CATO CORP - Interim / Quarterly Report 2025

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM10-Q

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the quarterly period endedMay 3, 2025 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the transition period from ____to______ Commission file number1-31340

THE CATO CORPORATION

(Exact name of registrant as specified in its charter)

Delaware56-0484485 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

8100 Denmark Road,Charlotte,North Carolina28273-5975 (Address of principal executive offices)
(Zip Code)

(704)554-8510 (Registrant's telephone number, including area code)

Not Applicable (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered Class A - Common Stock, par value $.033 per shareCATONew York Stock Exchange

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.

YesXNo 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).

YesXNo 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☑Non-accelerated filer☐Smaller reporting company☐Emerging growth 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 is a shell company (as defined in Rule 12b -2 of the Exchange Act).☐Yes☑No

As of May 3, 2025, there were17,973,355shares of Class A common stock and1,763,652shares of Class B common stock outstanding.

THE CATO CORPORATION

FORM 10-Q

Quarter Ended May 3, 2025

Table of Contents Page No.

PART I – FINANCIAL INFORMATION (UNAUDITED)
Item 1.Financial Statements (Unaudited):

Condensed Consolidated Statements of Income and Comprehensive Income2 For the Three Months Ended May 3, 2025 and May 4, 2024
Condensed Consolidated Balance Sheets3 At May 3, 2025 and February 1, 2025

Condensed Consolidated Statements of Cash Flows4 For the Three Months Ended May 3, 2025 and May 4, 2024
Condensed Consolidated Statements of Stockholders’ Equity5 For the Three Months Ended May 3, 2025 and May 4, 2024

Notes to Condensed Consolidated Financial Statements6 - 19

Item 2.Management’s Discussion and Analysis of Financial Condition and Results20 - 26 of Operations

Item 3.Quantitative and Qualitative Disclosures About Market Risk27

Item 4.Controls and Procedures27 PART II – OTHER INFORMATION

Item 1.Legal Proceedings28| Item 1A. | Risk Factors | 28 |
| --- | --- | --- |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |

Item 3.Defaults Upon Senior Securities28

Item 4.Mine Safety Disclosures29| Item 5. | Other Information | 29 |
| --- | --- | --- |
| Item 6. | Exhibits | 29 |

Signatures30

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(UNAUDITED)| | | Three Months Ended | | |
| --- | --- | --- | --- | --- |
| | May 3, 2025 | | May 4, 2024 | |
| | (Dollars in thousands, except per share data) | | | |
| REVENUES | | | | |
| Retail sales | $ | 168,419 | $ | 175,272 |
| Other revenue (principally finance charges, late fees and | | | | |
| layaway charges) | | 1,823 | | 1,827 |
| Total revenues | | 170,242 | | 177,099 |
| COSTS AND EXPENSES, NET | | | | |
| Cost of goods sold (exclusive of depreciation shown below) | | 109,318 | | 112,505 |
| Selling, general and administrative (exclusive of depreciation | | | | |
| shown below) | | 55,325 | | 56,752 |
| Depreciation | | 2,564 | | 2,040 |
| Interest and other income | | ( 1,202 ) | | ( 5,821 ) |
| Costs and expenses, net | | 166,005 | | 165,476 |
| Income before income taxes | | 4,237 | | 11,623 |

Income tax expense928649| Net income | | $ | 3,309$ | 10,974 |
| --- | --- | --- | --- | --- |
| Basic earnings per share | | $ | 0.17$ | 0.54 |
| Diluted earnings per share | | $ | 0.17$ | 0.54 |
| Comprehensive income: | | | | |
| Net income | | $ | 3,309$ | 10,974 |
| Unrealized gain (loss) on available-for-sale securities, net | | | | |
| of deferred income taxes of $ | 0for each of the three months | | 38 | ( 748 ) |
| ended May 3, 2025 and May 4, 2024 | | | | |
| Comprehensive income | | $ | 3,347$ | 10,226 |

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

May 3, 2025February 1, 2025| | | | (Dollars in thousands) | | |
| --- | --- | --- | --- | --- | --- |
| | | ASSETS | | | |
| Current Assets: | | | | | |
| Cash and cash equivalents | | | $ | 31,346$ | 20,279 |
| Short-term investments | | | | 48,609 | 57,423 |
| Restricted cash | | | | 2,675 | 2,799 |
| Accounts receivable, net of allowance for customer credit losses of | | | | | |
| $584and $ | 581at May 3, 2025 and February 1, 2025, respectively | | | 26,830 | 24,540 |
| Merchandise inventories | | | 109,430 | | 110,739 |
| Prepaid expenses and other current assets | | | | 7,560 | 7,406 |
| Total Current AssetsProperty and equipment – net | | | 226,450 | | 223,18660,326 |
| | | | | 58,767 | |
| Other assets | | | | 19,863 | 19,979 |
| Right-of-Use assets – net | | | 135,726 | | 148,870 |
| Total Assets | | | $440,806 | $ | 452,361 |
| Current Liabilities: | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | |
| Accounts payable | | | $ | 90,876$ | 88,641 |
| Accrued expenses | | | | 38,253 | 41,717 |
| Accrued bonus and benefits | | | | 326 | 326 |
| Accrued income taxes | | | | 545 | - |
| Current lease liability | | | | 52,524 | 57,555 |
| Total Current Liabilities | | | 182,524 | | 188,239 |
| Other noncurrent liabilities | | | | 13,293 | 13,485 |
| Lease liability | | | | 80,072 | 88,341 |

