CATO CORP — Interim / Quarterly Report 2026

May 28, 2026

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 2, 2026 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 2, 2026, there were18,195,206shares of Class A common stock and1,763,652shares of Class B common stock outstanding.

THE CATO CORPORATION

FORM 10-Q

Quarter Ended May 2, 2026

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 2, 2026 and May 3, 2025
Condensed Consolidated Balance Sheets3 At May 2, 2026 and January 31, 2026

Condensed Consolidated Statements of Cash Flows4 For the Three Months Ended May 2, 2026 and May 3, 2025
Condensed Consolidated Statements of Stockholders’ Equity5 For the Three Months Ended May 2, 2026 and May 3, 2025

Notes to Condensed Consolidated Financial Statements6 - 20

Item 2.Management’s Discussion and Analysis of Financial Condition and Results21 - 27 of Operations

Item 3.Quantitative and Qualitative Disclosures About Market Risk28

Item 4.Controls and Procedures28 PART II – OTHER INFORMATION

Item 1.Legal Proceedings29| Item 1A. | Risk Factors | 29 |
| --- | --- | --- |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |

Item 3.Defaults Upon Senior Securities29

Item 4.Mine Safety Disclosures30| Item 5. | Other Information | 30 |
| --- | --- | --- |
| Item 6. | Exhibits | 30 |

Signatures31

1

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(UNAUDITED)| | | Three Months Ended | | |
| --- | --- | --- | --- | --- |
| | May 2, 2026 | | May 3, 2025 | |
| | (Dollars in thousands, except per share data) | | | |
| REVENUES | | | | |
| Retail sales | $ | 169,410 | $ | 168,419 |
| Other revenue (principally finance charges, late fees and | | | | |
| layaway charges) | | 1,694 | | 1,823 |
| Total revenues | | 171,104 | | 170,242 |
| COSTS AND EXPENSES, NET | | | | |
| Cost of goods sold (exclusive of depreciation shown below) | | 106,340 | | 109,318 |
| Selling, general and administrative (exclusive of depreciation | | | | |
| shown below) | | 53,930 | | 55,325 |
| Depreciation | | 2,236 | | 2,564 |
| Interest and other income, net | | ( 1,233 ) | | ( 1,202 ) |
| Costs and expenses, net | | 161,273 | | 166,005 |
| Income before income taxes | | 9,831 | | 4,237 |
| Income tax expense | | 522 | | 928 |

Net income		$	9,309$	3,309
Basic earnings per share		$	0.47$	0.17
Diluted earnings per share		$	0.47$	0.17
Comprehensive income:
Net income		$	9,309$	3,309
Net unrealized gain (loss) on available-for-sale securities, net
of deferred income taxes of $	0for each of the three months		( 260 )	38
ended May 2, 2026 and May 3, 2025
Comprehensive income		$	9,049$	3,347

See notes to condensed consolidated financial statements (unaudited).

2

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

May 2, 2026January 31, 2026| | | | (Dollars in thousands, except per share data) | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | | ASSETS | | | | |
| Current Assets: | | | | | | |
| Cash and cash equivalents | | | $ | 25,412$ | | 16,788 |
| Short-term investments | | | | 55,558 | | 56,859 |
| Restricted cash | | | | 2,675 | | 2,675 |
| Accounts receivable, net of allowance for customer credit losses of | | | | | | |
| $676and $ | 682at May 2, 2026 and January 31, 2026, respectively | | | 33,159 | | 25,462 |
| Merchandise inventories | | | | 92,490 | | 83,696 |
| Prepaid expenses and other current assets | | | | 7,928 | | 7,787 |
| Total Current Assets | | | | 217,222 | | 193,267 |
| Property and equipment – net | | | | 52,504 | | 53,748 |
| Other assets | | | | 20,720 | | 20,471 |
| Right-of-Use assets – net | | | | 148,734 | | 153,933 |
| Total Assets | | | $ | 439,180 | $ | 421,419 |
| Current Liabilities: | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
| Accounts payable | | | $ | 79,702$ | | 64,958 |
| Accrued expenses | | | | 34,590 | | 37,101 |
| Accrued bonus and benefits | | | | 1,838 | | 326 |
| Current lease liability | | | | 52,088 | | 53,507 |
| Total Current Liabilities | | | | 168,218 | | 155,892 |
| Other noncurrent liabilities | | | | 11,318 | | 11,272 |
| Lease liability | | | | 92,939 | | 96,941 |

