Shares of Cato Corp. (CATO - Get Report) on Thursday surged after the women's fashion and accessories retailer reported a healthy rise in same-store sales and a big boost in profit for its second quarter.
The Charlotte, N.C., company earned $11.9 million, or 48 cents a share, in the quarter ended Aug. 3, up 83% from $6.5 million, or 26 cents, in the year-earlier quarter. Sales climbed 2% to $210.4 million from $206.8 million. Same-store sales increased 4%.
Cato shares closed 18% higher at $16.36.
Chairman and CEO John Cato said in a statement that the performance "exceeded our expectations with higher same-store sales, higher merchandise margins and savings in" selling, general and administrative expense.
Gross margin widened 80 basis points to 38% of sales in the quarter, the company said, due to fatter merchandise margins and lower occupancy costs.
He said the company remained "cautiously optimistic about the second half ... given the difficult retail environment and the potential effect of new tariffs."
As of Aug. 3 Cato operated 1,299 stores in 31 states compared with 1,350 stores in 33 states a year earlier. It sells under three brands: Cato, Versona and It's Fashion.
The stock traded at an intraday high as $16.52 on Thursday, up almost 20%, before pulling back. Cato shares have bounced off a 52-week low of $11.85 in June and were trading as high as $22.19 in September 2018.
The company, which has a market cap of about $370 million, has no analyst coverage at this time, according to Bloomberg.
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