Stockholders' Equity:
Preferred stock, $	100par value per share,		100,000	shares
authorized,	noneissued					-	-
Class A common stock, $		0.033par value per share,		50,000,000
shares authorized;	17,973,355	and	18,313,929	shares issued
at May 3, 2025 and February 1, 2025, respectively						607	619
Convertible Class B common stock, $			0.033par value per share,
15,000,000	shares authorized;	1,763,652
shares issued at May 3, 2025 and February 1, 2025						59	59
Additional paid-in capital					129,786		129,530
Retained earnings						34,274	31,935
Accumulated other comprehensive income						191	153
Total Stockholders' Equity					164,917		162,296
Total Liabilities and Stockholders’ Equity					$440,806	$	452,361

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended May 3, 2025May 4, 2024

(Dollars in thousands)| Operating Activities:Net income | $ | 3,309$ | 10,974 |
| --- | --- | --- | --- |
| Adjustments to reconcile net income to net cash provided by operating activities:Depreciation | | 2,564 | 2,040 |
| Provision for customer credit lossesPurchase premium and premium amortization of investments | | 215( 81 ) | ( 136 )171 |
| Gain on sale of assets held for investmentShare-based compensation | | 193( 34 ) | ( 4,093 )( 38 ) |
| (Gain) Loss on disposal of property and equipmentChanges in operating assets and liabilities which provided (used) cash: | | ( 30 ) | 65 |
| Accounts receivableMerchandise inventories | | ( 2,505 )1,309 | ( 1,836 )( 2,714 ) |
| Prepaid and other assetsOperating lease right-of-use assets and liabilities | | ( 156 )( 38 ) | ( 435 )27 |
| Accrued income taxesAccounts payable, accrued expenses and other liabilities | | ( 878 )- | 1,163518 |
| Net cash provided by operating activities | | 3,868 | 5,706 |

Investing Activities:Expenditures for property and equipment	( 1,019 )	( 3,261 )
Purchase of short-term investmentsSales of short-term investments	11,195( 2,262 )	21,413( 8,572 )
Sales of other assets	34	5,034
Net cash provided by investing activities	7,948	14,614

Financing Activities:Dividends paid	-	( 3,523 )
Repurchase of common stockProceeds from employee stock purchase plan	( 935 )62	( 2,237 )161
Net cash used by financing activities	( 873 )	( 5,599 )

Net increase in cash, cash equivalents, and restricted cash10,94314,721| Cash, cash equivalents, and restricted cash at beginning of period | 23,078 | 27,913 |
| --- | --- | --- |
| Cash, cash equivalents, and restricted cash at end of period | $34,021 | $42,634 |

Non-cash activity: Accrued other assets and property and equipment expenditures$284$491

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

Accumulated

AdditionalOtherTotal

CommonPaid-inRetainedComprehensiveStockholders'

StockCapitalEarningsIncome (Loss)Equity

(Dollars in thousands, except per share data)| Balance — February 1, 2025Comprehensive income: | | $678 | $129,530 | $31,935 | $ | 153$ | 162,296 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net incomeUnrealized net gain on available-for-sale securities, net of deferred | | - | - | 3,309 | | - | 3,309 |
| income tax benefit of $Class A common stock sold through employee stock purchase plan | 0 | -- | 72- | | -- | 38- | 3872 |
| Share-based compensation issuances and exercisesShare-based compensation expense | | ( 2 )- | 184- | | ( 73 )- | -- | 111( 2 ) |
| Repurchase and retirement of treasury shares | | ( 10 ) | - | ( 897 ) | | - | ( 907 ) |

Balance — May 3, 2025$666$129,786$34,274$191$164,917

Accumulated

AdditionalOtherTotal

CommonPaid-inRetainedComprehensiveStockholders'

StockCapitalEarningsIncome (Loss)Equity

(Dollars in thousands, except per share data)| Balance — February 3, 2024Comprehensive income: | | $694 | $126,953 | $64,279 | $ | 395$ | 192,321 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net incomeUnrealized net loss on available-for-sale securities, net of deferred | | - | - | 10,974 | | - | 10,974 |
| income tax benefit of $Dividends paid ($ | 0.17per share)0 | -- | -- | ( 3,523 ) | - | ( 748 )- | ( 3,523 )( 748 ) |
| Class A common stock sold through employee stock purchase planShare-based compensation issuances and exercises | | 131 | 189- | | 5- | -- | 19018 |
| Share-based compensation expenseRepurchase and retirement of treasury shares | | ( 14 )- | ( 84 )- | ( 2,223 ) | - | -- | ( 2,237 )( 84 ) |

Balance — May 4, 2024$694$127,058$69,512$( 353 )$196,911

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - GENERAL :

The condensed consolidated financial statements as of May 3, 2025 and for the three months ended May 3, 2025 and May 4, 2024 have been prepared from the accounting records of The Cato Corporation and its wholly-owned subsidiaries (the “Company”), and all amounts shown are unaudited. In the opinion of management, all adjustments considered necessary for a fair statement of the financial statements have been included. All such adjustments are of a normal, recurring nature unless otherwise noted. The results of the interim period may not be indicative of the results expected for the entire year. The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025. Amounts as of February 1, 2025 have been derived from the audited annual financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America. On February 16, 2024, the Company closed on the sale of land held for investment. The sale resulted in a net gain of $ 3.2 million and is included in Interest and other income in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income for the period ended May 4, 2024.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 - EARNINGS PER SHARE: Accounting Standard Codification (“ASC”) 260 – Earnings Per Share requires dual presentation of basic and diluted Earnings Per Share (“EPS”) on the face of all income statements for all entities with complex capital structures. The Company has presented one basic EPS and one diluted EPS amount for all common shares in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. While the Company’s certificate of incorporation provides the right for the Board of Directors to declare dividends on Class A shares without declaration of commensurate dividends on Class B shares, the Company has historically paid the same dividends to both Class A and Class B shareholders and the Board of Directors has resolved to continue this practice. Accordingly, the Company’s allocation of income for purposes of the EPS computation is the same for Class A and Class B shares and the EPS amounts reported herein are applicable to both Class A and Class B shares. Basic EPS is computed as net income less earnings allocated to non-vested equity awards divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and the Employee Stock Purchase Plan.

