After registering 9% growth in May, The Cato Corporation reported flat comparable-store sales (comps) for June. Moreover, the company’s sales totaled $72.9 million for the five-week period (ending Jul 7, 2018), which dipped 2% from the year-ago number.
Per management, comps for June were marginally lower than the company’s projection. Further, this fashion apparel and accessories’ retailer reported sales of $386.5 million for the twenty-two weeks (ended Jul 1, 2018), which remained flat year over year. However, comps inched up 1% on a year-to-date basis.
We note that retail sector has long been bearing the brunt of changing consumer preferences from offline shopping to online, resulting in lower store traffic and volatile consumer spending. This has heavily weighed on Cato’s financial performance. In fact, declining comps have become a major concern for retailers like Cato, which has witnessed a long dismal comps trend. Comps fell a respective 6%, 5%, 6%, 9%, 8%, 7%, 11%, 10%, 9%, 16%, 16% and 2% for April, February, January, 2018; December, November, October, September, August, July, June, May and April 2017. However, the metric rose 6% in March 2018.
Due to lower store traffic, volatile consumer spending, intense competition, retailers are resorting to store closures and concentrating more on digital capabilities. Evidently, Cato shuttered down one store in Guthrie, OK. Consequently, the company operated 1,350 stores across 33 states as of Jul 7, 2018, down from 1,374 stores as of Jul 1, 2017.
In the past month, shares of Cato have lost 12.2% against the industry’s 1.8% rise.
Apart from Cato, retailers like L Brands, Inc. (LB - Free Report) , The Buckle, Inc. (BKE - Free Report) and Costco Wholesale Corporation (COST - Free Report) released sales data for June. While Buckle’s comps slipped 1.2% year over year, L Brands and Costco recorded comps growth of 3% and 9.7% respectively.
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