' discretionary income. For 2014, the company estimates same-store sales will be in a range of down 2% to flat and net income in a range of $43.1 million to $48.5 million, a decrease of 21% to 11% compared to $54.3 million in 2013. Cato estimates first quarter 2014 net income to be in a range of $26 million to $27.7 million, based on same-store sales of down 2% to flat.
"Results for 2013 were negatively impacted by the continuing difficult economic situation our customers have faced for some time now," said John Cato, chairman, president and CEO. "Even with the very challenging environment, we have continued to grow our store base, manage our inventory, control costs and, most importantly, remain profitable. We have also continued to invest in our business by renovating and expanding facilities, upgrading systems and launching an e-commerce website in November. In regard to the fourth quarter, earnings were impacted by a very promotional holiday sales season as well as a number of winter storms in December and January. Also, the comparison of fourth quarter results to the prior year is negatively impacted by the fact this year had one less week than the prior year period."