Women's fashion specialty retailer Cato Corp. (CATO) on Thursday reported a decline in fourth quarter profit on lower same store sales. Further, the company issued forecast for first quarter and fiscal 2013.
In the fourth quarter, net income declined 22 percent to $7.94 million from $10.11 million last year. Earnings per share fell 23 percent to $0.27 from $0.35 a year ago.
Sales for the quarter were $232.0 million, an increase of 5 percent over sales of $221.5 million last year. On a comparable 14-week basis, total sales for the quarter decreased 4 percent and same-store sales decreased 7 percent from last year.
In the fourth quarter, gross margin increased 20 basis points to 34.8 percent of sales primarily due to higher merchandise margin, somewhat offset by higher store occupancy costs.
John Cato, Chairman, President and Chief Executive Officer, said, "Cato faced a very difficult year in 2012. The already weak economic environment was further impacted by political uncertainty, tax changes and higher costs that negatively impacted our customer."
Looking ahead, the company said it believes that the sales environment in 2013 will continue to be difficult due to the ongoing negative economic environment, including slow job growth, higher gasoline and food prices and increased payroll taxes.
In addition, continued cooler weather conditions through the Easter selling season and additional markdowns from weak sales are anticipated to negatively impact first quarter results.
For the first quarter, the company projects net income to be in a range of $30.3 million to $33.3 million, or $1.03 to $1.14 per share, a decrease of 5 percent to an increase of 5 percent compared to $1.09 in first quarter 2012. This estimate is based on same-store sales of down 4 percent to down 2 percent.
For 2013, the company expects net income in a range of $48.1 million to $56.8 million, a decrease of 22 percent to 8 percent compared to $61.7 million in 2012. The company estimates earnings per share will be in a range of $1.64 to $1.93, a decrease of 22 percent to 9 percent compared to $2.11 in 2012.
Same-store sales will be in a range of down 3 percent to down 1 percent and its gross margin rate will decrease to 37.1 percent from 37.7 percent in 2012.
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