Charlotte, NC-based retailer of apparel and accessories for women, Cato Corporation (CATO), posted splendid sales results for the month ended Jan 3, 2015 driven by robust holiday sales. Results also gained from favorable weather conditions.
For the five weeks ended Jan 3, the company’s comparable-store sales (comps) registered an increase of 6%, above the company’s expectations. Net sales for December increased 9% to $109.2 million from $100.1 million posted last year.
Fiscal year-to-date, Cato reported net sales of $923.0 million, up 7% from $862.7 million in the prior-year period. Comps for the 11-months period were up 4%.
Last month, for the 4 weeks ended Nov 29, 2014, Cato reported a 10% increase in sales to $73.8 million compared with $67.3 million in the prior-year period. Comps for November were up 7%, attributed to early deals for Thanksgiving and Black Friday coupled with low gas prices, which encouraged consumers to spend liberally. Moreover, in November, Cato boosted sales by celebrating the first anniversary of its eCommerce website.
A close look at the company’s combined sales performance for the months of November and December reveals that the 2014 holiday season has been an encouraging one for Cato.
After a strong holiday season and increased sales so far in the quarter, the company has raised its earnings guidance for the fourth quarter of fiscal 2014. The guidance upgrade can also be attributed to lower taxes.
Management now anticipates fourth-quarter earnings per share in the range of 25–29 cents, wherein the lower end is almost double the company’s previous forecast of 13–17 cents per share. In the fourth quarter of the prior-year the company had earned 13 cents per share.
For fiscal 2014, Cato now expects earnings of $2.07–$2.11 per share, up from its recently projected range of $1.95–$1.99 per share as well as prior-year earnings of $1.86 per share. Moreover, the company stated that the earnings per share guidance for both fourth quarter and fiscal 2014 includes a positive impact of 2 cents and 9 cents per share, respectively, from total share repurchases in the year.
The holiday shopping season this year has been an uplifting one for most retailers, with many of them reporting solid sales numbers for the months of November and December. Some of these retailers include Macy's Inc. (M), Gap Inc. (GPS) and J. C. Penney Company Inc. (JCP).
Now coming back to Cato, the company revealed that it has shut down three of its stores in December. This has brought the company’s total store count, as of Jan 3, 2015, to 1,345, operating in 32 states, compared with 1,316 as of Jan 4, 2014.
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