Back to top

Image: Bigstock

Cato's Dismal Comps Trend Continues, Stock Plummets 45% YTD

Read MoreHide Full Article

Declining comparable store-sales (comps) trend seems to be a never-ending phase for The Cato Corporation (CATO - Free Report) . We note that its comps have been declining since more than a year, primarily due to a tough apparel retail scenario. In fact, this trend entered the month of June as well, for which Cato’s released dismal sales metrics.



These are well reflected in Cato’s share price. The stock has plummeted 45% on a year-to-date basis, wider than the Zacks categorized Retail – Apparel/Shoe industry that declined 23.1%.

Dismal Comps Performance

Cato’s comps for the five weeks ended Jul 1, 2017 fell 16% from the period ended Jul 2, 2016. Moreover, its sales for the same period also slumped 15% to $74.7 million from $88 million reported a year ago.

Here below is shown the trend of declining comps for the last six months of 2017:



Alongside, Cato, which operates 1,374 stores, posted sales data for the 22-week period ended Jul 1, 2017, wherein sales declined 16% to $386.5 million from the year-ago tally of $460.9 million. Comps decreased 16% year to date.

Prior to this, the company reported a 16% drop in May comps. Also, its sales for the four-week period ended May 27, 2017 declined 15% to $74.2 million from $87.4 million recorded in the prior-year period.

Bottom Line

With consumers shifting more toward online shopping, the retailers are facing lot of difficulties to increase traffic at the stores. As a result, companies have to come up with several plans like additional offers, free promotions and discounted prices to hold traffic at the stores, which might hurt the margins. To counter the same, retailers are now focusing more on enhancing their omni-channel capabilities, optimizing store fleet and restructuring activities.

Apart from Cato, various other retailers came out with comps results for the month of June. Retailers such as Zumiez Inc. (ZUMZ - Free Report) and Costco Wholesale Corporation (COST - Free Report) managed to record positive comps despite the headwinds. Zumiez recorded comps growth of 5.3%, while the same increased 6% for Costco.

Stock to Consider

If interested in the Retail – Apparel/Shoe industry, you may count upon The Children's Place, Inc. (PLCE - Free Report) that has a long-term earnings growth rate of 8% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Published in