Commitments and contingencies (Note 10)--| 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; | 18,195,206 | and | 17,976,854 | shares issued | | | | |
| at May 2, 2026 and January 31, 2026, respectively | | | | | | 615 | | 608 |
| Convertible Class B common stock, $ | | | 0.033par value per share, | | | | | |
| 15,000,000 | shares authorized; | 1,763,652 | | | | | | |
| shares issued at May 2, 2026 and January 31, 2026 | | | | | | 59 | | 59 |
| Additional paid-in capital | | | | | | 131,989 | | 131,347 |
| Retained earnings | | | | | | 34,028 | | 25,026 |
| Accumulated other comprehensive income | | | | | | 14 | | 274 |
| Total Stockholders' Equity | | | | | | 166,705 | | 157,314 |
| Total Liabilities and Stockholders’ Equity | | | | | $ | 439,180 | $ | 421,419 |

See notes to condensed consolidated financial statements (unaudited).

3

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended May 2, 2026May 3, 2025

(Dollars in thousands)| Operating Activities:Net income | $ | $ | 3,309 |
| --- | --- | --- | --- |
| Adjustments to reconcile net income to net cash provided by operating activities: | | 9,309 | |
| DepreciationProvision for customer credit losses | | 2,236 | 2,564215 |
| Purchase premium and premium amortization of investments | | 207( 98 ) | ( 81 ) |
| Gain on sale of assets held for investmentShare-based compensation | | - | 193( 34 ) |
| Gain on disposal of property and equipment | | 578( 2 ) | ( 30 ) |
| Changes in operating assets and liabilities which provided (used) cash:Accounts receivable | | | ( 2,505 ) |
| Merchandise inventories | | ( 8,642 )( 8,794 ) | 1,309 |
| Prepaid and other assetsOperating lease right-of-use assets and liabilities | | ( 390 ) | ( 38 ) |
| Accounts payable, accrued expenses and other liabilities | | ( 221 ) | ( 156 )( 878 ) |
| | 13,866 | | |
| Net cash provided by operating activities | | 8,049 | 3,868 |

Investing Activities:Expenditures for property and equipment
Purchase of short-term investments	( 1,067 )	( 1,019 )( 2,262 )
Sales of short-term investments	( 6,836 )7,974	11,195
Sales of other assetsProceeds from cash value of life insurance policy	-	34
	738	-
Net cash provided by investing activities	809	7,948

Financing Activities:Repurchase of common stock
Proceeds from employee stock purchase plan	( 311 )	( 935 )62
	77
Net cash used in financing activities	( 234 )	( 873 )

Net increase in cash, cash equivalents, and restricted cash8,62410,943| Cash, cash equivalents, and restricted cash at beginning of period | 19,463 | 23,078 |
| --- | --- | --- |
| Cash, cash equivalents, and restricted cash at end of period | $28,087 | $34,021 |

Non-cash activity:Accrued other assets and property and equipment expenditures		$
	$	260	284
Accrued treasury stock		1	-

See notes to condensed consolidated financial statements (unaudited).

