CATO REPORTS 2Q RESULTS

Rhea-AI Summary

Cato (NYSE: CATO) reported second-quarter 2026 net income of $1.1 million, or $0.06 per diluted share, down from $6.8 million, or $0.35, a year earlier. Quarterly sales declined 6% to $163.9 million, primarily reflecting a 3.7% same-store sales decrease.

Gross margin fell from 36.2% to 32.8% due to lower merchandise margins and occupancy deleverage, while SG&A rose to 33.0% of sales despite a $3.3 million absolute decline. For the first half of 2026, net income was $10.5 million versus $10.1 million on sales of $333.3 million, down 2.9%. Year-to-date gross margin eased to 35.0% and SG&A fell $4.7 million. Cato closed eight stores in the quarter, ending with 1,057 stores in 31 states, and management cited ongoing pressure on customers’ discretionary income and expects the back half of 2026 to be challenging.

Positive

• Year-to-date net income up to $10.5 million from $10.1 million
• Year-to-date SG&A expenses reduced by $4.7 million
• Quarterly SG&A expense down $3.3 million versus prior-year quarter
• Interest and other income increased to $2.3 million in Q2 from $1.4 million
• Cash and cash equivalents increased to $35.1 million from $16.8 million at January 31, 2026
• Stockholders’ equity rose to $167.9 million from $157.3 million since January 31, 2026

Negative

• Q2 net income declined to $1.1 million from $6.8 million year over year
• Q2 sales decreased 6% to $163.9 million
• Q2 same-store sales fell 3.7% versus 2025
• Q2 gross margin rate declined from 36.2% to 32.8%
• Year-to-date sales declined 2.9% to $333.3 million
• Eight stores closed in Q2, reducing store count to 1,057
• Management expects customer discretionary-income pressure and a challenging back half of 2026

News Explained

At August 1, Cato reported $35,115 thousand of cash and $58,650 thousand of short-term investments against $105,640 thousand of current liabilities.

Cato's August 20 release reports results for the quarter ended August 1, 2026, and adds a balance-sheet view of the company's resources and obligations at that date.

The balance sheet lists current assets of $208,463 thousand and current liabilities of $105,640 thousand.

It reports cash and cash equivalents of $35,115 thousand, short-term investments of $58,650 thousand, and restricted cash of $2,675 thousand.

Stockholders' equity was $167,905 thousand, while current and noncurrent lease liabilities were $47,835 thousand and $90,794 thousand, respectively.

Market reaction after 2Q26 earnings report: CATO -6.67%

-6.67% $3.50

15m delay

-6.67% Vs previous close

$3.50 Last Price

$3.50 $3.65 Day Range

$69.86M Market Cap

0.0x Rel. Volume

Following this news, CATO has declined 6.67%, reflecting a notable negative market reaction. Our momentum scanner has triggered 2 alerts so far, indicating moderate trading interest and price volatility. The stock is currently trading at $3.50.

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Market Context

CATO's historical earnings reactions included 12.75% after the 1Q report and -0.68% after the 4Q rep...

Analysis

CATO's historical earnings reactions included 12.75% after the 1Q report and -0.68% after the 4Q report. That range frames the announcement against mixed precedents, with declining quarterly margins as the principal risk to monitor.

Key Figures

Quarterly net income: $1.1 million Diluted EPS: $0.06 Quarterly sales: $163.9 million; down 6% +5 more

8 metrics

Quarterly net income $1.1 million 2Q 2026 vs. $6.8 million in 2Q 2025

Diluted EPS $0.06 2Q 2026 vs. $0.35 in 2Q 2025

Quarterly sales $163.9 million; down 6% 2Q 2026 vs. $174.7 million in 2Q 2025

Same-store sales Down 3.7% 2Q 2026 compared with 2Q 2025

Six-month net income $10.5 million Six months ended August 1, 2026 vs. $10.1 million prior year

Gross margin 32.8% 2Q 2026 vs. 36.2% in 2Q 2025

SG&A as percent of sales 33.0% 2Q 2026 vs. 32.8% in 2Q 2025

Stores closed 8 stores During the second quarter ended August 1, 2026

Historical Context

3 past events · Latest: Jun 03 (Neutral)

Pattern 3 events

Date	Event	Sentiment	24h Move	Catalyst
Jun 03	Board appointment	Neutral	+8.1%	Southern First appointed Cato lead independent director Bryan Kennedy to its board.
May 21	1Q earnings report	Positive	+12.8%	First-quarter profit, sales, same-store sales, and gross margin improved year over year.
Mar 19	4Q earnings report	Negative	-0.7%	Fourth-quarter loss narrowed, but sales declined and the company reported a full-year loss.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

CATO's historical earnings reactions aligned with the reported direction, while the management-related event diverged.

