The Cato Corp. stock is up more than 5 percent to $36.60 after the retailer reported that its earnings had risen in the first quarter.

Net income for the quarter increased 15 percent to $35.9 million, or $1.29 a diluted share, up from $31.1 million, or $1.11, a year ago. This beat the FactSet estimate for earnings per share of $1.25.

Sales for the three months ending May 2 increased 1 percent to $285.5 million from $281.6 million a year earlier. This was just shy of the FactSet estimate for sales of $286 million. The company’s same store sales were flat.

“Although same-store sales for the first quarter were flat, our earnings per diluted share increased over last year primarily due to higher gross margins, change in recognition of unredeemed gift cards and favorable adjustments to the effective tax rate as a result of tax initiatives,” said John Cato, chairman, president and chief executive officer.

Gross margin increased to 42.6 percent of sales from 42.3 percent for the same period last year.

“Our expectations for the second quarter remain unchanged from what was included in the original guidance for the full year and reflect same store sales in the range of down 2% to flat and earnings per diluted share in the range of $.50 to $.53 versus $.56 last year,” Cato said.

The company lowered its guidance for the full year. The original forecast was for earnings per diluted share of $2.39, it was lowered to $2.25 to $2.38.

Cato opened 1 store, relocated 2 stores and closed 1 store during the quarter.

Cato is hosting its annual general meeting of shareholders on May 19.

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