Cato Corp. (CATO, Financial) filed Quarterly Report for the period ended 2011-10-29.
Cato Corp. Cl A has a market cap of $717.3 million; its shares were traded at around $25.89 with a P/E ratio of 12.1 and P/S ratio of 0.8. The dividend yield of Cato Corp. Cl A stocks is 3.6%. Cato Corp. Cl A had an annual average earning growth of 4.2% over the past 10 years. GuruFocus rated Cato Corp. Cl A the business predictability rank of 3.5-star.
Cost of goods sold was $125.8 million, or 64.8% of retail sales and $429.4 million or 61.4% of retail sales for the third quarter and first nine months of fiscal 2011, compared to $127.1 million, or 64.2% of retail sales and $418.4 million or 60.7% of retail sales for the prior year s comparable three and nine month periods, respectively. The overall increase in cost of goods sold as a percent of retail sales for the third quarter was due to higher occupancy costs related to store development partially offset by a decrease in comparable store sales. For the first nine months of 2011, the increase resulted primarily from lower sell-throughs of regular priced merchandise. Cost of goods sold includes merchandise costs (net of discounts and allowances), buying costs, distribution costs, occupancy costs, freight and inventory shrinkage. Net merchandise costs and in-bound freight are capitalized as inventory costs. Buying and distribution costs include payroll, payroll-related costs and operating expenses for the buying departments and distribution center. Occupancy expenses include rent, real estate taxes, insurance, common area maintenance, utilities and maintenance for stores and distribution facilities. Total gross margin dollars (retail sales less cost of goods sold exclusive of depreciation) decreased by 3.8% to $68.3 million for the third quarter of fiscal 2011 and decreased by 0.4% to $269.7 million for the first nine months of fiscal 2011 compared to $71.0 million and $270.7 million for the prior year s comparable three and nine month periods, respectively. Gross margin as presented may not be comparable to those of other entities.
Selling, general and administrative expenses (“SG&A”) primarily include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, bank and credit card processing fees and bad debts. SG&A expenses were $57.5 million, or 29.6% of retail sales and $179.8 million, or 25.7% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $60.6 million, or 30.6% of retail sales and $191.0 million, or 27.7% of retail sales for the prior year s comparable three and nine month periods, respectively. SG&A expenses as a percentage of retail sales decreased 100 basis points for the third quarter of fiscal 2011 as compared to the prior year primarily as a result of lower accrued incentive compensation costs. For the first nine months of fiscal 2011, SG&A expenses decreased 200 basis points as compared to the prior year. The overall dollar decrease for the first nine months of fiscal 2011 was primarily attributable to decreased accrued incentive based compensation and insurance costs partially offset by an increase in payroll costs.
Interest and other income was $0.9 million, or 0.4% of retail sales and $2.8 million, or 0.4% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $1.0 million, or 0.5% of retail sales and $2.9 million, or 0.4% of retail sales for the prior year s comparable three and nine month periods, respectively. The slight dollar decrease for the first nine months of fiscal 2011 was primarily due to lower miscellaneous income partially offset by higher interest income due to an increase in cash and short-term investments.
Income tax expense was $2.8 million or 1.4% of retail sales and $29.9 million, or 4.3% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $2.8 million, or 1.4% of retail sales and $27.0 million, or 3.9% of retail sales for the prior year s comparable three and nine month periods, respectively. The dollar increase in the first nine months of fiscal 2011 resulted from higher pre-tax income partially offset by a slightly lower effective tax rate. The effective income tax rate for the third quarter of fiscal 2011 was 31.4% compared to 32.0% for the third quarter of 2010. The current year quarter was impacted by the reduction of a reserve for unrecognized tax benefits from the closing of a state income tax audit. The effective income tax rate for the first nine months of fiscal 2011 was 35.4% compared to 36.1% for the nine months of fiscal 2010.
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Cato Corp. Cl A has a market cap of $717.3 million; its shares were traded at around $25.89 with a P/E ratio of 12.1 and P/S ratio of 0.8. The dividend yield of Cato Corp. Cl A stocks is 3.6%. Cato Corp. Cl A had an annual average earning growth of 4.2% over the past 10 years. GuruFocus rated Cato Corp. Cl A the business predictability rank of 3.5-star.