Three Months Ended May 3, 2025 May 4, 2024 (Dollars in thousands, except per share data) Numerator Net earnings $ 3,309 $ 10,974 Earnings allocated to non-vested equity awards ( 192 ) ( 557 ) Net earnings available to common stockholders $ 3,117 $ 10,417 Denominator Basic weighted average common shares outstanding 18,684,837 19,356,789 Diluted weighted average common shares outstanding 18,684,837 19,356,789 Net income per common share Basic earnings per share $ 0.17 $ 0.54 Diluted earnings per share $ 0.17 $ 0.54

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME: The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (loss) (in thousands) for the three months ended May 3, 2025:

Changes in Accumulated Other Comprehensive Income (Loss) (a) Unrealized Gains and (Losses) on Available-for-Sale Securities Beginning Balance at February 1, 2025 $ 153 Other comprehensive income (loss) before reclassification 72 Amounts reclassified from accumulated other comprehensive income (b) ( 34 ) Net current-period other comprehensive income (loss) 38 Ending Balance at May 3, 2025 $ 191 (a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to accumulated other comprehensive income. (b) Includes $ 34 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net realized gains on available-for-sale securities. The tax impact of this reclassification was $ 0 .

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (loss) (in thousands) for the three months ended May 4, 2024:

Changes in Accumulated Other Comprehensive Income (Loss) (a) Unrealized Gains and (Losses) on Available-for-Sale Securities Beginning Balance at February 3, 2024 $ 395 Other comprehensive income (loss) before reclassification ( 1,434 ) Amounts reclassified from accumulated other comprehensive income (b) 686 Net current-period other comprehensive income (loss) ( 748 ) Ending Balance at May 4, 2024 $ ( 353 ) (a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to accumulated other comprehensive income. + (b) Includes $ 892 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities. The tax impact of this reclassification was $ 206 .

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 – FINANCING ARRANGEMENTS:

On March 13, 2025, the Company, as borrower, and certain other domestic subsidiaries, as borrowers and guarantors, entered into a Credit Agreement (the “ABL Credit Agreement”) and related loan documents, by and among the Company, certain other of the Company’s domestic subsidiaries, and Wells Fargo Bank, National Association, as the lender (the “Lender”), to establish an asset-based revolving credit facility (the “ABL Facility”) in an amount up to $ 35.0 million. The proceeds from the ABL Facility may be used to provide funding for ongoing working capital and general corporate purposes. The ABL Credit Agreement is committed through May 2027 and is secured primarily by inventory and third-party credit card receivables. There were no borrowings outstanding and the availability under the facility was $ 30.0 million before giving effect to a $ 3.0 million outstanding letter of credit that reduced borrowing availability to $ 27.0 million as of May 3, 2025. The weighted average interest rate under the credit facility was zero at May 3, 2025 due to no outstanding borrowings.

NOTE 5 – REPORTABLE SEGMENT INFORMATION:

The Company has determined that it has four operating segments, as defined under ASC 280 – Segment Reporting , including Cato, It’s Fashion, Versona and Credit. As outlined in ASC 280-10, the Company has two reportable segments: Retail and Credit. The Company has aggregated its three retail operating segments, including e-commerce, based on the aggregation criteria outlined in ASC 280-10, which states that two or more operating segments may be aggregated into a single reportable segment if aggregation is consistent with the objective and basic principles of ASC 280-10, which require the segments to have similar economic characteristics, products, production processes, clients and methods of distribution. The Company’s retail operating segments have similar economic characteristics and similar operating, financial and competitive risks. The products sold in each retail operating segment are similar in nature, as they all offer women’s apparel, shoes and accessories. Merchandise inventory of the Company’s retail operating segments is sourced from the same countries and some of the same vendors, using similar production processes. Merchandise for the Company’s retail operating segments is distributed to retail stores in a similar manner through the Company’s single distribution center and is subsequently distributed to customers in a similar manner. The Company operates its women’s fashion specialty retail stores in 31 states as of May 3, 2025, principally in the southeastern United States. The Company offers its own credit card to its customers and all credit authorizations, payment processing and collection efforts are performed by a wholly-owned subsidiary of the Company. The Company does not allocate certain corporate expenses to the Credit segment. The Company’s President and Chief Executive Officer is the Company’s chief operating decision maker (“CODM”). The structure described above reflects the manner in which the CODM regularly assesses information for decision-making purposes, including the allocation of resources. The Company also provides corporate services, including finance, information technology, and corporate administration, to its segments which are fully allocated to the retail segment. Interest and other income from assets held for investment and sale are not included in assessing the segments’ performance and therefore not allocated to either segment. The CODM manages and evaluates the segments’ operating performance based on segment sales, expenses, and profit or loss from operations before income taxes as presented in the Company’s annual budget and forecasting process, as well as monthly analyses of budget-to-actual and prior year variances. Segment

