The Cato Corporation caters to fashion-minded Southerners on a budget. The retailer operates about 1,300 apparel stores in 30 states (primarily in the Southeast) under the names Cato, Cato Plus, Versona, It's Fashion, and It's Fashion Metro. Its mostly private-label merchandise selection includes misses', juniors', girls', and plus-sized casualwear, career clothing, coats, shoes, and accessories geared to low- and middle-income customers, mostly females aged 18 to 50. Cato's stores are typically located in shopping centers anchored by a Wal-Mart store or another major discounter or supermarket. Founded in 1946, the company is led by chairman John Cato, the third generation of Catos in the family business.
Cato Corp. operates two business segments: Retail, which includes its 1,300 stores and accounts for 99% of the company's sales; and Credit. To make purchases more convenient, Cato offers a layaway program and its own credit card. The company estimates that 10% of purchases made in its stores involve its branded credit card and layaway program.
Cato's sales were essentially flat (up 0.7%) in fiscal 2012 (ends January) vs. the prior year. Net income increased 10% over the same period. The marginal increase in sales was attributed to new store openings. Same-store sales fell 1% from fiscal 2011. The company opened four stores in fiscal 2012.
The company enjoys a strong presence in the Southeast, and it has plans to fortify its footprint in the Northeast and Midwest, as well. In the meantime, Cato has been adding retail outlets in existing markets and right-sizing its network by relocating stores and closing underperforming locations. The women's apparel retailer plans to open 45 new stores in fiscal 2013 (ends January), including 15 Cato stores, 10 It's Fashion Metro shops, and 20 Versona Accessories stores. The retailer's newest banner, Versona Accessories, debuted in fall 2011. Versona stores aim to capitalize on higher demand for jewelry and accessories (as opposed to apparel). They also sell shoes and handbags.
In addition to offering on-trend apparel for women and girls, Cato has been making strides to get the rest of the family into its stores. The retailer's It's Fashion chain offers men's and boys' clothing, while It's Fashion Metro carries outfits for infants and home decor. By offering a mix of affordable items for the whole family, Cato believes it can better differentiate itself from other department stores and discounters as the US retail industry continues to recover from the deep recession.
Chairman, CEO, and president John P. D. Cato and his family control about 39% of the company's voting stock. – less