Key Terms

gross margin, sg&a, same-store sales

3 terms

gross margin financial

"Gross margin decreased from 36.2% to 32.8% of sales in the quarter"

Gross margin is the difference between how much money a company makes from selling its products and how much it costs to produce them, expressed as a percentage of sales. It shows how efficiently a company is turning sales into profit before other expenses like marketing or salaries. Higher gross margin means the company keeps more money from each sale, which is a good sign of financial health.

View in glossary

sg&a financial

"SG&A expenses as a percent of sales increased from 32.8% to 33.0%"

SG&A stands for Selling, General, and Administrative expenses. It includes the costs a company spends on selling products, running the business day-to-day, and managing staff, like advertising, rent, and salaries. These expenses matter because they affect how much profit a company can make from its sales.

same-store sales financial

"primarily due to a 3.7% same-store sales decrease for the quarter"

Same-store sales measure the revenue generated by stores that have been open for a certain period, typically a year, comparing their sales over different time frames. It helps assess whether a business is growing due to increased customer activity at existing locations rather than new stores. For investors, this figure indicates the health and performance of a company's core operations, independent of expansion efforts.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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CHARLOTTE, N.C., Aug. 20, 2026 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) today reported net income of $1.1 million or $0.06 per diluted share for the second quarter ended August 1, 2026, compared to net income of $6.8 million or $0.35 per diluted share for the second quarter ended August 2, 2025. 

Sales for the second quarter ended August 1, 2026 were $163.9 million, or a decrease of 6% from sales of $174.7 million for the second quarter ended August 2, 2025 primarily due to a 3.7% same-store sales decrease for the quarter compared to 2025.

For the six months ended August 1, 2026, the Company reported net income of $10.5 million or $0.53 per diluted share, compared to net income of $10.1 million or $0.51 for the six months ended August 2, 2025. Sales for the six months ended August 1, 2026 were $333.3 million, a decrease of 2.9% from sales of $343.1 million for the six months ended August 2, 2025 primarily due to flat same-store sales compared to 2025 and the impact of closed stores.

"Our results in the quarter are in large part due to the continued pressure on our customers' discretionary income, which is being negatively impacted in part by persistent inflation, higher fuel prices and continued elevated interest rates," stated John Cato, Chairman, President, and Chief Executive Officer. "We expect the negative pressure on our customers' discretionary income to continue for the foreseeable future. We will continue to tightly manage our expenses and inventory as we anticipate the back half of 2026 to be challenging." 

Gross margin decreased from 36.2% to 32.8% of sales in the quarter due to lower merchandise margins and deleveraging of occupancy costs. SG&A expenses as a percent of sales increased from 32.8% to 33.0% of sales during the quarter. For the quarter, SG&A expense decreased $3.3 million primarily due to lower payroll costs and credit card fees. Income tax expense for the quarter was $0.1 million versus an income tax benefit of $0.3 million in the prior year.

Year-to-date gross margin decreased from 35.6% of sales to 35.0% primarily due to lower merchandise margins and deleveraging of occupancy costs. Year-to-date SG&A expenses were 32.4% as a percent of sales versus 32.8% in the prior year. Year-to-date SG&A expenses decreased $4.7 million primarily due to lower payroll, equipment and insurance costs, partially offset by professional fees and litigation costs. Income tax expense for the first half increased to $0.7 million from $0.6 million last year.

During the second quarter ended August 1, 2026, the Company closed eight stores. As of August 1, 2026, the Company had 1,057 stores in 31 states, compared to 1,101 stores in 31 states as of August 2, 2025.

 The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating three concepts, "Cato," "Versona" and "It's Fashion." The Company's Cato stores offer exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day. The Company also offers exclusive merchandise found in its Cato stores at www.catofashions.com. Versona is a unique fashion destination offering apparel and accessories including jewelry, handbags and shoes at exceptional prices every day. Select Versona merchandise can also be found at www.shopversona.com. It's Fashion offers fashion with a focus on the latest trendy styles for the entire family at low prices every day.

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 the Company's expected or estimated operational financial results, activities or opportunities, and potential impacts and effects of events, risks or contingencies 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, levels of unemployment, fuel, energy and food costs, inflation, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of credit; changes in laws or regulations affecting our business, including but not limited to tariffs and taxes; 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 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 negative affect on the Company's profitability; adverse weather, public health threats, acts of war or aggression or similar conditions 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; 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 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.

