Cato net incomes decreases 12 percent in 2013
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Net income for the fourth quarter and year ended February 1, 2014. For the fourth quarter, the company reported net income of 3.8 million dollars or 0.13 dollars per diluted share, compared to net income of 7.9 million dollars or 0.27 dollars per diluted share for the fourth quarter ended February 2, 2013. For the quarter, net income and earnings per diluted share both decreased 52 percent from the prior year.
“Results for 2013 were negatively impacted by the continuing difficult economic situation our customers have faced for some time now,” commented John Cato, Chairman, President and Chief Executive Officer, adding, "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 do not expect e-commerce to have significant impact on 2014 results. 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.”
In the fourth quarter, gross margin was relatively flat at 34.7 percent of sales as merchandise margins held in the very promotional environment. For 2013, gross margin decreased 40 basis points to 37.3 percent of sales primarily due to higher store occupancy costs.
For the fiscal year ended February 1, 2014, the company opened 32 stores, relocated five stores and closed 22 stores. As of February 1, 2014, the Company operated 1,320 stores in 32 states. The company believes that 2014 could be another tough year. The sales environment may be difficult due to continuing slow job growth and higher costs which reduce the customers' discretionary income. For 2014, the Company estimates same-store sales will be in a range of down 2 percent to flat and its gross margin rate will decrease to 36.8 percent from 37.3 percent in 2013, resulting in net income in a range of 43.1 million dollars to 48.5 million dollars, a decrease of 21 percent to 11 percent compared. The company estimates earnings per diluted share will be in a range of 1.47 dollars to 1.66 dollars, a decrease of 21 percent to 11 percent.
The company estimates first quarter 2014 net income to be in a range of 26 million dollars to 27.7 million dollars, or 0.89 dollars to 0.95 dollars per diluted share, a decrease of 15 percent to 10 percent compared to 1.05 dollars in first quarter 2013. This estimate is based on same-store sales of down 2 percent to flat.