Cato Corporation (CATO) has reported a 0.71 percent fall in profit for the quarter ended Oct. 29, 2016. The company has earned $8.26 million, or $0.30 a share in the quarter, compared with $8.32 million, or $0.30 a share for the same period last year.
Revenue during the quarter dropped 7.19 percent to $209.26 million from $225.47 million in the previous year period. Gross margin for the quarter contracted 165 basis points over the previous year period to 36.14 percent. Total expenses were 99 percent of quarterly revenues, up from 96.23 percent for the same period last year. That has resulted in a contraction of 278 basis points in operating margin to 1 percent.
Operating income for the quarter was $2.09 million, compared with $8.50 million in the previous year period.
"The retail environment continues to be soft, and markdown sales in the latter part of the quarter were significantly less than our earlier forecasts," stated John Cato, Chairman, President, and Chief Executive Officer. "Soft sales in the first half of the year continued and eroded further in the third quarter and we expect this trend to continue into the fourth quarter. Overall, we have experienced a number of merchandise assortment and timing issues that have resulted in significant reductions of regular priced sales. Consequently, we had significant markdown inventory as we entered the fourth quarter."
Working capital increases marginally
Cato Corp has recorded an increase in the working capital over the last year. It stood at $288.89 million as at Oct. 29, 2016, up 3.78 percent or $10.52 million from $278.37 million on Oct. 31, 2015. Current ratio was at 2.88 as on Oct. 29, 2016, up from 2.60 on Oct. 31, 2015.
Days sales outstanding were almost stable at 15 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 52 days for the quarter compared with 84 days for the previous year period.
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