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Cato (NYSE: CATO) triples Q1 profit but warns on inflation

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(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

The Cato Corporation reported much stronger first-quarter results. For the quarter ended May 2, 2026, net income was $9.3 million, or $0.47 per diluted share, compared with $3.3 million, or $0.17 per diluted share, a year earlier.

Sales were $169.5 million, up 0.7%, and same-store sales increased 3%. Gross margin rose to 37.2% from 35.1%, helped by a pre-tax $5.7 million IEEPA tariff refund, while selling, general and administrative expenses fell to $53.9 million. The company repurchased 107,823 shares, ended the quarter with 1,065 stores, and noted that higher fuel and food prices are pressuring customers’ discretionary income and may hurt future sales.

Shareholders re-elected three directors, approved the advisory vote on executive compensation, and ratified PricewaterhouseCoopers LLP as independent auditor.

Positive

  • Strong earnings rebound and margin expansion: Net income rose to $9.3 million with diluted EPS of $0.47, as gross margin improved to 37.2% helped by a $5.7 million tariff refund and lower SG&A.

Negative

  • Management expects macro headwinds on sales: The company noted softening sales trends later in the quarter and warned that rising fuel and food prices may negatively impact customers’ discretionary spending and future sales.

Insights

Cato posted a sharp profit rebound helped by a one-time tariff refund, while warning about inflation pressures on future sales.

The Cato Corporation delivered a strong first-quarter earnings rebound, with net income rising to $9.3 million and diluted EPS at $0.47. Sales were relatively flat at $169.5 million, but same-store sales grew 3%, and gross margin expanded to 37.2% from 35.1%.

A key driver was a pre-tax $5.7 million IEEPA tariff refund, which boosted gross margin but is non-recurring by nature. Operating efficiency improved as selling, general and administrative expenses declined to $53.9 million and fell as a percentage of sales, indicating tighter cost control alongside modest growth.

Management highlighted that sales trends softened later in the quarter and expects rising inflation, especially fuel and food prices, to reduce customers’ discretionary income. This could pressure future sales even as the company maintains 1,065 stores and continues buybacks. Subsequent quarterly results will show how persistent these macro headwinds become relative to current profitability.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 5.07 Submission of Matters to a Vote of Security Holders Governance
Results of a shareholder vote on proposals at an annual or special meeting.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Net income $9.3 million Quarter ended May 2, 2026
Diluted EPS $0.47 per share Quarter ended May 2, 2026
Sales $169.5 million Quarter ended May 2, 2026; up 0.7% year over year
Same-store sales growth 3% Quarter ended May 2, 2026
Gross margin rate 37.2% Quarter ended May 2, 2026; 35.1% in 2025
Tariff refund claim $5.7 million pre-tax IEEPA tariff refund included in Q1 2026 gross margin
SG&A expense $53.9 million Quarter ended May 2, 2026; down from $55.3 million
Stores in operation 1,065 stores As of May 2, 2026; 1,109 a year earlier
same-store sales financial
"The Company’s same-store sales for the quarter increased 3%."
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.
gross margin financial
"First quarter gross margin as a percentage of sales was 37.2% in 2026 and 35.1% in 2025."
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.
International Emergency Economic Powers Act regulatory
"Our results significantly benefited from the refund claim of IEEPA (International Emergency Economic Powers Act) tariffs in the quarter."
A U.S. law that gives the president broad authority to control trade, financial transactions, and assets during a declared national emergency, such as by imposing sanctions, freezing property, or restricting exports and imports. For investors it matters because those powers can suddenly block deals, cut off access to markets or funds, and change the value of companies or securities much like an emergency brake that can stop or reroute economic activity overnight.
forward-looking regulatory
"Statements in this press release that express a belief, expectation or intention... are considered “forward-looking” within the meaning of The Private Securities Litigation Reform Act of 1995."
Forward-looking describes statements, estimates or projections about a company’s future performance, plans or expectations rather than past results. Like a weather forecast for a business, these predictions help investors form expectations and decide whether to buy, hold or sell, but they are not guarantees and can change if conditions differ from assumptions. Investors use them to gauge management’s strategy and potential risks and rewards.
independent registered public accounting firm regulatory
"to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm"
An independent registered public accounting firm is an outside accounting company officially registered with the government regulator to examine and report on a public company's financial records and controls. Investors treat its reports like an impartial inspector’s certificate — they add credibility to financial statements, help spot errors or misleading claims, and reduce the risk that shareholders are relying on unchecked or biased numbers.
Total sales $169.5 million 0.7% increase year over year
Net income $9.3 million
Diluted EPS $0.47
Same-store sales 3% growth
Gross margin rate 37.2% up from 35.1% in prior year quarter
Guidance

Management indicated that rising inflation, particularly fuel and food prices, is expected to negatively impact customers’ discretionary income and future sales.

