The Cato (CATO) investor relations material

Executive summary

• Q3 2025 retail sales increased 6% year-over-year to $153.7 million, with same-store sales up 10%, partially offset by store closures.

• Nine-month retail sales rose 2% to $496.8 million, with a 6% increase in same-store sales, offset by closures.

• The company operated 1,101 stores at quarter-end, down from 1,167 a year ago, and closed 16 stores year-to-date.

• Q3 2025 net loss was $5.2 million ($0.28 per diluted share), improving from a $15.1 million loss ($0.79 per share) in Q3 2024.

• Nine-month net income was $5.0 million ($0.25 per share), compared to a $4.0 million net loss ($0.24 per share) in the prior year.

Financial highlights

• Q3 gross margin increased to 32.0% from 28.8% year-over-year, driven by lower freight, distribution, buying, and occupancy costs.

• Gross margin dollars increased 18% in Q3 and 5.7% for the nine months year-over-year.

• SG&A expenses as a percent of sales decreased to 37.1% from 40.0% in Q3, with a $0.9 million reduction in absolute terms.

• Cost of goods sold as a percent of retail sales decreased to 68.0% in Q3 and 65.5% for nine months.

• Tax benefit of $1.2 million in Q3 versus a $0.3 million tax expense last year, due to lower foreign income taxes and reserve roll-offs.

Outlook and guidance

• Product acquisition costs are expected to rise due to ongoing tariffs, especially for goods from China and Southeast Asia.

• Management expects a challenging Q4 due to slowing employment and lower economic growth.

• The company anticipates continued negative impact on results unless mitigated by price increases or vendor negotiations.

• Plans to tightly manage expenses and inventory while aiming for continued sales growth.

• Capital expenditures for fiscal 2025 are expected to be approximately $5.9 million.