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Cato Reports Improved June Comps

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Charlotte, NC-based retailer of apparel and accessories for women, Cato Corporation posted yet another month of improved comparable-store sales (comps) performance for the 5 weeks ended Jul 5, 2014. Comps for the period registered a growth of 3%.

Further, for the 5-week period, Cato reported a year-over-year increase of 7% in total sales, which came in at $92.0 million versus sales of $86.1 million registered for the 5-week period ended Jul 6, 2013. The company’s key retail metrics came in line with the year-to-date trend.

We believe the company’s sales for the month have mainly picked up due to a probable rise in traffic. Our anticipation is based on certain positive economic factors including the recently reported 0.2% drop in unemployment data in June and a rise of 7.4% in consumer credit. Moreover, favorable weather conditions and huge promotional activities may have also acted as catalysts in improving traffic at the company’s stores.

Other retailers who have registered strong comps growth during the month include L Brands, Inc. (LB - Free Report) , Zumiez Inc. and Costco Wholesale Corp. (COST - Free Report) with comps growth of 2%, 3.1% and 6%, respectively.

Now coming back to Cato, the company reported a 6% increase in sales to $460.9 million for the twenty-two week period ended Jul 5, 2014. Comps for the year-to-date period were up 3%.

In the month of June the company expanded its store base by opening three new stores, one each at Mason City, IA, State College, PA and Richmond, VA. The company also relocated one store, which is in Charleston, SC. As of Jul 5, 2014, this leading specialty retailer of women's fashion apparel and accessories operated 1,328 stores across 32 states as against 1,306 stores in 31 states as of Jul 6, 2013.

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