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

expenses and other items primarily include cost of goods sold, selling, general and administrative expenses, depreciation and interest and other income. Assessment and approval of all capital expenditures are determined to be in support of and based on the needs of the retail segment; however, the CODM does not evaluate performance or allocate resources based on segment asset balances and, therefore, total segment assets are not presented in the tables below. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in Note 1 of the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025. The Company evaluates performance based on profit or loss from operations before income taxes.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):

The following schedule summarizes certain segment information (in thousands):

Three Months Ended May 3, 2025 Retail Credit Total Revenues $ 169,577 $ 665 $ 170,242 Cost of goods sold 109,318 - 109,318 Selling, general, and administrative (a) 39,159 387 39,546 Corporate overhead 15,779 - 15,779 Depreciation 2,564 - 2,564 Interest and other income ( 105 ) ( 303 ) ( 408 ) Income (loss) before income taxes $ 2,862 $ 581 $ 3,443 Corporate interest and other income ( 794 ) Income (loss) before income taxes $ 4,237 Capital expenditures $ 1,019 $ - $ 1,019 Three Months Ended May 4, 2024 Retail Credit Total Revenues $ 176,430 $ 669 $ 177,099 Cost of goods sold 112,505 - 112,505 Selling, general, and administrative (a) 40,968 408 41,376 Corporate overhead 15,376 - 15,376 Depreciation 2,040 - 2,040 Interest and other income ( 90 ) ( 235 ) ( 325 ) Income (loss) before income taxes $ 5,630 $ 497 $ 6,127 Corporate interest and other income ( 5,496 ) Income (loss) before income taxes $ 11,623 Capital expenditures $ 3,261 $ - $ 3,261 (a) Selling, general, and administrative expense include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, bank and credit card processing fees.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 – SHARE-BASED COMPENSATION: As of May 3, 2025, the Company had the 2018 Incentive Compensation Plan for the granting of various forms of equity-based awards, including restricted stock and stock options for grant to officers, directors and key employees. The following table presents the number of options and shares of restricted stock initially authorized and available for grant under this plan as of May 3, 2025:

2018 Plan Options and/or restricted stock initially authorized 4,725,000 Options and/or restricted stock available for grant 2,865,875

In accordance with ASC 718 – Compensation–Stock Compensation , the fair value of current restricted stock awards is estimated on the date of grant based on the market price of the Company’s stock and is amortized to compensation expense on a straight-line basis over the related vesting periods. As of May 3, 2025 and February 1, 2025, there was $ 6,298,000 and $ 7,276,000 , respectively, of total unrecognized compensation expense related to unvested restricted stock awards, which had a remaining weighted- average vesting period of 2.1 years and 1.9 years, respectively. The total compensation expense during the three months ended May 3, 2025 was $ 109,000 compared to a benefit of $ 66,000 for the three months ended May 4, 2024. This compensation activity is classified as a component of Selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

The following summary shows the changes in the number of shares of unvested restricted stock outstanding during the three months ended May 3, 2025:

Weighted Average Number of Grant Date Fair Shares Value Per Share Restricted stock awards at February 1, 2025 1,215,181 $ 8.98 Granted - - Vested ( 225,924 ) 12.89 Forfeited or expired ( 68,274 ) 8.33 Restricted stock awards at May 3, 2025 920,983 $ 8.07

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 – SHARE-BASED COMPENSATION (CONTINUED):

The Company’s Employee Stock Purchase Plan allows eligible full-time employees to purchase a limited number of shares of the Company’s Class A Common Stock during each semi-annual offering period at a 15 % discount through payroll deductions. During the three months ended May 3, 2025 and May 4, 2024, the Company sold 21,736 and 33,317 shares to employees at an average discount of $ 0.50 and $ 0.86 per share, respectively, under the Employee Stock Purchase Plan. The compensation expense recognized for the 15 % discount given under the Employee Stock Purchase Plan was approximately $ 11,000 and $ 29,000 for the three months ended May 3, 2025 and May 4, 2024, respectively. These expenses are classified as a component of Selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

NOTE 7 – FAIR VALUE MEASUREMENTS: The following tables set forth information regarding the Company’s financial assets and liabilities that are measured at fair value (in thousands) as of May 3, 2025 and February 1, 2025:

Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable May 3, 2025 Assets Inputs Inputs Description Level 1 Level 2 Level 3 Assets: State/Municipal Bonds $ 697 $ - $ 697 $ - Corporate Bonds 45,601 - 45,601 - U.S. Treasury/Agencies Notes and Bonds 2,267 - 2,267 - Cash Surrender Value of Life Insurance 9,184 - - 9,184 Asset-backed Securities (ABS) 44 - 44 - Total Assets $ 57,793 $ - $ 48,609 $ 9,184 Liabilities: Deferred Compensation $ ( 8,236 ) $ - $ - $ ( 8,236 ) Total Liabilities $ ( 8,236 ) $ - $ - $ ( 8,236 )

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 – FAIR VALUE MEASUREMENTS (CONTINUED):

Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable February 1, 2025 Assets Inputs Inputs Description Level 1 Level 2 Level 3 Assets: State/Municipal Bonds $ 1,244 $ - $ 1,244 $ - Corporate Bonds 51,326 - 51,326 - U.S. Treasury/Agencies Notes and Bonds 4,624 - 4,624 - Cash Surrender Value of Life Insurance 9,301 - - 9,301 Asset-backed Securities (ABS) 229 - 229 - Total Assets $ 66,724 $ - $ 57,423 $ 9,301 Liabilities: Deferred Compensation $ ( 8,548 ) $ - $ - $ ( 8,548 ) Total Liabilities $ ( 8,548 ) $ - $ - $ ( 8,548 )

