cato20210130
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-K
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
January 30, 2021
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number
1-31340
The Cato Corporation
Registrant
Delaware
56-0484485
State of Incorporation
I.R.S. Employer Identification Number
8100 Denmark Road
Charlotte
,
North Carolina
28273-5975
Address of Principal Executive Offices
704
/
554-8510
Registrant’s Telephone
Number
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A - Common Stock, par value $.033 per share
CATO
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the
Registrant is a well-known seasoned
issuer, as defined
in Rule 405 of the Securities
Act.
Yes
☐
No
☑
Indicate by check mark if the
Registrant is not required to
file reports pursuant to Section
13 or Section 15(d) of
the Exchange Act.
Yes
☐
No
☑
Indicate by check mark
whether the Registrant
(1) has filed all
reports required to
be filed by Section
13 or 15(d)
of the Securities
Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required
to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes
☑
No
☐
Indicate by
check mark
whether the
registrant has
submitted electronically
every Interactive
Data File
required to
be submitted
pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter)
during the preceding 12 months
(or for such shorter period
that the
registrant was required to submit such files). Yes
☑
No
☐
Indicate by check mark
whether the registrant is
a large accelerated
filer, an accelerated
filer, a non-accelerated
filer, a smaller
reporting company,
or an
emerging growth
company.
See the
definitions of
“large accelerated
filer,” “accelerated
filer,” “smaller
reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☑
Emerging Growth Company
☐
Non-accelerated filer
☐
Smaller reporting company
☐
If an emerging
growth company,
indicate by check
mark if the
registrant has
elected not to
use the extended
transition period
for
complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant
has filed a report on and attestation
to its management’s assessment
of the
effectiveness of
its internal control
over financial reporting
under Section 404(b)
of the Sarbanes
-Oxley Act (15
U.S.C. 7262(b))
by
the registered public accounting firm that prepared or issued
its audit report.
☑
Indicate by check mark whether the registrant is a shell company (as
defined in Exchange Act Rule 12b-2). Yes
☐
No
☑
The aggregate
market value
of the
Registrant’s Class
A Common
Stock held
by non-affiliates
of the
Registrant as
of August
1,
2020, the last
business day of
the Company’s
most recent second
quarter, was $
234,143,784
based on the
last reported sale
price per
share on the New York
Stock Exchange on that date.
As of January
30, 2021, there
were
20,839,795
shares of Class
A common stock
and
1,763,652
shares of Class
B common stock
outstanding.
DOCUMENTS INCORPORATED
BY REFERENCE
Portions of the proxy statement relating to the 2021 annual meeting of
shareholders are incorporated by reference into the
following part of this annual report:
Part III — Items 10, 11, 12, 13 and 14
2
THE CATO CORPORATION
FORM 10-K
TABLE OF CONTENTS
Page
PART
I
Item 1.
Business ..........................................................................................................................
5 – 10
Item 1A.
Risk Factors ....................................................................................................................
10 – 20
Item 1B.
Unresolved Staff Comments ...........................................................................................
20
Item 2.
Properties ........................................................................................................................
20
Item 3.
Legal Proceedings ...........................................................................................................
21
Item 3A.
Executive Officers of the Registrant ...............................................................................
22
Item 4.
Mine Safety Disclosures .................................................................................................
22
PART
II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ........................................................................................
23 – 25
Item 6.
Selected Financial Data ..................................................................................................
26
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results
of Operations ..................................................................................................................
27 – 33
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk ........................................
33
Item 8.
Financial Statements and Supplementary Data ..............................................................
34 – 62
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure .......................................................................................................................
63
Item 9A.
Controls and Procedures .................................................................................................
63
Item 9B.
Other Information ...........................................................................................................
63
PART
III
Item 10.
Directors, Executive Officers and Corporate Governance .............................................
64
Item 11.
Executive Compensation ................................................................................................
65
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ........................................................................................................
65
Item 13.
Certain Relationships and Related Transactions, and Director Independence ...............
65
Item 14.
Principal Accountant Fees and Services .........................................................................
65
PART
IV
Item 15.
Exhibits and Financial Statement Schedules ..................................................................
66 – 70
Item 16.
Form 10-K
Summary ............................................................................