4

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

Accumulated

AdditionalOtherTotal

CommonPaid-inRetainedComprehensiveStockholders'

StockCapitalEarningsIncome (Loss)Equity

(Dollars in thousands)| Balance — January 31, 2026Comprehensive income: | | $667 | $131,347 | $25,026 | $ | 274$ | 157,314 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net incomeUnrealized net loss on available-for-sale securities, net of deferred | | - | - | 9,309 | | - | 9,309 |
| income tax benefit of $Class A common stock sold through employee stock purchase plan | 0 | 1- | 88- | | -- | ( 260 )- | ( 260 )89 |
| Share-based compensation issuances and exercisesShare-based compensation expense | | 10- | 564( 10 ) | | -- | -- | 564- |
| Repurchase and retirement of treasury shares | | ( 4 ) | - | ( 307 ) | | - | ( 311 ) |

Balance — May 2, 2026$674$131,989$34,028$14$166,705

Accumulated

AdditionalOtherTotal

CommonPaid-inRetainedComprehensiveStockholders'

StockCapitalEarningsIncome (Loss)Equity

(Dollars in thousands)| 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- | | -- | -- | 184( 2 ) |
| Repurchase and retirement of treasury sharesOther | | ( 10 )- | -- | ( 897 )( 73 ) | | -- | ( 907 )( 73 ) |

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

See notes to condensed consolidated financial statements (unaudited).

5

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - GENERAL : The condensed consolidated financial statements as of May 2, 2026 and for the three months ended May 2, 2026 and May 3, 2025 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 January 31, 2026. Amounts as of January 31, 2026 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. In February 2026, the U.S. Supreme Court issued a ruling that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the United States were unauthorized, effectively invalidating IEEPA tariffs. In April 2026, following the Supreme Court’s invalidation of the IEEPA tariffs and the establishment of procedures for processing tariff refunds, the Company submitted a refund claim and recorded a $ 5.7 million reduction in cost of goods sold in the first quarter of fiscal 2026. Subsequent Events: Subsequent to May 2, 2026, the Company repurchased 4,471 shares for $ 12,824 . On May 15, 2026, the Company received a $ 2.6 million partial payment for its tariff refund claim. The Company anticipates receiving payment for the balance of its tariff refund claim by the end of the second quarter of fiscal 2026. The Company received a $ 5.6 million payment for the outstanding balance of the income tax refund receivable due from the IRS.

6

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 2, 2026 May 3, 2025 (Dollars in thousands, except per share data) Numerator Net earnings $ 9,309 $ 3,309 Earnings allocated to non-vested equity awards ( 427 ) ( 192 ) Net earnings available to common stockholders $ 8,882 $ 3,117 Denominator Basic weighted average common shares outstanding 18,818,492 18,684,837 Diluted weighted average common shares outstanding 18,818,492 18,684,837 Net income per common share Basic earnings per share $ 0.47 $ 0.17 Diluted earnings per share $ 0.47 $ 0.17

Unvested restricted stock excluded from the calculation of diluted EPS for the periods ended May 2, 2026 and May 3, 2025 were 904,000 and 1,151,000 , respectively, because the effect of including them in the calculation of diluted EPS would have been antidilutive.

7

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME: The following table sets forth information regarding the changes in Accumulated other comprehensive income (in thousands) for the three months ended May 2, 2026:

Changes in Accumulated Other Comprehensive Income (Loss) (a) Unrealized Gains and (Losses) on Available-for-Sale Securities Beginning Balance at January 31, 2026 $ 274 Other comprehensive income (loss) before reclassification ( 260 ) Amounts reclassified from accumulated other comprehensive income - Net current-period other comprehensive income (loss) ( 260 ) Ending Balance at May 2, 2026 $ 14 (a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to accumulated other comprehensive income.

The following table sets forth information regarding the changes in Accumulated other comprehensive income (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 gains on available-for-sale securities. The tax impact of this reclassification was $ 0 .

8

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 March 2028 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 2, 2026 and January 31, 2026. The weighted average interest rate under the credit facility was zero at May 2, 2026 and January 31, 2026 due to no outstanding borrowings.

