(By Balaseshan) Cato Corp. (NYSE: CATO) reported a 24 percent fall in earnings for the third quarter due to drop in same-store sales and margins, and that the apparel company narrowed its full year earnings forecast.
Earnings were $4.67 million or $0.16 per share for the third quarter, down from $6.11 million or $0.21 per share in the year-ago quarter.
Sales rose 2 percent to $197.6 million and same-store sales decreased 2 percent.
CATO's gross margin shrank to 34.0 percent from 35.2 percent mainly due to lower merchandise margin and higher occupancy costs related to store development.
Looking ahead for the fourth quarter, CATO still expects EPS between $0.38 and $0.42 per share, a 9 percent to 20 percent rise compared with $0.35 in the prior year quarter.
[Related -Chart Says: Buy This 'Boring' Retailer Now]
For the full year, the company now expects EPS in the range of $2.22 to $2.26, a slight rise to an increase of 2% compared to $2.21 in 2011. Previously, Cato had anticipated earnings per share to be within the range of $2.18 to $2.27. The company now expects to open 37 stores during 2012.
As of October 27, 2012, the company operated 1,306 stores in 31 states, compared to 1,292 stores in 31 states as of October 29, 2011.
CATO shares closed Wednesday's regular session at $27.72. The stock has been trading in the 52-week range between $22.81 and $32.32.