Cato Corporation Announces Impressive Second Quarter Financial Performance

Cato Corporation Reports Remarkable Second Quarter Results

Charlotte, N.C. - August 21, 2025
The Cato Corporation (NYSE: CATO) has released its financial results for the second quarter ended August 2, 2025. The company's net income reached an impressive $6.8 million, translating to $0.35 per diluted share. This marks a significant increase from last year’s net earnings of $0.1 million or $0.01 per diluted share for the quarter ending August 3, 2024.

Sales Growth

Cato's sales for the quarter totaled $174.7 million, reflecting a growth of 5% compared to $166.9 million in the same quarter last year. This growth was largely driven by a 9% increase in same-store sales, indicating a favorable reception to the company’s value-priced fashion offerings amid a recovering market.

Year-to-Date Performance

For the first six months ending August 2, 2025, Cato reported a net income of $10.1 million or $0.51 per diluted share. This shows a slight decline compared to $11.1 million or $0.54 from the same period last year. The company recorded total sales of $343.1 million for the first half of the year, which is a modest increase of 0.3% from $342.2 million in the previous year, primarily due to a 4% rise in same-store sales, although partially offset by store closures.

Management’s Commentary

John Cato, the Chairman, President, and CEO of the company, stated, “Our sales trends have continued to improve during the second quarter. We attribute this growth partly to the previous year's supply chain disruptions that affected sales.” He further emphasized the need for careful expense management as Cato anticipates challenges in the latter half of 2025 due to uncertainties surrounding tariffs and their potential effect on product acquisition costs.

Gross Margin and Expenses

In terms of gross margins, Cato achieved an increase from 34.6% to 36.2% in the quarter, credited to lower distribution and buying costs, even though merchandise margins were lower. Selling, general, and administrative (SGA) expenses as a percentage of sales fell from 34.9% to 32.8%, primarily due to reductions in payroll and insurance expenditures, despite increased costs in advertising and general corporate needs. The income tax benefit for the quarter was recorded at $0.3 million compared to an income tax expense of $0.6 million the prior year.

Year-to-date gross margins moved up from 35.2% to 35.6%, again due to lower distribution and buying costs, contrasted against decreased merchandise margins. The year-to-date SGA expenses stood at 32.8% of sales, a drop from 33.6% in the previous year, reflecting lower payroll and insurance costs while still encompassing increased advertising expenses.

Store Closures

During the second quarter, the company closed eight stores, resulting in a total of 1,101 stores across 31 states as of August 2, 2025, a reduction from 1,166 stores at the end of the similar period in the previous year.

Company Overview

Cato Corporation is a prominent retailer specializing in value-priced fashion apparel and accessories through three primary brands: "Cato," "Versona," and "It's Fashion." The Cato chain offers exclusive fashion items comparable to those found in mall specialty stores, feature exceptional pricing daily. Versona provides a unique destination for stylish apparel and accessories, while “It’s Fashion” focuses on trendy styles affordable for the whole family.

In summary, Cato Corporation's financial results for the second quarter of 2025 indicate a robust performance amid market challenges, thanks to strategic sales growth and careful expense management. As the company continues to navigate potential hurdles, their commitment to providing quality and style at accessible prices remains evident.