The Company’s investment portfolio was primarily invested in corporate bonds and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at May 3, 2025 and February 1, 2025. The state, municipal and corporate bonds and asset-backed securities have contractual maturities which range from 10 days to 2.9 years. The U.S. Treasury/Agencies notes and bonds have contractual maturities which range from 3 months to 1.0 year. Additionally, at May 3, 2025, the Company had deferred compensation plan assets of $ 9.2 million. At February 1, 2025, the Company had deferred compensation plan assets of $ 9.3 million. These assets are recorded within Other assets in the Condensed Consolidated Balance Sheets. Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments. Their fair value is principally based on market values determined by management with the assistance of a third-party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors. Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within Level 3 of the valuation hierarchy. The Level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds’ net asset values, as recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet. These funds are designed to mirror mutual funds and money market funds that are observable and actively traded.

The following tables summarize the change in fair value of the Company’s financial assets and liabilities measured using Level 3 inputs for the three months ended May 3, 2025 and the year ended February 1, 2025 (dollars in thousands):

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 – FAIR VALUE MEASUREMENTS (CONTINUED):

Fair Value Measurements Using Significant Unobservable Asset Inputs (Level 3) Cash Surrender Value Beginning Balance at February 1, 2025 $ 9,301 Redemptions - Additions - Total gains or (losses): Included in interest and other income (or changes in net assets) ( 117 ) Ending Balance at May 3, 2025 $ 9,184 Fair Value Measurements Using Significant Unobservable Liability Inputs (Level 3) Deferred Compensation Beginning Balance at February 1, 2025 $ ( 8,548 ) Redemptions 266 Additions ( 38 ) Total (gains) or losses: Included in interest and other income (or changes in net assets) 84 Ending Balance at May 3, 2025 $ ( 8,236 ) Fair Value Measurements Using Significant Unobservable Asset Inputs (Level 3) Cash Surrender Value Beginning Balance at February 3, 2024 $ 8,586 Redemptions - Additions - Total gains or (losses): Included in interest and other income (or changes in net assets) 715 Ending Balance at February 1, 2025 $ 9,301 Fair Value Measurements Using Significant Unobservable Liability Inputs (Level 3) Deferred Compensation Beginning Balance at February 3, 2024 $ ( 8,654 ) Redemptions 1,175 Additions ( 220 ) Total (gains) or losses: Included in interest and other income (or changes in net assets) ( 849 ) Ending Balance at February 1, 2025 $ ( 8,548 )

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which modifies the requirements on income tax disclosures to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This guidance is effective for fiscal years beginning after December 15, 2024 for all public business entities, with early adoption and retrospective application permitted. The Company is currently in the process of evaluating the potential impact of adoption of this new guidance on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires public entities to disclose, on an annual and interim basis, disaggregated information in the footnotes about specified information related to certain costs and expenses. This guidance is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the potential impact of adoption of this new guidance on its consolidated financial statements and related disclosures.

NOTE 9 – INCOME TAXES: The Company had an effective tax rate for the first quarter of 2025 of 21.9 % compared to an effective tax rate of 5.6 % for the first quarter of 2024. Income tax expense for the quarter increased to $ 0.9 million in 2025 from $ 0.6 million in 2024. The increase in tax expense was primarily due to increases in foreign and state income taxes.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10 – COMMITMENTS AND CONTINGENCIES: The Company is, from time to time, involved in routine litigation incidental to the conduct of its business, including litigation regarding the merchandise that it sells, litigation regarding intellectual property, litigation instituted by persons injured upon premises under its control, litigation with respect to various employment matters, including alleged discrimination and wage and hour litigation, and litigation with present or former employees. Although such litigation is routine and incidental to the conduct of the Company’s business, as with any business of its size with a significant number of employees and significant merchandise sales, such litigation could result in large monetary awards. Based on information currently available, management does not believe that any reasonably possible losses arising from current pending litigation will have a material adverse effect on its condensed consolidated financial statements. However, given the inherent uncertainties involved in such matters, an adverse outcome in one or more of such matters could materially and adversely affect the Company’s financial condition, results of operations and cash flows in any particular reporting period. The Company accrues for these matters when the liability is deemed probable and reasonably estimable.

NOTE 11 – REVENUE RECOGNITION:

The Company recognizes sales at the point of purchase when the customer takes possession of the merchandise and pays for the purchase, generally with cash or credit. Sales from purchases made with Cato credit, gift cards and layaway sales from stores are also recorded when the customer takes possession of the merchandise. E-commerce sales are recorded when the risk of loss is transferred to the customer. Gift cards are recorded as deferred revenue until they are redeemed or forfeited. Gift cards do not have expiration dates. Layaway transactions are recorded as deferred revenue until the customer takes possession or forfeits the merchandise. A provision is made for estimated merchandise returns based on sales volumes and the Company’s experience; actual returns have not varied materially from historical amounts. A provision is made for estimated write-offs associated with sales made with the Company’s proprietary credit card. Amounts related to shipping and handling billed to customers in a sales transaction are classified as Other revenue and the costs related to shipping product to customers (billed and accrued) are classified as Cost of goods sold. The Company offers its own proprietary credit card to customers. All credit activity is performed by the Company’s wholly-owned subsidiaries. No ne of the credit card receivables are secured. The Company estimated customer credit losses of $ 215,000 and $ 171,000 for the periods ended May 3, 2025 and May 4, 2024, respectively, on sales purchased by the Company’s proprietary credit card of $ 5.4 million and $ 5.7 million for the periods ended May 3, 2025 and May 4, 2024, respectively. The following table provides information about receivables and contract liabilities from contracts with customers (in thousands):

