CHARLOTTE, N.C., May 19, 2017 /PRNewswire/ -- The Cato Corporation (NYSE: CATO) held its Annual Shareholders' Meeting on Friday, May 19, 2017 at its corporate offices in Charlotte, N.C.
John Cato, Chairman, President, and Chief Executive Officer, began the meeting with a recap of three major initiatives undertaken by The Company in 2014 to address changes in customer buying habits. The initiatives were the launch of our e-commerce platform, opening our own overseas sourcing offices, and shifting to a new model of designing fashions internally. Mr. Cato indicated each of these initiatives has required adjustments to how the business operates and each will play a key role in The Company's future success.
Mr. Cato stated The Company reported record earnings in 2015 and achieved over $1 billion in sales. Unfortunately, Mr. Cato said 2016 was more difficult, as it was for many retailers, but he was proud to highlight the year was still very profitable. He also indicated these challenges are continuing in 2017 and are primarily the result of changing consumer buying habits affecting the entire retail industry, as well as internal merchandising missteps.
"The good news is we have identified these issues related to our merchandise assortment and design and are taking corrective actions that will put us back on track," Mr. Cato said. "While we had hoped to turn the corner on this by now, our merchandise corrections will continue through the summer and most likely into fall. Bottom line, this means 2017 will be a very challenging year."
Mr. Cato mentioned several factors compounding the challenges of a volatile and competitive retail market. Among them are the rising cost of living, consumer spending shifts away from apparel and more toward "experiences," the general decline in brick-and-mortar sales due to online shopping, and the continuing lack of new shopping center development and increased competition for good retail space.
But Mr. Cato also outlined a number of reasons he remains optimistic about The Company's future. First, he said, Cato is committed to providing exclusive styles at a great value by utilizing its new internal design team. Second, the opening of sourcing offices in Asia gives Cato better control and flexibility in the manufacturing of our goods. Finally, the success of our e-commerce initiatives has created a convenient and increasingly popular shopping alternative.
Mr. Cato indicated that the overall strategy at Cato remains sound. "We are committed to growing our business by driving same-store sales profitably, growing our e-commerce business and adding additional stores when the right space becomes available," stated Mr. Cato.
In addition, Mr. Cato remarked that, while Cato is not immune to the effects of the distressed retail environment, The Company is better positioned than most. Cato stores are located in strip shopping centers, which offer convenience for our customers and lower occupancy costs as compared to malls, where much of the retail difficulty is occurring. Also, Cato stores are located in smaller markets with less competition than in major cities. The company's everyday low-price strategy gives our customers confidence they can shop at any time and always get the best value. Additionally, the company has a loyal customer base that still prefers the in-store shopping experience. Mr. Cato also stressed that Cato is very strong financially with over $250 million in cash at year end, and no debt.
Mr. Cato also reiterated The Company's commitment to its shareholders. In 2016, Cato returned more than $78 million in value to shareholders through quarterly dividends of $35.4 million and share repurchases of $42.6 million. The Company also maintained its quarterly dividend of $.33 per share, or $1.32 annually.
In summary, Mr. Cato said, "The challenges of 2016 are continuing this year. But the good news is we have recognized our merchandising missteps and are correcting them as quickly as possible."
In a meeting of the Board of Directors prior to the shareholder meeting, the Board declared a regular quarterly dividend of $0.33 per share. This dividend equates to a dividend of $1.32 on an annualized basis, and represents an annualized yield of 6.1% based on the closing market price of $21.53 on May 18, 2017.
During the Annual Meeting, shareholders re-elected Bryan F. Kennedy, III and Thomas B. Henson each for a term expiring in 2020. Shareholders voted yes for a proposal to approve the compensation of executive officers and voted to hold an advisory vote on "say on pay" annually. Finally, shareholders ratified the selection of PricewaterhouseCoopers LLP (PwC) as the company's independent registered public accounting firm for the fiscal year ending February 3, 2018.
The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories operating three concepts, "Cato", "Versona" and "It's Fashion". The Company's Cato stores offer exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices every day. The Company also offers exclusive merchandise found in its Cato stores at www.catofashions.com. Versona is a unique fashion destination offering apparel and accessories including jewelry, handbags and shoes at exceptional prices every day. Select Versona merchandise can also be found at www.shopversona.com. It's Fashion offers fashion with a focus on the latest trendy styles for the entire family at low prices every day.
Statements in this press release not historical in nature including, without limitation, statements regarding the Company's expected or estimated operational and financial results 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: any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not limited to, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, home values, consumer net worth and the availability of credit; uncertainties regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; adverse weather or similar conditions that may affect our sales or operations; inventory risks due to shifts in market demand, including the ability to liquidate excess inventory at anticipated margins; and other factors discussed under "Risk Factors" in Part I, Item 1A of the Company's most recently filed annual report on Form 10-K and in other reports the Company files with or furnishes to the SEC from time to time. 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.
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SOURCE The Cato Corporation