Business

Cato’s earnings soar but weather could drag on 2015 results

Demolition recently began on the former Charlotte Knights baseball stadium to make way for a new Cato distribution center in Fort Mill. The fashion retailer reported fourth-quarter earnings on Thursday that soared 139 percent but anticipates that harsh winter weather will be a drag on 2015 financial results.
Demolition recently began on the former Charlotte Knights baseball stadium to make way for a new Cato distribution center in Fort Mill. The fashion retailer reported fourth-quarter earnings on Thursday that soared 139 percent but anticipates that harsh winter weather will be a drag on 2015 financial results. jsimmons@charlotteobserver.com

Charlotte-based fashion retailer Cato Corp. reported income that soared 139 percent in the fourth quarter of 2014 but anticipates that harsh weather will take a toll on its first-quarter and full-year financial results.

For the fourth quarter that ended Jan. 31, the company reported net income of $9.2 million, or 33 cents per share, compared with income of $3.8 million, or 13 cents per share, for the first quarter last year, thanks to robust sales and “favorable weather,” Cato said in a statement Thursday.

Quarterly sales were $237.8 million, up 11 percent from sales of $215.2 million for the same period last year. Quarterly same-store sales – those that have been open at least a year – rose 8 percent year over year.

Last year’s earnings were the third highest in company history. Cato’s 2014 earnings were $60.5 million, or $2.15 per share, compared with $54.3 million, or $1.86 per share, in 2013. Sales in 2014 rose 7 percent to $977.9 million from $910.5 million in 2013, and same-store sales for 2014 rose 4 percent from 2013.

Still, the company says a slow start to 2015 could be a drag on future earnings. Earlier this month, the company reported disappointing same-store sales for February as cold temperatures deterred many shoppers.

“The start of 2015 has been difficult, with February same-store sales down 10 percent, primarily due to adverse weather. The company believes that 2015 may continue to be challenging,” Cato said in a statement released Thursday.

First quarter same-store sales will be down 3 to 4 percent, the company said, and earnings will range from $28.8 million to $27.9 million, or $1.03 to $1 share, compared with the $1.13 a share analysts currently expect.

For the year, Cato said same-store sales will be either flat or down 2 percent, and that net income will range from $61.2 million to $56.7 million, an increase of 1 percent to a decrease of 6 percent, compared with $60.5 million in 2014.

For the fiscal year that ended Jan. 31, Cato opened 33 stores, relocated four stores and closed seven stores. As of Jan. 31, the company operated 1,346 stores in 32 states. Demolition recently began on the former Charlotte Knights baseball stadium to make way for a new Cato distribution center in Fort Mill.

Cato shares closed Thursday at $38.15, down more than 5 percent.

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