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CHARLOTTE, N.C. - Cato Corporation (NYSE:CATO) reported a narrower third quarter loss on Thursday, but still fell short of expectations.
The company’s shares were down 5.85% in pre-market trading after the results.
The value-priced fashion retailer posted a third quarter net loss of -$0.28 per share, improving from a -$0.79 per share loss in the same period last year. Revenue came in at $155.4 million, representing a 6% increase from $144.6 million in the prior-year quarter. Same-store sales increased 10% compared to 2024.
Despite the improvement from last year, the results disappointed investors, leading to the significant stock decline. The company attributed part of last year’s weak comparison to three major hurricanes that negatively impacted sales over a five-week span in 2024, along with supply chain issues that caused late merchandise deliveries.
"Our positive second quarter sales trend continued into the third quarter," stated John Cato, Chairman, President, and Chief Executive Officer. "We believe the fourth quarter will be challenging due in part to the slowdown in employment growth and lower expected economic growth."
Gross margin improved to 32.0% from 28.8% in the prior year quarter, driven by lower freight, distribution, buying and occupancy costs, partially offset by higher markdowns. SG&A expenses decreased to $57.0 million from $57.9 million last year, representing 37.1% of sales compared to 40.0% in the prior year.
For the nine months ended November 1, 2025, Cato reported net income of $5.0 million or $0.25 per diluted share, compared to a net loss of $4.0 million or -$0.24 per share for the same period in 2024.
The company continued to reduce its store count, closing 16 locations year-to-date. As of November 1, 2025, Cato operated 1,101 stores across 31 states, down from 1,167 stores a year earlier.
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