The Cato (CATO) Q2 2026 earnings summary

Executive summary

• Q2 2025 sales rose 5% year-over-year to $174.7 million, driven by a 9% same-store sales increase, partially offset by store closures.

• Net income for Q2 2025 was $6.8 million ($0.35 per diluted share), up from $0.1 million ($0.01 per share) in Q2 2024.

• For the six months ended August 2, 2025, sales were $343.1 million, up 0.3% year-over-year, with a 4% same-store sales rise, offset by store closures.

• Six-month net income was $10.1 million ($0.51 per share), down from $11.1 million ($0.54 per share) in the prior year.

• The company operated 1,101 stores at quarter-end, down from 1,166 a year ago, with 16 permanent closures in the first half and plans to close about 50 stores in fiscal 2025.

Financial highlights

• Gross margin for Q2 2025 improved to 36.2% from 34.6% year-over-year due to lower buying and distribution costs.

• SG&A expenses as a percent of sales decreased to 32.8% from 34.9% in Q2 2024, mainly from lower payroll and insurance costs.

• Cost of goods sold as a percent of retail sales decreased to 63.8% in Q2 2025 from 65.4% in Q2 2024.

• Q2 2025 net income margin was 3.9%, up from 0.1% in Q2 2024.

• Year-to-date gross margin rose to 35.6% from 35.2%; SG&A expenses as a percent of sales fell to 32.8% from 33.6%.

Outlook and guidance

• Tariff increases on products from China and Southeast Asia are expected to raise product acquisition costs in the second half of the year.

• The company anticipates continued pricing and margin pressures as tariffs impact retail pricing and consumer discretionary spending.

• Management will focus on expense control amid ongoing market uncertainties.

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

• The company expects to close about 50 stores in fiscal 2025.