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Cato Comps Fall in January, Q4 & FY15 Earnings View Slashed

After a robust December, which was disappointing for most retailers, The Cato CorporationCATO posted a soft sales data for the four weeks ended Jan 30, 2016. This marked the company's first decline following five straight months of positive sales data.

Comparable-store sales (comps) for January fell 7% from the year-ago period. Total sales dipped 4% to $52.9 million from $54.9 million reported a year ago. Sales results for January were largely impacted by unfavorable weather as well as higher costs related primarily to medical expenses.

Alongside, the company posted sales data for fourth-quarter and fiscal 2015 ended Jan 30, 2016, wherein sales improved 4% to $247.3 million and 2% to $1,001.4 million, respectively. Comps for the fourth quarter inched up 1%, while for fiscal 2015, it remained flat.

Following dismal January results, Cato lowered its earnings per share forecast for fourth-quarter and fiscal 2015. The company now expects fourth-quarter earnings in the range of 32-36 cents per share, compared with its original projection of 39-43 cents and the prior-year figure of 33 cents.

Consequently, management also tweaked its earnings per share guidance for fiscal 2015 to a range of $2.28-$2.32, from the $2.35-$2.39 range guided earlier and $2.15 reported last year. The company is scheduled to report fourth-quarter and fiscal 2015 earnings results on Mar 17, 2016.

Moreover, in January, Cato relocated two stores. In the fourth quarter, the company opened and relocated three stores, and shut one down. This brings its fiscal 2015 store activity to 31 new store openings, 11 relocations and 5 closures. Consequently, the company was operating 1,372 stores across 32 states as of Jan 30, 2016, marking an increase from 1,346 stores operated as of Jan 31, 2015.

Stocks to Consider

Well-ranked stocks in the retail sector include Abercrombie & Fitch Co. ANF , Express Inc. EXPR and L Brands Inc. LB . Both Abercrombie and Express Inc. sport a Zacks Rank #1 (Strong Buy), while L Brands has a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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