Balance as of May 3, 2025 February 1, 2025 Proprietary Credit Card Receivables, net $ 10,756 $ 10,848 Gift Card Liability $ 6,191 $ 7,541

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 – LEASES:

The Company determines whether an arrangement is a lease at inception. The Company has operating leases for stores, offices, warehouse space and equipment. Its leases have remaining lease terms of one year to 10 years , some of which include options to extend the lease term for up to five years , and some of which include options to terminate the lease within one year . The Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date of the lease in determining the present value of lease payments. The components of lease cost are shown below (in thousands):

` Three Months Ended May 3, 2025 May 4, 2024 Operating lease cost $ 16,588 $ 17,002 Variable lease cost (a) $ 438 $ 497 (a) Primarily relates to monthly percentage rent for stores not presented on the balance sheet.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 – LEASES (CONTINUED):

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands):

Operating cash flow information: Three Months Ended May 3, 2025 May 4, 2024 Cash paid for amounts included in the measurement of lease liabilities $ 14,534 $ 15,607 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations, net of rent violations $ 1,206 $ 444

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:

As of May 3, 2025 May 4, 2024 Weighted-average remaining lease term 2.1 Years 2.1 Years Weighted-average discount rate 5.90 % 4.65 %

As of May 3, 2025, the maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):

Fiscal Year 2025 (a) $ 49,952 2026 43,045 2027 27,948 2028 16,845 2029 8,066 Thereafter 575 Total lease payments 146,431 Less: Imputed interest 13,835 Present value of lease liabilities $ 132,596 (a) Excluding the 3 months ended May 3, 2025.

THE CATO CORPORATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION:

The following information should be read along with the unaudited Condensed 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-Q 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 “Management’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 31, 2026 (“fiscal 2025”) 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 or other pandemics and related responses and mitigation efforts, as well as the potential impact of supply chain disruptions, extreme weather conditions, trade policies, inflationary pressures and other economic conditions 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 forwardlooking 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, inflation, wage rates, tax rates, tariffs, interest rates, home values, consumer net worth and the availability of credit; changes in laws, regulations or government policies affecting our business, including but not limited to tariffs and taxes; 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;
underperformance or other factors that may lead to a continuation or acceleration of store closures and negatively affect the Company’s profitability, financial condition and prospects; adverse weather, public health threats (including the COVID-19 or other pandemics), acts of war or aggression 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; adverse developments or volatility affecting the financial services industry or broader financial markets; and other factors discussed under “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended February 1, 2025 (“fiscal 2024”), 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.

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CRITICAL ACCOUNTING POLICIES AND ESTIMATES:

The Company’s critical accounting policies and estimates are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025. The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include the calculation of potential asset impairment, income tax valuation allowances, reserves relating to self-insured health insurance, workers’ compensation, general and auto insurance liabilities, uncertain tax positions, the allowance for customer credit losses, and inventory shrinkage.

The Company’s critical accounting policies and estimates are discussed with the Audit Committee.

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS:

The following table sets forth, for the periods indicated, certain items in the Company's unaudited Condensed

Consolidated Statements of Income as a percentage of total retail sales:| | Three Months Ended | | |
| --- | --- | --- | --- |
| | May 3, 2025 | May 4, 2024 | |
| Total retail sales | 100.0 | % | 100.0% |
| Other revenue | 1.1 | | 1.0 |
| Total revenues | 101.1 | | 101.0 |
| Cost of goods sold (exclusive of depreciation) | 64.9 | | 64.2 |
| Selling, general and administrative (exclusive of depreciation) | 32.8 | | 32.4 |
| Depreciation | 1.5 | | 1.2 |
| Interest and other income | (0.7) | | (3.3) |
| Income before income taxes | 2.5 | | 6.6 |
| Net income | 2.0 | | 6.3 |

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED):

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist readers in better understanding and evaluating our financial condition and results of operations. We recommend reading this MD&A in conjunction with our Condensed Consolidated Financial Statements and the Notes to those statements included in the “Financial Statements” section of this Quarterly Report on Form 10-Q, as well as our 2024Annual Report on Form 10-K.

Recent Developments

Tariff Pressures

A significant quantity of our products are made in China and Southeast Asia. The products from these countries are subject to the newly implemented reciprocal tariffs, as well as an additional Section 301 ad valorem tariff on Chinese products. In the quarter, only products from China were subject to the Section 301 ad valorem tariffs. These tariffs increased our costs associated with receipted products made in these countries in the latter half of the first quarter and will continue to do so in the second quarter.

These cost increases will negatively impact our results of operations and financial condition unless we are able to successfully mitigate their effects by increasing retail pricing without losing sales and/or sharing these costs with our vendors. Certain product categories such as shoes and handbags will be difficult to source in countries with lower tariffs.

Additionally, our supply chain may be impacted in the second quarter as the flow of Chinese products to the United States was reduced due to the high reciprocal tariffs that were only recently decreased in mid-May.
Potential supply chain issues such as products delivered late due to port congestion, longer transit times and dwell times at port, and container availability may impact the costs we pay for ocean freight or the timeliness of our product deliveries, any of which may negatively impact our results of operations and financial condition.

