Cato Corp. (CATO, Financial) filed Quarterly Report for the period ended 2010-12-08.
Cato Corp. has a market cap of $820.9 million; its shares were traded at around $29.6 with a P/E ratio of 15.2 and P/S ratio of 0.9. The dividend yield of Cato Corp. stocks is 2.5%. 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 Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Credit revenue of $2.1 million represented 1.0% of total revenues in the third quarter of fiscal 2010, compared to the third quarter of fiscal 2009 credit revenue of $2.3 million or 1.2% of total revenues. Credit revenue decreased for the comparable period due to lower finance and late 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 third quarter of 2010, compared to last year s third quarter expenses of $1.6 million. The decrease was primarily due to lower bad debt expense which included a $0.1 million reduction in the bad debt reserve as well as reduced administrative expenses compared to the third quarter of 2009.
Cost of goods sold was $125.7 million, or 63.5% of retail sales and $415.6 million or 60.3% of retail sales for the third quarter and first nine months of fiscal 2010, compared to $124.5 million, or 65.2% of retail sales and $409.9 million or 62.6% of retail sales for the prior year s comparable three and nine month periods, respectively. The overall decrease in cost of goods sold as a percent of retail sales for the third quarter and first nine 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 8.9% to $72.3 million for the third quarter of fiscal 2010 and increased by 12.1% to $274.0 million for the first nine months of fiscal 2010 compared to $66.4 million and $244.5 million for the prior year s comparable
Depreciation expense was $5.6 million, or 2.9% of retail sales and $16.2 million, or 2.3% of retail sales for the third quarter and first nine months of fiscal 2010, respectively, compared to $5.4 million, or 2.9% of retail sales and $16.5 million, or 2.5% of retail sales for the prior year s comparable three and nine month periods, respectively. The third quarter dollar increase compared to the prior year third quarter of 2009 was due to increased depreciation as a result of the acceleration of depreciable lives on certain information technology assets. The decrease in depreciation expense for the first nine months of fiscal 2010 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 0.5% of retail sales and $2.9 million, or 0.4% of retail sales for the third quarter and first nine months of fiscal 2010, 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. Interest and other income remained flat for the comparable third quarter and nine month periods.
Income tax expense was $3.3 million or 1.7% of retail sales and $28.2 million, or 4.1% for the third quarter and first nine months of fiscal 2010, respectively, compared to $1.3 million, or 0.7% of retail sales and $19.5 million, or 3.0% of retail sales for the prior year s comparable three and nine month periods, respectively. The third quarter increase resulted from higher pre-tax income and a higher effective tax rate. The effective income tax rate for the third quarter of fiscal 2010 was 32.7% compared to 30.2% for the third 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 nine months of fiscal 2010 was 36.1% compared to 33.7% for the nine months of fiscal 2009 primarily as a result of the favorable resolution of various state income tax matters in the prior year.
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Cato Corp. has a market cap of $820.9 million; its shares were traded at around $29.6 with a P/E ratio of 15.2 and P/S ratio of 0.9. The dividend yield of Cato Corp. stocks is 2.5%. 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 Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Total retail sales for the third quarter were $198.0 million compared to last year s third quarter sales of $191.0 million, a 3.7% increase. Same-store sales increased 1.9% in the third quarter of fiscal 2010 due to better sell-throughs of regular price merchandise. For the nine months ended October 30, 2010, total retail sales were $689.6 million compared to last year s first nine months sales of $654.4 million an increase of 5.4%. Same-store sales increased 3.9% 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 $200.8 million and $698.2 million for the third quarter and nine months ended October 30, 2010, respectively, compared to $193.8 million and $663.1 million for the third quarter and nine months ended October 31, 2009, respectively. The Company operated 1,281 stores at October 30, 2010 compared to 1,291 stores at the end of last year s third quarter. For the first nine months of 2010 the Company opened 29 new stores, relocated four stores and closed 19 stores. The Company currently expects to open approximately 40 stores, relocate five stores and close approximately 26 stores in fiscal 2010.Credit revenue of $2.1 million represented 1.0% of total revenues in the third quarter of fiscal 2010, compared to the third quarter of fiscal 2009 credit revenue of $2.3 million or 1.2% of total revenues. Credit revenue decreased for the comparable period due to lower finance and late 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 third quarter of 2010, compared to last year s third quarter expenses of $1.6 million. The decrease was primarily due to lower bad debt expense which included a $0.1 million reduction in the bad debt reserve as well as reduced administrative expenses compared to the third quarter of 2009.
Cost of goods sold was $125.7 million, or 63.5% of retail sales and $415.6 million or 60.3% of retail sales for the third quarter and first nine months of fiscal 2010, compared to $124.5 million, or 65.2% of retail sales and $409.9 million or 62.6% of retail sales for the prior year s comparable three and nine month periods, respectively. The overall decrease in cost of goods sold as a percent of retail sales for the third quarter and first nine 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 8.9% to $72.3 million for the third quarter of fiscal 2010 and increased by 12.1% to $274.0 million for the first nine months of fiscal 2010 compared to $66.4 million and $244.5 million for the prior year s comparable
Depreciation expense was $5.6 million, or 2.9% of retail sales and $16.2 million, or 2.3% of retail sales for the third quarter and first nine months of fiscal 2010, respectively, compared to $5.4 million, or 2.9% of retail sales and $16.5 million, or 2.5% of retail sales for the prior year s comparable three and nine month periods, respectively. The third quarter dollar increase compared to the prior year third quarter of 2009 was due to increased depreciation as a result of the acceleration of depreciable lives on certain information technology assets. The decrease in depreciation expense for the first nine months of fiscal 2010 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 0.5% of retail sales and $2.9 million, or 0.4% of retail sales for the third quarter and first nine months of fiscal 2010, 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. Interest and other income remained flat for the comparable third quarter and nine month periods.
Income tax expense was $3.3 million or 1.7% of retail sales and $28.2 million, or 4.1% for the third quarter and first nine months of fiscal 2010, respectively, compared to $1.3 million, or 0.7% of retail sales and $19.5 million, or 3.0% of retail sales for the prior year s comparable three and nine month periods, respectively. The third quarter increase resulted from higher pre-tax income and a higher effective tax rate. The effective income tax rate for the third quarter of fiscal 2010 was 32.7% compared to 30.2% for the third 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 nine months of fiscal 2010 was 36.1% compared to 33.7% for the nine months of fiscal 2009 primarily as a result of the favorable resolution of various state income tax matters in the prior year.
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