Research Desk Line-up: Tilly's Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 7, 2017 / Pro-Trader Daily publishes post-earnings coverage on The Cato Corp. (NYSE: CATO) following the Company's disclosure of its first quarter fiscal 2017 financial results on May 18, 2017. The specialty retailer of value-priced fashion apparel and accessories reported a y-o-y decline in revenue and earnings. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Get more of our free earnings reports coverage from other constituents of the Apparel Stores industry. Pro-TD has currently selected Tilly's, Inc. (NYSE: TLYS) for due-diligence and potential coverage as the Company announced on May 23, 2017, its financial results for Q1 FY17 which ended on April 29, 2017. Register for a free membership today, and be among the early birds that get access to our report on Tilly's when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on CATO; also brushing on TLYS. With the links below you can directly download the report of your stock of interest free of charge at:

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Earnings Reviewed

For the first quarter ended April 29, 2017, Cato reported sales of $237.7 million, down 17% compared to sales of $285.5 million for the first quarter ended April 30, 2016. The Company's revenue number lagged behind analysts' consensus estimates of $245.2 million. Cato's same-store sales for the reported quarter decreased 17% on a y-o-y basis.

For Q1 2017, Cato's gross margin decreased 390 basis points to 38.7% of sales compared to gross margin of 42.6% in Q1 2016, primarily due to lower merchandise margins and deleveraging of buying and occupancy costs. The Company's selling, general, and administrative (SG&A) expenses as a percent of sales increased 190 basis points to 26.8% for the reported quarter compared to SG&A of 24.9% for the year earlier same quarter primarily due to deleveraging of store expenses, offset by lower incentive compensation. During Q1 2017, Cato's effective tax rate decreased to 14.7% versus the prior year at 28.5% due to reduced earnings, ongoing tax saving initiatives, and favorable tax adjustments in the reported quarter.

For Q1 2017, Cato reported net income of $22.2 million, or $0.85 per diluted share, compared to net income of $35.9 million, or $1.29 per diluted share, for Q1, 2016. The Company's net income decreased 38%, while earnings per diluted share fell 34% for the reported quarter. Cato's earnings numbers exceeded Wall Street's forecasts of $0.80 per share.

"Our negative sales trend persisted throughout the first quarter, impacting margins and earnings as we continued to work through our merchandise missteps," stated John Cato, Chairman, President, and Chief Executive Officer, "It is taking longer to work through these issues than expected and the remainder of the year will be impacted. We expect earnings for the year to be below last year."

Balance Sheet

As of April 29, 2017, Cato's cash and short-term investments totaled $235.05 million compared to $252.16 million as on January 28, 2017. The Company's merchandise inventories totaled $131.78 million at the end of the reported quarter, down compared to inventory of $145.68 million at the end of the previous quarter

On May 19, 2017, Cato's Board of Directors of declared a regular quarterly dividend of $0.33 per share. The dividend will be payable on June 19, 2017, to shareholders of record on June 05, 2017. The $0.33 dividend, or $1.32 on an annualized basis, represents an annualized yield of 6.1% at the closing market price on May 18, 2017.

May Operation Results

As per the press release on June 01, 2017, Cato reported sales of $74.2 million for the four weeks ended May 27, 2017, a 15% decrease versus sales of $87.4 million for the four weeks ended May 28, 2016. Same-store sales for the month declined 16% on a y-o-y basis.

Cato's sales for the seventeen weeks ended May 27, 2017, were $311.9 million, a 16% decrease versus sales of $372.9 million for the seventeen weeks ended May 28, 2016. During the month of May, the Company relocated one store in Lafayette, LA and closed one store. As of May 27, 2017, the Company operated 1,373 stores in 33 states compared to 1,372 stores in 33 states as of May 28, 2016.

Stock Performance

At the closing bell, on Tuesday, June 06, 2017, Cato's stock declined 5.34%, ending the trading session at $18.26. A total volume of 396.75 thousand shares were exchanged during the session, which was above the 3-month average volume of 320.08 thousand shares. The Company's shares are trading at a PE ratio of 14.45 and have a dividend yield of 7.23%. At Tuesday's closing price, the stock's net capitalization stands at $488.27 million.

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