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED AUGUST 1, 2026 AND AUGUST 2, 2025
(Dollars in thousands, except per share data)
	Quarter Ended								Six Months Ended
	August 1,		%		August 2,		%		August 1,		%		August 2,		%
	2026		Sales		2025		Sales		2026		Sales		2025		Sales
REVENUES
Retail sales	$	163,902	100.0 %		$	174,653	100.0 %		$	333,312	100.0 %		$	343,072	100.0 %
Other revenue (principally finance,
late fees and layaway charges)		1,599	1.0 %			1,856	1.1 %			3,293	1.0 %			3,679	1.1 %
Total revenues		165,501	101.0 %			176,509	101.1 %			336,605	101.0 %			346,751	101.1 %
GROSS MARGIN (Memo)		53,722	32.8 %			63,186	36.2 %			116,792	35.0 %			122,288	35.6 %
COSTS AND EXPENSES, NET
Cost of goods sold		110,180	67.2 %			111,467	63.8 %			216,520	65.0 %			220,784	64.4 %
Selling, general and administrative		54,047	33.0 %			57,371	32.8 %			107,977	32.4 %			112,696	32.8 %
Depreciation		2,246	1.4 %			2,525	1.4 %			4,482	1.3 %			5,089	1.5 %
Interest and other income		(2,268)	-1.4 %			(1,393)	-0.8 %			(3,501)	-1.1 %			(2,594)	-0.8 %
Costs and expenses, net		164,205	100.2 %			169,970	97.3 %			325,478	97.6 %			335,975	97.9 %
Income Before Income Taxes		1,296	0.8 %			6,539	3.7 %			11,127	3.3 %			10,776	3.1 %
Income Tax Expense (Benefit)		147	0.1 %			(293)	-0.2 %			669	0.2 %			635	0.2 %
Net Income	$	1,149	0.7 %		$	6,832	3.9 %		$	10,458	3.1 %		$	10,141	3.0 %
Basic Earnings Per Share	$	0.06			$	0.35			$	0.53			$	0.51
Diluted Earnings Per Share	$	0.06			$	0.35			$	0.53			$	0.51

 

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	August 1,				January 31,
	2026				2026
	(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	35,115			$	16,788
Short-term investments		58,650				56,859
Restricted cash		2,675				2,675
Accounts receivable - net		20,459				25,462
Merchandise inventories		82,487				83,696
Other current assets		9,077				7,787
Total Current Assets		208,463				193,267
Property and Equipment - net		51,730				53,748
Other Assets		20,942				20,471
Right-of-Use Assets, net		142,303				153,933
TOTAL	$	423,438			$	421,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	$	105,640			$	102,385
Current Lease Liability		47,835				53,507
Noncurrent Liabilities		11,264				11,272
Lease Liability		90,794				96,941
Stockholders' Equity		167,905				157,314
TOTAL	$	423,438			$	421,419

 

 

View original content:https://www.prnewswire.com/news-releases/cato-reports-2q-results-302855620.html

SOURCE The Cato Corporation

FAQ

How did Cato (NYSE: CATO) perform financially in Q2 2026?

Cato reported Q2 2026 net income of $1.1 million, or $0.06 per diluted share. According to Cato, quarterly sales were $163.9 million, down 6% year over year, with a 3.7% decrease in same-store sales impacting performance.

How did Cato’s Q2 2026 results compare to Q2 2025?

Net income fell from $6.8 million in Q2 2025 to $1.1 million in Q2 2026. According to Cato, sales declined from $174.7 million to $163.9 million, and gross margin rate decreased from 36.2% to 32.8% over the same period.

What were Cato’s year-to-date 2026 earnings and sales (CATO)?

For the first six months of 2026, Cato earned $10.5 million, or $0.53 per diluted share. According to Cato, year-to-date sales were $333.3 million, down 2.9% from $343.1 million in the comparable 2025 period.

How did Cato’s gross margin and SG&A change in Q2 2026?

Cato’s Q2 2026 gross margin rate declined to 32.8% from 36.2% a year earlier. According to Cato, SG&A expenses rose to 33.0% of sales, though SG&A dollars decreased $3.3 million, mainly from lower payroll and credit card fees.

What is Cato’s store count after Q2 2026 and how many stores closed?

As of August 1, 2026, Cato operated 1,057 stores in 31 states. According to Cato, the company closed eight stores during the second quarter and had 1,101 stores at the same time in 2025.

What outlook did Cato management give for the rest of 2026?

Management expects continued pressure on customers’ discretionary income and a challenging back half of 2026. According to Cato, factors include persistent inflation, higher fuel prices, and elevated interest rates, and the company plans to tightly manage expenses and inventory.

How strong is Cato’s balance sheet as of August 1, 2026?

Cato reported total assets of $423.4 million and stockholders’ equity of $167.9 million as of August 1, 2026. According to Cato, cash and cash equivalents were $35.1 million, and short-term investments totaled $58.7 million.