68
3
Forward-looking Information
The following information
should be
read along with
the Consolidated Financial
Statements,
including the accompanying
Notes appearing in
this report. Any
of the following
are “forward-looking”
statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E
of the Securities Exchange Act of 1934, as amended: (1) statements in this Form 10-K
and any documents
incorporated by
reference that
reflect projections
or expectations
of our
future financial
or economic
performance; (2) statements that
are not
historical information; (3)
statements of our
beliefs, intentions,
plans and
objectives for future
operations, including those
contained in “Managemen
t’s Discussion
and
Analysis of Financial
Condition and Results
of Operations”; (4)
statements relating to
our operations or
activities for
our fiscal
year ending
January 29,
2022 (“fiscal
2021”) and
beyond, including,
but not
limited to, statements regarding expected amounts of capital expenditures and store openings, relocations,
remodels and closures, statements
regarding the potential impact of
the COVID-19 pandemic and
related
responses and mitigation efforts on our business, results of operations
and financial condition and
statements regarding
new store
development strategy
;
and (5)
statements relating
to our
future
contingencies. When possible, we
have attempted to identify
forward-looking statements by using
words
such as
“will,” “expects,”
“anticipates,” “approximates,”
“believes,” “estimates,”
“hopes,” “intends,”
“may,” “plans,” “could,”
“would,” “should” and any variations or
negative formations of such words and
similar expressions. We
can give no assurance that
actual results or events will
not differ materially from
those expressed or implied in any
such forward-looking statements. Forward-looking statements included
in this
report are based
on information available
to us
as of
the filing date
of this report,
but subject to
known and unknown risks, uncertainties and other factors that could cause actual results
to differ
materially from those contemplated
by the forward-looking statements.
Such factors include, but
are not
limited to,
the following:
any actual
or perceived
deterioration in
the conditions
that drive
consumer
confidence and spending,
including, but not
limited to, prevailing
social, economic, political
and public
health conditions and uncertainties,
levels of unemployment, fuel,
energy and food
costs, wage rates, tax
rates, interest
rates, home
values, consumer
net worth
and the
availability of
credit; changes
in laws,
regulations or
governmental policies affecting
our business,
including but
not limited
to tariffs;
uncertainties regarding the
impact of any
governmental action regarding,
or responses to,
the foregoing
conditions; competitive factors and pricing pressures; our ability to predict and respond to rapidly
changing fashion
trends and
consumer demands;
our ability
to successfully
implement our
new store
development strategy to increase
new store openings and
our ability of
any such new stores
to grow and
perform as expected;
adverse weather,
public health threats
(including the
global coronavirus (COVID-
19) pandemic) or similar conditions that may affect our sales or operations; inventory risks due to shifts in
market demand,
including the
ability to
liquidate excess
inventory at
anticipated margins;
and other
factors discussed under “Risk Factors” in Part I, Item 1A of this annual report on Form 10-K
for the fiscal
year ended January
30, 2021 (“fiscal
2020”), as amended
or supplemented, and
in other
reports we file
with or
furnish to
the Securities
and Exchange
Commission (“SEC”)
from time
to time.
We do
not
undertake, and expressly
decline, any obligation
to update
any such forward-
looking information
contained in this report, whether as a result of new information, future events,
or otherwise.
As used herein, the
terms “we,” “our,”
“us”, the “Company” or
“Cato” include The Cato
Corporation
and its subsidiaries, unless the context indicates another meaning and except that when used with
reference to
common stock or
other securities
described herein
and in
describing the
positions held
by
management of the
Company, such
terms include only The
Cato Corporation.
Our website is
located at
www.catofashions.com where
we make
available, free
of charge,
our annual
reports on
Form 10-K,
quarterly reports on
Form 10-Q, current reports
on Form 8-K, proxy statements
and other reports
(including amendments to
these reports)
filed or
furnished pursuant to
Section 13(a) or 15(d)
under the
Securities Exchange Act
of 1934. These
reports are available
as soon as
reasonably practicable after
we
electronically file these
materials with the
SEC. We
also post on
our website the
charters of our
Audit,
Compensation and Corporate Governance
and Nominating Committees; our
Corporate Governance
Guidelines; Code of Business Conduct and Ethics and
Code of Ethics for the Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer and
any amendments or waivers
thereto for
4
any of our directors or executive officers; and any other publicly available corporate governance materials
contemplated by
SEC or
New York
Stock Exchange
regulations.
The information
contained on
our
website,
www.catofashions.com
, is not,
and should in no
way be construed as,
a part of this
or any other
report that we filed with or furnished to the SEC.
5
PART
I
Item 1.
Business:
Background
The Company,
founded in
1946, operated
1,330 fashion specialty
stores at
January 30,
2021, in
33
states, principally
in the
southeastern United
States, under
the names
“Cato,” “Cato
Fashions,” “Cato
Plus,” “It’s
Fashion,” “It’s
Fashion Metro”
and “Versona.”
The Cato
concept seeks
to offer
quality
fashion apparel and accessories at low prices every day, in junior/missy and plus sizes.
The Cato
concept’s stores and e-commerce website feature a broad assortment of apparel and accessories, including
dressy, career,
and casual
sportswear, dresses,
coats, shoes,
lingerie, costume jewelry
and handbags.
A
major portion of the Cato concept’s merchandise is sold under
its private label and is produced by various
vendors in accordance with the concept’s specifications.
The It’s Fashion and
It’s Fashion Metro
concepts offer fashion with a focus on the latest trendy styles for the entire family at low prices every day.
The Versona
concept’s stores
and e-commerce website
offer quality
fashion apparel
items, jewelry and
accessories at exceptional
values every day.
The Company’s
stores range in
size from 2,100
to 19,000
square feet
and are
located primarily
in strip
shopping centers
anchored by
national discounters
or
market-dominant grocery