Highlight of Business Operations:
Total retail sales for the third quarter were $194.1 million compared to last year s third quarter sales of $198.2 million, a 2.0% decrease. Same-store sales decreased 3.0% in the third quarter of fiscal 2011 due to difficult economic conditions and resulting uncertainty affecting our customers. For the nine months ended October 29, 2011, total retail sales were $699.1 million compared to last year s comparable nine month sales of $689.1 million, and same-store sales decreased 1.0% for the comparable nine month period. Total revenues, comprised of retail sales and other income (principally, finance charges and late fees on customer accounts receivable and layaway fees), were $196.7 million and $707.2 million for the third quarter and nine months ended October 29, 2011, respectively, compared to $201.0 million and $697.6 million for the third quarter and nine months ended October 30, 2010, respectively. The Company operated 1,292 stores at October 29, 2011 compared to 1,281 stores at the end of last year s third quarter. For the first nine months of 2011, the Company opened 23 new stores, relocated three stores and closed 13 stores. The Company currently expects to open approximately 38 stores, relocate four stores and close approximately 29 stores in fiscal 2011.Cost of goods sold was $125.8 million, or 64.8% of retail sales and $429.4 million or 61.4% of retail sales for the third quarter and first nine months of fiscal 2011, compared to $127.1 million, or 64.2% of retail sales and $418.4 million or 60.7% of retail sales for the prior year s comparable three and nine month periods, respectively. The overall increase in cost of goods sold as a percent of retail sales for the third quarter was due to higher occupancy costs related to store development partially offset by a decrease in comparable store sales. For the first nine months of 2011, the increase resulted primarily from lower sell-throughs of regular priced merchandise. Cost of goods sold includes merchandise costs (net of discounts and allowances), buying costs, distribution costs, occupancy costs, freight and inventory shrinkage. Net merchandise costs and in-bound freight are capitalized as inventory costs. Buying and distribution costs include payroll, payroll-related costs and operating expenses for the buying departments and distribution center. Occupancy expenses include rent, real estate taxes, insurance, common area maintenance, utilities and maintenance for stores and distribution facilities. Total gross margin dollars (retail sales less cost of goods sold exclusive of depreciation) decreased by 3.8% to $68.3 million for the third quarter of fiscal 2011 and decreased by 0.4% to $269.7 million for the first nine months of fiscal 2011 compared to $71.0 million and $270.7 million for the prior year s comparable three and nine month periods, respectively. Gross margin as presented may not be comparable to those of other entities.
Selling, general and administrative expenses (“SG&A”) primarily include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, bank and credit card processing fees and bad debts. SG&A expenses were $57.5 million, or 29.6% of retail sales and $179.8 million, or 25.7% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $60.6 million, or 30.6% of retail sales and $191.0 million, or 27.7% of retail sales for the prior year s comparable three and nine month periods, respectively. SG&A expenses as a percentage of retail sales decreased 100 basis points for the third quarter of fiscal 2011 as compared to the prior year primarily as a result of lower accrued incentive compensation costs. For the first nine months of fiscal 2011, SG&A expenses decreased 200 basis points as compared to the prior year. The overall dollar decrease for the first nine months of fiscal 2011 was primarily attributable to decreased accrued incentive based compensation and insurance costs partially offset by an increase in payroll costs.
Interest and other income was $0.9 million, or 0.4% of retail sales and $2.8 million, or 0.4% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $1.0 million, or 0.5% of retail sales and $2.9 million, or 0.4% of retail sales for the prior year s comparable three and nine month periods, respectively. The slight dollar decrease for the first nine months of fiscal 2011 was primarily due to lower miscellaneous income partially offset by higher interest income due to an increase in cash and short-term investments.
Income tax expense was $2.8 million or 1.4% of retail sales and $29.9 million, or 4.3% of retail sales for the third quarter and first nine months of fiscal 2011, respectively, compared to $2.8 million, or 1.4% of retail sales and $27.0 million, or 3.9% of retail sales for the prior year s comparable three and nine month periods, respectively. The dollar increase in the first nine months of fiscal 2011 resulted from higher pre-tax income partially offset by a slightly lower effective tax rate. The effective income tax rate for the third quarter of fiscal 2011 was 31.4% compared to 32.0% for the third quarter of 2010. The current year quarter was impacted by the reduction of a reserve for unrecognized tax benefits from the closing of a state income tax audit. The effective income tax rate for the first nine months of fiscal 2011 was 35.4% compared to 36.1% for the nine months of fiscal 2010.
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