Pricing Pressures

The pressure on our customers’ discretionary income continued into fiscal 2025. As the cost of tariffs begins to impact retail pricing, our customers may become more cautious with their discretionary spending. The customers’ caution in regard to their discretionary spending will put additional pressure on our ability to mitigate the cost increases caused by tariffs.

Comparison of First Quarter of 2025 with 2024

Total retail sales for the first quarter were $168.4 million compared to last year’s first quarter sales of $175.3 million. Sales decreased primarily due to stores that were closed in the past 12 months. Same-store sales were flat for the quarter. Same store sales include stores that have been open more than 15 months. Stores that have been relocated or expanded are also included in the same store sales calculation after they have been open more than 15 months. The method of calculating same store sales varies across the retail industry. As a result, our same store sales calculation may not be comparable to similarly titled measures reported by other companies. E-commerce sales were less than 5.0% of sales for the first quarter of fiscal 2025 and are included in the same-store sales calculation. Total revenues, comprised of retail sales and other revenue (principally finance charges and late fees on customer accounts receivable, shipping charged to customers for e-

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

commerce purchases and layaway fees), were $170.2 million for the first quarter ended May 3, 2025, compared to $177.1 million for the first quarter ended May 4, 2024. The Company operated 1,109 stores at May 3, 2025 compared to 1,171 stores at the end of last fiscal year’s first quarter. For the first three months of fiscal 2025, the Company permanently closed eight stores. The Company currently expects to close approximately 50 stores in fiscal 2025.

Other revenue, a component of total revenues, was $1.8 million for the first quarter of fiscal 2025, compared to $1.8 million for the prior year’s comparable first quarter. Included in Other revenue is credit revenue of $0.7 million which represented 0.4% of total revenues in the first quarter of fiscal 2025, flat both in dollars and percentage compared to 2024. Credit revenue is comprised of interest earned on the Company’s private label credit card portfolio and related fee income. Related expenses include principally payroll, postage and other administrative expenses, and totaled $0.4 million in the first quarter of 2025, compared to last year’s first quarter expenses of $0.4 million.

Cost of goods sold was $109.3 million, or 64.9% of retail sales for the first quarter of fiscal 2025, compared to $112.5 million, or 64.2% of retail sales in the first quarter of fiscal 2024. The increase in cost of goods sold as a percent of sales was due to increased sales of marked down goods, partially offset by lower buying and freight costs. Cost of goods sold includes merchandise costs (net of discounts and allowances), buying costs, distribution costs, occupancy costs, freight and inventory shrinkage. Net merchandise costs and inbound freight are capitalized as inventory costs. Buying and distribution costs include payroll, payroll-related costs and operating expenses for the buying departments and distribution center. Occupancy costs include rent, real estate taxes, insurance, common area maintenance, utilities and maintenance for stores and distribution facilities. Total gross margin dollars (retail sales less cost of goods sold exclusive of depreciation) decreased by 5.8% to $59.1 million for the first quarter of fiscal 2025 compared to $62.8 million in the first quarter of fiscal 2024. Gross margin as presented may not be comparable to those of other entities.

Selling, general and administrative expenses (“SG&A”) primarily include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, and bank and credit card processing fees. SG&A expenses were $55.3 million, or 32.8% of retail sales for the first quarter of fiscal 2025, compared to $56.8 million, or 32.4% of retail sales in the first quarter of fiscal 2024. SG&A expense was lower in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 primarily due to lower corporate and field payroll expense, as well as lower insurance costs and store expenses, partially offset by increases in equipment maintenance.

Depreciation expense was $2.6 million, or 1.5% of retail sales for the first quarter of fiscal 2025, compared to $2.0 million, or 1.2% of retail sales for the first quarter of fiscal 2024. The increase in depreciation expense was due to the distribution center automation implementation at the end of the second quarter of 2024.

Interest and other income was $1.2 million, or 0.7% of retail sales for the first quarter of fiscal 2025, compared to $5.8 million, or 3.3% of retail sales for the first quarter of fiscal 2024. The decrease was primarily due to a $3.2 million net gain on the sale of land held for investment and the sale of equity securities recorded in the first quarter of 2024.

Income tax expense was $0.9 million or 0.6% of retail sales for the first quarter of fiscal 2025, compared to income tax expense of $0.6 million, or 0.4% of retail sales for the first quarter of fiscal 2024. The effective income tax rate for the first quarter of fiscal 2025 was 21.9% compared to 5.6% for the first

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

quarter of 2024. The increase in tax expense was primarily due to increases in foreign and state income taxes.

LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK:

The Company believes that its cash, cash equivalents and short-term investments, together with cash flows from operations and its new asset-backed revolving line of credit, will be adequate to fund the Company’s regular operating requirements and expected capital expenditures for the next 12 months.

Cash provided by operating activities for the first three months of fiscal 2025 was primarily generated by earnings adjusted for depreciation and changes in working capital. The decrease in cash provided of $1.8 million for the first three months of fiscal 2025 as compared to the first three months of fiscal 2024 was primarily attributable to lower net income, partially offset by the relative change in inventory from year-end to the first quarter for both years and non-operating gain on the sale of assets held for investment in the first quarter of fiscal 2024.

At May 3, 2025, the Company had working capital of $43.9 million compared to $34.9 million at February 1, 2025. The increase was primarily attributable to an increase in cash and lower current lease liability, partially offset by lower short-term investments and higher accounts payable.

