Net income in FY22 was $0 million, or $0 per diluted share, compared to net income of $36.8 million, or $1.65 per diluted share, for the previous year, the company said in a press release.
Fashion retailer Cato Corporation reported a 1 per cent decline in net sales to $752.4 million in FY22 with same-store sales also down by 1 per cent. The company’s gross margin also fell from 40.5 per cent to 32.3 per cent. The firm reported a net loss of $3 million for Q4 FY22 compared to a net loss of $6.5 million for the same period in FY21.
The selling, general, and administrative expenses decreased to 32.3 per cent of sales from 35.1 per cent in the prior year, primarily due to lower employee incentive compensation expenses and store equipment expenses, offset by increased store operating expenses.
In addition, the company reported a net loss of $3 million, or $0.14 per diluted share, for the fourth quarter (Q4) of FY22 compared to a net loss of $6.5 million, or $0.30 per diluted share, for the same period last year. However, sales for the fourth quarter increased by 2 per cent to $177.5 million from $173.6 million for the same quarter last year. Same-store sales for the quarter also increased by 3 per cent compared to the same period in FY21.
The gross margin in Q4 FY22 decreased from 36.9 per cent in Q4 FY21 to 31.3 per cent of sales, reflecting pressure from increased markdowns, coupled with higher freight and distribution costs. However, selling, general, and administrative expenses as a percentage of sales decreased from 40.5 per cent to 33.8 per cent during the quarter, primarily due to lower store equipment expenses and employee incentive compensation expenses, partially offset by increased store operating expenses.
During 2022, the company opened 15 stores, relocated four stores, and permanently closed 46 stores. As of January 28, 2023, the company operated 1,280 stores in 32 states, compared to 1,311 stores in 32 states as of January 29, 2022. The company plans to open up to 30 new stores and close up to 50 stores as leases expire in 2023, with these store closings anticipated to have minimal financial impact.
“We are pleased that we were able to deliver comparable store sales growth in the fourth quarter, in these challenging economic times. That said, we were negatively impacted by late merchandise shipments for most of the year, leading to significantly more markdowns than anticipated,” said John Cato, Chairman, president and chief executive officer. “The impact of rising inflation and higher interest rates on our customer’s discretionary income, coupled with the negative impact of supply chain disruption on our merchandise assortment was difficult to overcome. Despite the challenges experienced throughout 2022, we have continued investing in key capital projects and efficiency initiatives in support of our long-term growth.”
Fibre2Fashion News Desk (DP)