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May 03, 2025
Cato Corp-Class A Q1 2025 Earnings Report
Cato Corp reported a sharp drop in Q1 net income as sales declined and gross margin narrowed.
Key Takeaways
The Cato Corporation posted Q1 revenue of $170.2M and net income of $3.3M, down significantly year-over-year. Weak discretionary spending and lower merchandise margins were key challenges during the quarter.
Net income declined to $3.3M from $11.0M a year ago.
EPS dropped to $0.17 compared to $0.54 in Q1 2024.
Sales fell to $168.4M, a 4% decrease YoY.
Gross margin slipped to 35.1% due to higher markdown sales.
Forward Guidance
Cato remains cautious for the rest of the year amid uncertain economic conditions and potential tariff impacts.
Positive Outlook
- Later-quarter sales trends showed some improvement.
- SG&A costs decreased due to lower payroll and insurance expenses.
- Company executed a share buyback of nearly 300K shares.
- No new store openings helped control expansion costs.
- Inventory levels remained relatively stable.
Challenges Ahead
- Overall revenue declined 4% YoY.
- Net income and EPS saw sharp drops from prior year.
- Gross margin compressed due to higher markdown sales.
- Interest and other income fell significantly from Q1 2024.
- Economic uncertainty and tariff threats weigh on outlook.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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