In Q1 FY23, ending April 29, 2023, the company's sales drop by 7 per cent to $190.3 million from $204.9 million in Q1 FY22. The company also registered a 6 per cent decline in its same-store sales compared to the corresponding period in the previous fiscal year, Cato Corporation said in its financial results of Q1 FY23, ending April 29, 2023.

The first-quarter gross margin as a percentage of sales witnessed a slight increase from 35.5 per cent in Q1 FY22 to 35.8 per cent in FY23. This improvement was largely driven by reduced markdowns, which the company attributes to on-time merchandise shipments.

However, selling, general, and administrative expenses as a percentage of sales went up from 29.5 per cent to 32.5 per cent during Q1 FY23, impacting the overall profitability. The increase in selling, general, and administrative expenses can be attributed to higher operating costs.

As part of its operational strategy, the Cato Corporation opened four new stores but closed 20 stores during the first quarter of FY23. As of April 29, 2023, the company is operating 1,264 stores across 32 states, which shows a decrease from 1,315 stores as of April 30, 2022.

"Our customer continues to feel the strain of higher interest rates and inflation on their discretionary income, which has negatively impacted our sales for the first quarter," said John Cato, chairman, president and chief executive officer. "We are finally experiencing sustained relief from previous supply chain challenges, but the continued volatility in the economy causes us to remain cautious about the remainder of the year."

Fibre2Fashion News Desk (DP)