Cato Corporation, a US-based fashion retailer, has reported sales of $342.2 million for the first half of fiscal 2024 (H1 FY24), an 8 per cent decrease from $371.5 million in the same period last year. This decline was primarily attributed to store closures in 2023 and a 4 per cent drop in same-store sales compared to H1 FY23.

Despite the drop in sales, Cato Corporation reported a significant increase in net income for H1 FY24. The company posted net income of $11.1 million, or $0.54 per diluted share, compared to $5.6 million, or $0.27 per diluted share, for the six months ended July 29, 2023. However, the gross margin slightly decreased from 35.5 per cent of sales to 35.2 per cent, reflecting higher costs or lower sales efficiency, the company said in a press release.

In the second quarter of fiscal 2024 (Q2 FY24), which ended on August 3, 2024, the company continued to face challenges. Sales for the quarter were $166.9 million, down 8 per cent from $181.2 million in the same quarter last year. This decline was again largely due to store closures in 2023 and a 2 per cent decrease in same-store sales during the quarter.

Net income for Q2 FY24 was significantly lower at $0.1 million, or $0.01 per diluted share, compared to $1.1 million, or $0.06 per diluted share, for the second quarter of the previous year. The company also reported a decline in gross margin, which fell from 35.1 per cent to 34.6 per cent of sales in Q2 FY24.

During the second quarter, Cato Corporation closed five stores, continuing its trend of reducing its retail footprint. As of August 3, 2024, the company operated 1,166 stores across 31 states, down from 1,247 stores in the same number of states as of July 29, 2023.

"Although the second quarter sales trend improved, the sales environment continues to be challenged by negative pressure on our customers' discretionary spending," said John Cato, chairman, president, and chief executive officer. "We continue to manage our selling, general, and administrative expenses tightly in line with our current sales trend. We believe the back half of the year will remain challenging."

Fibre2Fashion News Desk (DP)