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Cato Corp. Reports Operating Results (10-K)

March 27, 2012 | About:
10qk

10qk

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Cato Corp. (CATO) filed Annual Report for the period ended 2012-03-27.

Cato Corp A has a market cap of $746 million; its shares were traded at around $28.32 with a P/E ratio of 12.3 and P/S ratio of 0.8. The dividend yield of Cato Corp A stocks is 3.4%. Cato Corp A had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated Cato Corp A the business predictability rank of 3.5-star.
This is the annual revenues and earnings per share of CATO over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CATO.


Highlight of Business Operations:

Retail sales increased by 0.8% to $920.6 million in fiscal 2011 compared to $913.1 million in fiscal 2010. The increase in retail sales in fiscal 2011 was largely attributable to sales from store development offset by same store sales decline. Same store sales decreased 1% from fiscal 2010. Same store sales includes stores that have been open more than 15 months. Stores that have been relocated or expanded are also included in the same store sales calculation after they have been open more than 15 months. The method of calculating same store sales varies across the retail industry. As a result, our same store sales calculation may not be comparable to similarly titled measures reported by other companies. Total revenues, comprised of retail sales and other income (principally finance charges and late fees on customer accounts receivable and layaway fees), increased by 0.7% to $931.5 million in fiscal 2011 compared to $924.7 million in fiscal 2010. The Company operated 1,288 stores at January 28, 2012 compared to 1,282 stores operated at January 29, 2011.

Credit revenue of $7.7 million represented 0.8% of total revenue in fiscal 2011, a decrease compared to 2010 credit revenue of $8.5 million or 0.9% of total revenue. The slight decrease in credit revenue was primarily due to reductions in finance and late charge income as a result of lower accounts receivable balances and regulatory changes. Credit revenue is comprised of interest earned on the Company s private label credit card portfolio and related fee income. Related expenses include principally bad debt expense, payroll, postage and other administrative expenses and totaled $4.4 million in fiscal 2011 compared to $5.4 million in fiscal 2010. The decrease in these expenses was principally due to a reduction in postage expense and bad debt expense of $1.2 million. See Note 16 of the Consolidated Financial Statements for a schedule of credit-related expenses. Total segment credit income before taxes increased $0.1 million from $3.1 million in 2010 to $3.2 million in 2011 due to a decrease in related operating expenses. Total credit income of $3.2 million in 2011 represented 3.2% of total income before taxes of $100.3 million compared to total credit income of $3.1 million in 2010 which represented 3.3% of 2010 total income before taxes.

Cost of goods sold was $574.2 million, or 62.4% of retail sales, in fiscal 2011 compared to $563.3 million, or 61.7% of retail sales, in fiscal 2010. The increase in cost of goods sold as a percent of retail sales resulted primarily from higher procurement costs and store occupancy costs. 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 and excluding depreciation) decreased by 1.0% to $346.4 million in fiscal 2011 from $349.8 million in fiscal 2010. Gross margin as presented may not be comparable to that of other companies.

Retail sales increased by 4.7% to $913.1 million in fiscal 2010 compared to $872.1 million in fiscal 2009. The increase in retail sales in fiscal 2010 was largely attributable to sales from store development and same store sales improvement. Same store sales increased 3% from fiscal 2009. Total revenues, comprised of retail sales and other income (principally finance charges and late fees on customer accounts receivable and layaway fees), increased by 4.6% to $924.7 million in fiscal 2010 compared to $884.0 million in fiscal 2009. The Company operated 1,282 stores at January 29, 2011 compared to 1,271 stores operated at January 30, 2010.

Credit revenue of $8.5 million represented 0.9% of total revenue in fiscal 2010, a decrease compared to 2009 credit revenue of $9.4 million or 1.1% of total revenue. The slight decrease in credit revenue was primarily due to reductions in finance and late charge income as a result of lower accounts receivable balances and regulatory changes. Credit revenue is comprised of interest earned on the Company s private label credit card portfolio and related fee income. Related expenses include principally bad debt expense, payroll, postage and other administrative expenses and totaled $5.4 million in fiscal 2010 compared to $6.6 million in fiscal 2009. The decrease in these expenses was principally due to a reduction in postage expense and bad debt expense of $906,000. See Note 16 of the Consolidated Financial Statements for a schedule of credit-related expenses. Total segment credit income before taxes increased $0.2 million from $2.9 million in 2009 to $3.1 million in 2010 due to a decrease in related operating expenses. Total credit income of $3.1 million in 2010 represented 3.3% of total income before taxes of $92.8 million compared to total credit income of $2.9 million in 2009 which represented 4.3% of 2009 total income before taxes.

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