Cato Corp. (CATO, Financial) filed Quarterly Report for the period ended 2010-09-08.
Cato Corp. has a market cap of $673.5 million; its shares were traded at around $24.29 with a P/E ratio of 13.4 and P/S ratio of 0.8. The dividend yield of Cato Corp. stocks is 3%. Cato Corp. had an annual average earning growth of 3.4% over the past 10 years. GuruFocus rated Cato Corp. the business predictability rank of 2.5-star.CATO is in the portfolios of Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates.
Credit revenue of $2.1 million represented 0.9% of total revenues in the second quarter of fiscal 2010, compared to the second quarter of fiscal 2009 credit revenue of $2.3 million or 1.0% of total revenues. Credit revenue decreased for the comparable period due to lower finance charge income due to decreased sales under the Company s proprietary credit card. 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 $1.3 million in the second quarter of 2010, compared to last year s second quarter expenses of $1.5 million. The decrease was primarily due to lower bad debt expense as well as reduced administrative expenses compared to the second quarter of 2009.
Cost of goods sold was $143.0 million, or 61.7% of retail sales and $289.9 million or 59.0% of retail sales for the second quarter and first six months of fiscal 2010, compared to $143.5 million, or 63.7% of retail sales and $285.4 million or 61.6% of retail sales for the prior year s comparable three and six month periods, respectively. The overall decrease in cost of goods sold as a percent of retail sales for the second quarter and first six months of 2010 resulted primarily from leveraging higher sales and lower markdowns. The decrease in markdowns was primarily attributable to inventory management and higher 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) increased by 8.4% to $88.8 million for the second quarter of fiscal 2010 and increased by 13.3% to $201.7 million for the first six months of fiscal 2010 compared to $81.9 million and $178.1 million for the prior year s comparable three and six month periods, respectively. Gross margin as presented may not be comparable to those of other entities.
Depreciation expense was $5.3 million, or 2.3% of retail sales and $10.5 million, or 2.1% of retail sales for the second quarter and first six months of fiscal 2010, respectively, compared to $5.5 million, or 2.4% of retail sales and $11.0 million, or 2.4% of retail sales for the prior year s comparable three and six month periods, respectively. The decrease in depreciation expense was due to lower store development in the past two years and decreased information technology investments.
Interest and other income was $1.0 million, or 0.4% of retail sales and $1.8 million, or 0.4% of retail sales for the second quarter and first six months of fiscal 2010, respectively, compared to $0.9 million, or 0.4% of retail sales and $1.9 million, or 0.4% of retail sales for the prior year s comparable three and six month periods, respectively. The slight decrease for the first six months of fiscal 2010 was primarily due to lower interest income due to reduced yields.
Income tax expense was $9.1 million or 3.9% of retail sales and $24.9 million, or 5.1% for the second quarter and first six months of fiscal 2010, respectively, compared to $7.0 million, or 3.1% of retail sales and $18.2 million, or 3.9% of retail sales for the prior year s comparable three and six month periods, respectively. The second quarter increase resulted from higher pre-tax income and a higher effective tax rate. The effective income tax rate for the second quarter of fiscal 2010 was 36.2% compared to 29.7% for the second quarter of 2009. The prior year quarter was impacted by the reduction of the provision for unrecognized tax benefits resulting from the closing of certain state income tax audits. The effective income tax rate for the first six months of fiscal 2010 was 36.6% compared to 33.9% for the six months of fiscal 2009.
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Cato Corp. has a market cap of $673.5 million; its shares were traded at around $24.29 with a P/E ratio of 13.4 and P/S ratio of 0.8. The dividend yield of Cato Corp. stocks is 3%. Cato Corp. had an annual average earning growth of 3.4% over the past 10 years. GuruFocus rated Cato Corp. the business predictability rank of 2.5-star.CATO is in the portfolios of Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates.
Highlight of Business Operations:
Total retail sales for the second quarter were $231.9 million compared to last year s second quarter sales of $225.4 million, a 2.9% increase. Same-store sales increased 2.0% in the second quarter of fiscal 2010 due to sell throughs of regular price merchandise. For the six months ended July 31, 2010, total retail sales were $491.6 million compared to last years first six months sales of $463.4 million, and same-store sales increased 5.0% for the comparable six 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 $234.7 million and $497.4 million for the second quarter and six months ended July 31, 2010, respectively, compared to $228.3 million and $469.3 million for the second quarter and six months ended August 1, 2009, respectively. The Company operated 1,275 stores at July 31, 2010 compared to 1,285 stores at the end of last year s second quarter, respectively. For the first six months of 2010 the Company opened 13 new stores, relocated three stores and closed nine stores. The Company currently expects to open approximately 41 stores, relocate six stores and close approximately 35 stores in fiscal 2010.Credit revenue of $2.1 million represented 0.9% of total revenues in the second quarter of fiscal 2010, compared to the second quarter of fiscal 2009 credit revenue of $2.3 million or 1.0% of total revenues. Credit revenue decreased for the comparable period due to lower finance charge income due to decreased sales under the Company s proprietary credit card. 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 $1.3 million in the second quarter of 2010, compared to last year s second quarter expenses of $1.5 million. The decrease was primarily due to lower bad debt expense as well as reduced administrative expenses compared to the second quarter of 2009.
Cost of goods sold was $143.0 million, or 61.7% of retail sales and $289.9 million or 59.0% of retail sales for the second quarter and first six months of fiscal 2010, compared to $143.5 million, or 63.7% of retail sales and $285.4 million or 61.6% of retail sales for the prior year s comparable three and six month periods, respectively. The overall decrease in cost of goods sold as a percent of retail sales for the second quarter and first six months of 2010 resulted primarily from leveraging higher sales and lower markdowns. The decrease in markdowns was primarily attributable to inventory management and higher 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) increased by 8.4% to $88.8 million for the second quarter of fiscal 2010 and increased by 13.3% to $201.7 million for the first six months of fiscal 2010 compared to $81.9 million and $178.1 million for the prior year s comparable three and six month periods, respectively. Gross margin as presented may not be comparable to those of other entities.
Depreciation expense was $5.3 million, or 2.3% of retail sales and $10.5 million, or 2.1% of retail sales for the second quarter and first six months of fiscal 2010, respectively, compared to $5.5 million, or 2.4% of retail sales and $11.0 million, or 2.4% of retail sales for the prior year s comparable three and six month periods, respectively. The decrease in depreciation expense was due to lower store development in the past two years and decreased information technology investments.
Interest and other income was $1.0 million, or 0.4% of retail sales and $1.8 million, or 0.4% of retail sales for the second quarter and first six months of fiscal 2010, respectively, compared to $0.9 million, or 0.4% of retail sales and $1.9 million, or 0.4% of retail sales for the prior year s comparable three and six month periods, respectively. The slight decrease for the first six months of fiscal 2010 was primarily due to lower interest income due to reduced yields.
Income tax expense was $9.1 million or 3.9% of retail sales and $24.9 million, or 5.1% for the second quarter and first six months of fiscal 2010, respectively, compared to $7.0 million, or 3.1% of retail sales and $18.2 million, or 3.9% of retail sales for the prior year s comparable three and six month periods, respectively. The second quarter increase resulted from higher pre-tax income and a higher effective tax rate. The effective income tax rate for the second quarter of fiscal 2010 was 36.2% compared to 29.7% for the second quarter of 2009. The prior year quarter was impacted by the reduction of the provision for unrecognized tax benefits resulting from the closing of certain state income tax audits. The effective income tax rate for the first six months of fiscal 2010 was 36.6% compared to 33.9% for the six months of fiscal 2009.
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