Understanding 8-K Material Events →
FALSE 0000018255 0000018255 2026-05-21 2026-05-21
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street NW
Washington, D.C. 29549
Form
8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 21, 2026
THE CATO CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
1-31340
56-0484485
(State or Other Jurisdiction
of
Incorporation
(Commission
File Number)
(IRS Employer
Identification No.)
8100 Denmark Road
,
Charlotte
,
North Carolina
(Address of Principal Executive Offices)
28273-5975
(Zip Code)
(704)
554-8510
(Registrant’s Telephone
Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check
the
appropriate
box
below
if
the
Form
8-K
filing
is
intended
to
simultaneously
satisfy
the
filing
obligation
of
the
registrant
under any of the following provisions:
☐
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a
-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A - Common Stock, par value $.033 per share
CATO
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company
☐
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended
transition period for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
2
THE CATO
CORPORATION
Item 2.02. Results of Operations and Financial Condition.
On May 21, 2026, The Cato Corporation issued a press release regarding its financial results for
the first quarter
ending May 2, 2026. A copy of this press release is hereby incorporated as Exhibit 99.1 hereto.
Item 5.07. Submission of Matters to a Vote
of Security Holders.
On
May
21,
2026,
the
Registrant
held
its
Annual
Meeting.
The
following
are
the
voting
results
on
each
matter
submitted to the Registrant’s
stockholders at the
Annual Meeting. The
proposals below are described
in detail in the
Proxy Statement.
At the Annual Meeting, the three nominees for director
were elected to the Registrant’s Board
of Directors (Proposal
1 below).
In
addition, management’s
proposal regarding the Company’s executive
compensation was approved
(Proposal
2
below).
In
addition,
management’s
proposal
regarding
the
selection
of
PricewaterhouseCoopers
LLP
as
the
Company’s
independent registered public
accounting firm for
the fiscal year ending
January 31, 2026
was approved (Proposal
3
below).
Summary of Voting
By Proposal
1.
To elect
Dr. Pamela L Davies, Thomas
B. Henson and Bryan F.
Kennedy III, each for a term expiring in 202
9
and until their successors are elected and qualified. Votes
recorded, by nominee, were as follows:
Nominee
For
Abstain
Broker
Non-Votes
Dr. Pamela L Davies
24,168,124
2,213,658
2,051,676
Thomas B. Henson
24,179,447
2,202,335
2,051,676
Bryan F. Kennedy III
24,054,725
2,327,057
2,051,676
2.
To
approve,
on an
advisory
basis, the
Company’s executive
compensation. The
Company’s shareholders
voted
to
approve this
proposal with
24,699,1186 for
and 1,284,938 votes
against. There were
397,658 abstentions and 2,51,676 Broker non-votes
3.
To
ratify
the
selection
of
PricewaterhouseCoopers
LLP
as
the
Company’s
independent
registered
public
accounting firm
for the
fiscal year
ending
January 30,
2027. The
Company’s
shareholders
voted to
approve
this proposal with 28,338,866 for and 63,838 votes against. There
were 30,754 abstentions.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 - Press Release issued May 21, 2026
Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)
3
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
THE CATO
CORPORATION
May 26, 2026
/s/ John P.
D. Cato
Date
John P.
D. Cato
Chairman, President and
Chief Executive Officer
May 26, 2026
/s/ Charles D. Knight
Date
Charles D. Knight
Executive Vice President
Chief Financial Officer
4
Exhibit Index
Exhibit
Exhibit
No.
99.1 - Press Release issued May 21, 2026
99.1
104
Cover page Interactive Data File (embedded within Inline
XBRL document)
104
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
Charles D. Knight
Executive Vice President
Chief Financial Officer
InvestorRelations@catocorp.com
CATO REPORTS
1Q EARNINGS
CHARLOTTE, N.C. (May 21, 2026) – The Cato Corporation (NYSE: CATO) today reported net income of $9.3 million
or $0.47 per diluted share for the first quarter ended May 2, 2026, compared
to net income of $3.3 million or $0.17 per
diluted share for the first quarter ended May 3, 2025.
Sales for the first quarter ended May 2, 2026 were $169.5 million, or an
increase of 0.7% from sales of $168.4 million for
the first quarter ended May 3, 2025.
The Company’s same-store sales for the quarter increased 3%.
"Our results significantly benefited from the refund claim
of IEEPA (International Emergency Economic Powers Act)
tariffs in the quarter.
Our sales trend softened as the quarter continued in part due
to higher fuel prices pressuring our
customers’ discretionary income,” said John Cato, Chairman, President
and Chief Executive Officer.
”
For the foreseeable
future we expect our sales to be negatively impacted by rising inflation,
especially fuel and food prices, which will reduce
our customers’ discretionary income.”
First quarter gross margin as a percentage of sales was 37.2% in 2026 and 35.1%
in 2025.
The increase in gross margin as
a percentage of sales is due in part to a pre-tax $5.7 million tariff refund claim
partially offset by lower merchandise
contribution caused in part by higher sales of marked-down
goods.
Selling, General and Administrative expense
decreased to $53.9 million in the first quarter of 2026 from
$55.3 million in 2025 due to decreases in corporate payroll
expense, insurance costs and equipment maintenance partially offset by incentive
compensation expense.
Selling, General
and Administrative expense as a percentage of sales decreased to 31.8%
in 2026 compared to 32.8% in 2025.
Interest and
other income were $1.2 million in both 2026 and 2025.
Income tax expense for the quarter decreased to $0.5 million in
2026 from
$0.9 million in 2025.
The decrease in tax expense is primarily due to a reduction in foreign taxes.
Additionally, the Company bought back 107,823 shares during the quarter.
During the first quarter ended May 2, 2026, the Company opened two
stores and closed six stores.
As of May 2, 2026, the
Company operated 1,065 stores in 31 states, compared to 1,109 stores
in 31 states as of May 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 May 2, 2026 AND May 3, 2025
(Dollars in thousands, except per share data)
Quarter Ended
May 2
%
May 3
%
2026
Sales
2025
Sales
REVENUES
Retail sales
$
169,410
100.0%
$
168,419
100.0%
Other revenue (principally finance,
late fees and layaway charges)
1,694
1.0%
1,823
1.1%
Total revenues
171,104
101.0%
170,242
101.1%
GROSS MARGIN (Memo)
63,070
37.2%
59,101
35.1%
COSTS AND EXPENSES, NET
Cost of goods sold
106,340
62.8%
109,318
64.9%
Selling, general and administrative
53,930
31.8%
55,325
32.8%
Depreciation
2,236
1.3%
2,564
1.5%
Interest and other income
(1,233)
-0.7%
(1,202)
-0.7%
Costs and expenses, net
161,273
95.2%
166,005
98.6%
Income Before Income Taxes
9,831
5.8%
4,237
2.5%
Income Tax Expense
522
0.3%
928
0.6%
Net Income
$
9,309
5.5%
$
3,309
2.0%
Basic Earnings Per Share
$
0.47
$
0.17
Diluted Earnings Per Share
$
0.47
$
0.17
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
May 2,
January 31,
2026
2026
(Unaudited)
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
25,412
$
16,788
Short-term investments
55,558
56,859
Restricted cash
2,675
2,675
Accounts receivable - net
33,159
25,462
Merchandise inventories
92,490
83,696
Other current assets
7,928
7,787
Total Current Assets
217,222
193,267
Property and Equipment - net
52,504
53,748
Other Assets
20,720
20,471
Right-of-Use Assets, net
148,734
153,933
TOTAL
$
439,180
$
421,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
$
116,130
$
102,385
Current Lease Liability
52,088
53,507
Noncurrent Liabilities
11,318
11,272
Lease Liability
92,939
96,941
Stockholders' Equity
166,705
157,314
TOTAL
$
439,180
$
421,419

