Cato 2011 Annual Meeting Highlights

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May 26, 2011, 04:29 ET

CHARLOTTE, N.C., May 26, 2011 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) held its Annual Shareholders' Meeting on Thursday, May 26, 2011 at its corporate offices in Charlotte, NC.

John Cato, Chairman, President, and Chief Executive Officer, commented on the Company's record 2010 performance in which Cato generated a 26% increase in both earnings per diluted share and net income. Mr. Cato also noted the Company recently reported a 22% increase in both earnings per diluted share and net income for the first quarter of 2011, the largest quarterly earnings in the Company's history. "Cato has posted three consecutive years of earnings improvement in a very tough environment by giving our customer what she wants – great fashion, great quality and low prices every day - in short, we have given her value," stated Mr. Cato.

Mr. Cato noted that organizational changes the Company has made over the last several years have allowed the Cato team to excel and have helped drive the business forward. "Those changes, along with those we've made in our merchandise, in how we source our goods and in our customer's shopping experience have all improved the bottom line," stated Mr. Cato.

Mr. Cato then discussed the Company's 2011 growth plans including that the Company continues to believe both the Cato and It's Fashion divisions, as well as the Company's newest concept, Versona Accessories, provide growth opportunities for the future. He added the Company expects to open 10 Cato stores and 34 It's Fashion Metro stores this year.

In discussing the new Versona concept, Mr. Cato noted that the concept arose from the success of a jewelry and accessory intensification in the Company's other two concepts in 2010. "We saw the opportunity for a third profit center and growth vehicle and we are leveraging the knowledge we gained to open Versona, a destination store offering an upscale shopping environment comparable to better specialty and department stores. With three different concepts, with three distinct customer bases, we are well positioned to continue growing our Company," commented Mr. Cato. The Company expects to open 10 Versona stores this fall.

Mr. Cato commented on the Company's cash position stating, "Our strong cash position allows us to make investments in new concepts, store development and additional infrastructure. It also allows us to maintain a consistent dividend and repurchase shares to provide value our shareholders can count on." He then discussed significant investments the Company is making in facilities and technology. "We are investing in systems to improve efficiencies in many areas of our business such as merchandise planning and allocation and warehouse management systems," commented Mr. Cato. These technology initiatives are expected to cost a total approximately $10 million.

Mr. Cato also discussed infrastructure investments the Company is making to accommodate and support the Company's growth. The projects include additional trailer parking and an additional 200,000 square foot distribution center, both on land the Company owns on Hebron Road in Charlotte near its existing facility, and 60,000 square feet of additional office space adjacent to it's current building on Denmark Road. The three projects are expected to cost approximately $40 million in total.

In a meeting of the Board of Directors prior to the Annual Meeting, the Board increased the Company's dividend 24% to $0.92 on an annualized basis. The current dividend represents a yield of 3.5% based on the May 26 closing price.

During the Annual Meeting, shareholders re-elected Bryan F. Kennedy, III and elected new director Thomas B. Henson to three-year terms ending in 2014. In a non-binding advisory vote, shareholders approved the Company's named executive officer executive compensation program and also voted to hold the non-binding advisory vote on named executive compensation every three years.

Shareholders also ratified the selection of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for fiscal 2011.

The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating two divisions, "Cato" and "It's Fashion". The Company's Cato division offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day. The It's Fashion division offers fashion with a focus on the latest trendy styles and nationally recognized urban brands for the entire family at low prices every day. As of April 30, 2011, the Company operated 1,282 stores in 31 states. Additional information on The Cato Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company's expected financial results, including the Company's dividend and share repurchases, 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, the following: general economic conditions; competitive factors and pricing pressures; the Company's ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand. Additional information concerning these and other important factors can be found in Item 1A. "Risk Factors" of the Company's most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. 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.

SOURCE The Cato Corporation