The ABL Credit Agreement is committed through May 2027 and is secured primarily by inventory and third-party credit card receivables. There were no borrowings outstanding and the availability under the facility was $30.0 million before giving effect to a $3.0 million outstanding letter of credit that reduced borrowing availability to $27.0 million as of May 3, 2025. The weighted average interest rate under the credit facility was zero at May 3, 2025 due to no outstanding borrowings.

Expenditures for property and equipment totaled $1.0 million in the first three months of fiscal 2025, compared to $3.3 million in last year’s first three months. The decrease in expenditures for property and equipment was primarily due to lower capital investments in information technology and the distribution center, as well as no new store openings in the first quarter of fiscal 2025. For the full fiscal 2025 year, the Company expects to invest approximately $7.3 million in capital expenditures, including distribution center automation projects.

Net cash provided by investing activities totaled $7.9 million in the first three months of fiscal 2025 compared to $14.6 million provided in the comparable period of fiscal 2024. The decrease was primarily due to a decrease in the sales of short-term investments and other assets, partially offset by lower capital expenditures.

Net cash used in financing activities totaled $0.9 million in the first three months of fiscal 2025 compared to $5.6million used in the comparable period of fiscal 2024. The decrease was primarily due to no dividends paid and reduced stock repurchases.

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

As of May 3, 2025, the Company had 703,419 shares remaining in open authorizations under its share repurchase program.

The Company does not use derivative financial instruments.

Additionally, at May 3, 2025, the Company had deferred compensation plan assets of $9.2 million. At February 1, 2025, the Company had deferred compensation plan assets of $9.3 million. These assets are recorded within Other assets in the Condensed Consolidated Balance Sheets. See Note 7, Fair Value Measurements.

RECENT ACCOUNTING PRONOUNCEMENTS:

See Note 8, Recent Accounting Pronouncements.

THE CATO CORPORATION

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

The Company is subject to market rate risk from exposure to changes in interest rates related to its financing, investing and cash management activities, but the Company does not believe such exposure is material.

ITEM 4. CONTROLS AND PROCEDURES:

We carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of May 3, 2025. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of May 3, 2025, our disclosure controls and procedures, as defined in Rule 13a-15(e), under the Securities Exchange Act of 1934 (the “Exchange Act”), were effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:

No change in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a- 15(f)) has occurred during the Company’s fiscal quarter ended May 3, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

THE CATO CORPORATION

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS:

Not Applicable

ITEM 1A. RISK FACTORS:

In addition to the other information in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended February 1, 2025.
These risks could materially affect our business, financial condition or future results; however, they are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS:

The following table summarizes the Company’s purchases of its common stock for the three months ended May 3, 2025:

ISSUER PURCHASES OF EQUITY SECURITIES| | | | | Total Number of | | Maximum Number | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | Shares Purchased as | | | (or Approximate Dollar | |
| | Total Number | Average | | Part of Publicly | | Value) of Shares that may | |
| | of Shares | Price Paid | Announced Plans or | | | Yet be Purchased Under | |
| Period | Purchased | per Share (1) | | Programs (2) | | The Plans or Programs (2) | |
| February 2025 | 135,279 | $ | 3.35 | | 135,279 | | |
| March 2025 | 129,603 | | 2.91 | | 129,603 | | |
| April 2025 | 29,154 | | 2.37 | | 29,154 | | |
| Total | 294,036 | $ | 3.06 | | 294,036 | | 703,419 |

(1)Prices include trading costs.

(2)As of February 1, 2025, the Company’s share repurchase program had 997,455 shares remaining

in open authorizations. During the first quarter ended May 3, 2025, the Company repurchased and retired 294,036 shares under this program for approximately $899,087 or an average market price of $3.06 per share. As of May 3, 2025, the Company had 703,419 shares remaining in open authorizations. There is no specified expiration date for the Company’s repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES:

Not Applicable

THE CATO CORPORATION

PART II OTHER INFORMATION

ITEM 4. MINE SAFETY DISCLOSURES:

No matters requiring disclosure.

ITEM 5. OTHER INFORMATION:

During the three months ended May 3, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended)adoptedorterminateda “Rule10b5-1 trading arrangement” or a “non-Rule10b5-1trading arrangement” (as such terms are defined in Item 408 of Regulation S-K).

ITEM 6. EXHIBITS:

Exhibit No.Item

3.1Registrant’s Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Form 10-Q of the Registrant for the quarter ended May 2, 2020.

3.2Registrant’s Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2 to Form 10-Q of the Registrant for the quarter ended May 2, 2020.

10.1Credit Agreement, dated as of March 13, 2025, by and among Wells

Fargo Bank, National Association, as Lender, and The Cato Corporation and certain of its subsidiaries as Borrowers and certain of its other subsidiaries as Guarantors, incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed March 19, 2025.

31.1*Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

31.2*Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

32.1*Section 1350 Certification of Principal Executive Officer.

32.2*Section 1350 Certification of Principal Financial Officer.

101.INSInline XBRL Instance Document 101.SCHInline XBRL Taxonomy Extension Schema Document 101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEFInline XBRL Taxonomy Extension Definitions Linkbase Document 101.LABInline XBRL Taxonomy Extension Label Linkbase Document 101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document 104.1Cover Page Interactive Data File (Formatted in Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101.1*)

Submitted electronically herewith.

THE CATO CORPORATION

PART II OTHER INFORMATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE CATO CORPORATION

May 29, 2025/s/ John P. D. Cato DateJohn P. D. Cato Chairman, President and Chief Executive Officer

May 29, 2025/s/ Charles D. Knight DateCharles D. Knight Executive Vice President Chief Financial Officer

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