Source: View Original Filing on SEC EDGAR

FAQ

How did The Cato Corporation (CATO) perform in Q1 2026?

Cato posted much higher Q1 2026 profit. Net income reached $9.3 million and diluted EPS was $0.47, compared with $3.3 million and $0.17 a year earlier, on sales of $169.5 million.

What were Cato (CATO) sales and same-store sales in Q1 2026?

Cato’s Q1 2026 sales were modestly higher. Total sales were $169.5 million, up 0.7% from $168.4 million a year earlier, while same-store sales increased 3%, showing better performance in existing locations.

How did Cato’s gross margin and expenses change in Q1 2026?

Cato’s margins and cost structure improved. Gross margin rose to 37.2% from 35.1%, partly due to a $5.7 million pre-tax tariff refund, while SG&A expenses declined to $53.9 million and fell as a percentage of sales.

What macroeconomic risks did Cato (CATO) highlight for future sales?

Cato warned about inflation-driven demand pressure. Management stated that higher fuel and food prices are reducing customers’ discretionary income, contributing to softer sales trends and expected negative impacts on future sales performance.

Did Cato (CATO) return capital to shareholders in Q1 2026?

Cato continued share repurchases in the quarter. The company bought back 107,823 shares, alongside maintaining a strong balance sheet with $25.4 million in cash and $55.6 million in short-term investments as of May 2, 2026.

What were the key voting results from Cato’s 2026 Annual Meeting?

All management proposals at Cato’s Annual Meeting passed. Shareholders re-elected three directors, approved the advisory vote on executive compensation, and ratified PricewaterhouseCoopers LLP as the independent registered public accounting firm.

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