The Cato Corporation CATO posted better-than-expected comparable-store sales (comps) data for the five weeks ended Jan 2, 2016. This marked the company’s fifth straight month of positive sales data.
Comps for December jumped 6% from the year-ago period, also exceeding the company’s expectations. Total sales improved 9% to $118.5 million from $109.2 million reported a year ago.
Alongside, the company posted its sales data for the eleven months ended Jan 2, 2016, wherein sales improved 3% to $948.5 million, while year-to-date comps were flat.
Following the solid results, the company now expects fourth-quarter earnings in the range of 39–43 cents per share, compared with its original projection of 35–39 cents, and the prior-year earnings of 33 cents. The raised guidance is mainly attributed to increased sales and lower taxes. However, the company is still cautious about the rest of the fourth quarter due to difficult sales comparisons from last year.
Consequently, management raised its earnings per share guidance for fiscal 2015 to a range of $2.35–$2.39, from $2.31–$2.35 guided earlier and $2.15 reported last year.
Moreover, in December, Cato closed one store. Consequently, the company operated 1,372 stores across 32 states as of Jan 2, 2016 – an increase from the count of 1,345 stores operated as of Jan 3, 2015.
Apart from Cato, other retailer also posted comps results for December. Though the picture for the holiday season is not clear yet, the sales data provided by a handful of retailers reveal that the key season this year was challenging. Retailers felt the pinch of declining customer traffic at stores and malls, as online stores stole the limelight. Moreover, retailers were forced to offer promotions as buyers were keen on availing discounts. This weighed on retailers’ pockets as profits declined.
Affected by the aforementioned factors, December comps for Rite Aid Corp. RAD and Zumiez Inc. ZUMZ declined 0.1% and 8.9%, respectively. However, comps for the Victoria’s Secret owner, L Brands Inc. LB rose 8%.
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