The Cato (CATO) investor relations material

Executive summary

• Net income for Q1 2026 was $9.3 million ($0.47 per diluted share), up from $3.3 million ($0.17 per diluted share) in Q1 2025, driven by a $5.7 million tariff refund and improved gross margin.

• Total revenues increased slightly to $171.1 million from $170.2 million year-over-year, with a 3% same-store sales increase offset by store closures.

• Sales increased 0.7% year-over-year to $169.5 million, with same-store sales up 3%.

• Operating 1,065 stores at quarter-end, down from 1,109 a year ago; two stores opened and six closed in the quarter.

• Results benefited from a $5.7 million IEEPA tariff refund claim, partially offset by higher sales of marked-down goods.

Financial highlights

• Retail sales were $169.4 million, up from $168.4 million year-over-year.

• Gross margin rose to 37.2% from 35.1% year-over-year, aided by the tariff refund and lower freight costs.

• SG&A expenses decreased to $53.9 million (31.8% of sales) from $55.3 million (32.8%) due to lower payroll and insurance costs.

• Income before income taxes was $9.8 million (5.8% of sales), up from $4.2 million (2.5%).

• Depreciation expense was $2.2 million, down from $2.6 million.

Outlook and guidance

• Plans to open up to 15 new stores and close approximately 35 stores in fiscal 2026.

• Expects to invest about $7.4 million in capital expenditures for the full year.

• Anticipates receiving the balance of the tariff refund by the end of Q2 2026.

• Sales are expected to be negatively impacted by rising inflation, especially fuel and food prices, reducing customers' discretionary income.