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Cato's Holiday Sales Disappoint - Analyst Blog

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The holiday season was disappointing for Cato Corporation ( CATO ), a specialty retailer of fashion apparel, footwear and accessories, compelling management to lower its fiscal 2012 earnings guidance.

The company witnessed a 7% decline in comparable store sales (comps) for December 2012, which fell short of management's expectations. Moreover, results worsened sequentially as Cato registered a 2% decline in comps for November 2012.

Compared to its peer, Buckle Inc . ( BKE ), Cato seems to be losing market share as the former reported better-than-expected sales results. Buckle witnessed an augmentation of 1% in comps during the period under review.

For the five-week period ended December 29, 2012, Cato's total sales decreased 4% to $103.3 million compared with total sales of $107.5 million for the five-week period ended December 31, 2011.

As per the company, total sales remained flat at $870 million for the 11 months ended December 29, 2012 compared with the prior-year period. However, comps marked a decline of 3%.

Following the sluggish results, management lowered its earnings guidance range to 34 cents - 36 cents a share for the fourth quarter of fiscal 2012. The company earlier forecasted earnings to be in the range of 38 cents - 42 cents. The company now expects fiscal 2012 earnings in the range of $2.17 to $2.19 per share, down from its earlier guidance of $2.22 to $2.26 per share.

In the last 7 days, the Zacks Consensus Estimate for the fourth quarter and fiscal 2012 went down by 5 cents and 6 cents, respectively to 35 cents and $2.18 per share.

Earlier, the company reported third-quarter fiscal 2012 earnings of 16 cents a share that surpassed the Zacks Consensus Estimate of 14 cents. However, the reported earnings plunged 24% year over year. Total sales inched up 2% to $197.6 million, while comps marked a decline of 2% during the quarter.

Headquartered in Charlotte, North Carolina, Cato Corporation operates 1,311 stores across 31 states as of December 29, 2012. Currently, we maintain a long-term 'Neutral' recommendation on the stock.

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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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