CATO ANNOUNCES ADDITIONAL THIRD AND FOURTH QUARTER STORE CLOSINGS
Cato will close about 120 stores in fiscal 2026, incurring up to $1.3 million in exit costs while targeting better results from 2027.
Rhea-AI Summary
The Cato Corporation (CATO) plans to close approximately 70 additional underperforming stores in the third and fourth quarters of 2026, bringing total planned fiscal 2026 closures to about 120 locations.
The company expects to incur between $1.0 million and $1.3 million in exit costs for these additional stores through the end of 2026, mainly for disposing of signage and fixtures and returning store systems to corporate. Because all affected sites are at the end of their lease terms, Cato will not pay rent on these locations beyond 2026, and management expects the larger closure program to improve operating results in fiscal 2027 and later years.
Positive
- Planned closure program expanded to approximately 120 stores in fiscal 2026, aiming to remove underperforming locations
- Estimated exit costs for additional closures limited to $1.0–$1.3 million through end of 2026
- Company will pay no rent beyond 2026 for the closing stores because leases are ending
- Management expects store closures to improve operating results in fiscal 2027 and beyond
Negative
- About 70 additional stores to close in third and fourth quarters of 2026, reducing store footprint
- Closure of underperforming and marginal stores highlights ongoing performance challenges in parts of the store base
- Company will incur $1.0–$1.3 million in store exit costs through the end of 2026
Key Figures
- Additional store closings
- approximately 70 stores
- Third and fourth quarters of fiscal 2026
- Total planned store closings
- approximately 120 stores
- Fiscal 2026
- Store exit costs
- $1.0 million-$1.3 million
- Through the end of 2026 for additional store closings
- Rent obligation
- No rent beyond 2026
- Closing stores are at the end of their lease term
Historical Context
-
Reported lower sales, profit, and eight store closures amid discretionary-spending pressure.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
forward-looking regulatory
AI-generated analysis. How Rhea-AI works. Not financial advice.
"Annually we review approximately one-third of our stores to exercise available lease options or negotiate an extension based on each store's performance including store sales trend and current and projected store profitability. In years past, marginal stores were renewed for an additional year to give the store more time to improve its sales trend and profitability," stated John Cato, Chairman, President, and Chief Executive Officer. "In light of the current economic environment, especially with the negative pressure on our customers' discretionary income, we do not expect these marginal stores to improve appreciably. As a result, we are closing more stores than expected this year. We believe that closing these additional stores will have a positive impact on our operating results in fiscal 2027 and beyond."
The Company expects to incur between
Statements in this press release that express a belief, expectation or intention, as well as those that are not a historical fact, including, without limitation, statements regarding additional planned store closures and the expected costs and potential impact on future operating results associated with these planned closures are considered "forward-looking" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations that are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements. Such factors include, but are not limited to, any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, prevailing social, economic, political and public health conditions and uncertainties, war or similar hostilities and their collateral effects, levels of unemployment, fuel, energy and food costs, inflation, wage rates, tax rates, tariff rates, interest rates, home values, consumer net worth and the availability of credit; changes in laws, regulations or government policies affecting our business, including but not limited to tariffs, taxes and customs enforcement; uncertainties regarding the impact of any governmental action regarding, or responses to, the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; our ability to successfully open new stores in attractive locations and the ability of any such new stores to grow and perform as expected; underperformance or other factors that may lead to a continuation or acceleration of store closures and negatively affect the Company's profitability, financial condition or prospects; adverse weather, public health threats, acts of war or aggression or similar conditions and related consequences that may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess inventory at anticipated margins; adverse developments or volatility affecting the financial services industry or broader financial markets; and other factors discussed under "Risk Factors" in Part I, Item 1A of the Company's most recently filed annual report on Form 10-K and in other reports the Company files with or furnishes to the SEC from time to time. The Company does not undertake, and expressly declines any obligation, to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized. The Company is not responsible for any changes made to this press release by wire or Internet services.
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SOURCE The Cato Corporation
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What brings Cato’s total planned store closures in fiscal 2026 to approximately 120?
The company had previously planned store closures and has now added about 70 additional underperforming stores to be closed in the third and fourth quarters of 2026, bringing the total number of stores expected to close in fiscal 2026 to approximately 120.
Why is Cato accelerating closures of marginal stores this year?
The company said that, given the current economic environment and negative pressure on customers’ discretionary income, it does not expect marginal stores to improve appreciably. In prior years, some marginal stores were renewed for an extra year to allow more time to improve performance, but that approach has changed, leading to more closures in 2026.
What types of expenses make up the $1.0–$1.3 million in expected exit costs?
The expected $1.0–$1.3 million in exit costs through the end of 2026 primarily reflects expenses to dispose of external signage and fixtures and to return store systems back to the corporate office.
What risks could cause actual results from the store closure plan to differ from expectations?
The company cites risks such as changes in consumer confidence and spending, prevailing social, economic, political and public health conditions, war or similar hostilities, inflation, wage and tax rates, tariffs, interest rates, employment levels, competitive and pricing pressures, its ability to respond to fashion trends, store underperformance, weather events, public health threats, inventory risks, financial market volatility, and other factors discussed in its latest Form 10-K and subsequent SEC filings.