9

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 – REPORTABLE SEGMENT INFORMATION:

The Company has determined that it has four operating segments, as defined under ASC 280 – Segment Reporting (“ASC 280”), including Cato, It’s Fashion, Versona and Credit. 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 2, 2026, 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 segment income 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 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 measure of segment assets is reported on the balance sheet as total consolidated assets. 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 January 31, 2026.

10

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 2, 2026 Retail Credit Total Revenues $ 170,439 $ 665 $ 171,104 Cost of goods sold (a) 106,340 - 106,340 Selling, general, and administrative (b) 38,717 397 39,114 Corporate overhead 14,816 - 14,816 Depreciation 2,236 - 2,236 Interest and other income, net ( 87 ) ( 270 ) ( 357 ) Segment income before income taxes $ 8,417 $ 538 $ 8,955 Corporate interest and other income ( 876 ) Income before income taxes $ 9,831 Capital expenditures $ 1,067 $ - $ 1,067 Three Months Ended May 3, 2025 Retail Credit Total Revenues $ 169,577 $ 665 $ 170,242 Cost of goods sold (a) 109,318 - 109,318 Selling, general, and administrative (b) 39,159 387 39,546 Corporate overhead 15,779 - 15,779 Depreciation 2,564 - 2,564 Interest and other income, net ( 105 ) ( 303 ) ( 408 ) Segment income before income taxes $ 2,862 $ 581 $ 3,443 Corporate interest and other income ( 794 ) Income before income taxes $ 4,237 Capital expenditures $ 1,019 $ - $ 1,019 (a) 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 in-bound 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. (b) Selling, general, and administrative expense include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, bank and credit card processing fees.

11

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 – SHARE-BASED COMPENSATION: As of May 2, 2026, the Company’s 2018 Incentive Compensation Plan allows 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 2, 2026:

2018 Plan Options and/or restricted stock initially authorized 4,725,000 Options and/or restricted stock available for grant 2,575,134

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 2, 2026 and January 31, 2026, there was $ 4,162,000 and $ 4,064,000 , respectively, of total unrecognized compensation expense related to unvested restricted stock awards, which had a remaining weighted- average vesting period of 2.0 years and 1.4 years, respectively. The total compensation expense during the three months ended May 2, 2026 and May 3, 2025 was $ 564,000 and $ 109,000 , respectively. 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 2, 2026:

Weighted Average Number of Grant Date Fair Shares Value Per Share Restricted stock awards at January 31, 2026 905,052 $ 8.06 Granted 298,494 2.88 Vested ( 268,303 ) 11.50 Forfeited or expired ( 3,822 ) 7.54 Restricted stock awards at May 2, 2026 931,421 $ 5.41

12

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 2, 2026 and May 3, 2025, the Company sold 31,503 and 21,736 shares to employees at an average discount of $ 0.43 and $ 0.50 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 $ 13,000 and $ 11,000 for the three months ended May 2, 2026 and May 3, 2025, 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 2, 2026 and January 31, 2026:

Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable May 2, 2026 Assets Inputs Inputs Description Level 1 Level 2 Level 3 Assets: Corporate Bonds $ 55,558 $ - $ 55,558 $ - Cash Surrender Value of Life Insurance 9,827 - - 9,827 Total Assets $ 65,385 $ - $ 55,558 $ 9,827 Liabilities: Deferred Compensation $ ( 8,343 ) $ - $ - $ ( 8,343 ) Total Liabilities $ ( 8,343 ) $ - $ - $ ( 8,343 )

13

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 January 31, 2026 Assets Inputs Inputs Description Level 1 Level 2 Level 3 Assets: Corporate Bonds $ 54,822 $ - $ 54,822 $ - U.S. Treasury/Agencies Notes and Bonds 2,037 - 2,037 - Cash Surrender Value of Life Insurance 9,693 - - 9,693 Total Assets $ 66,552 $ - $ 56,859 $ 9,693 Liabilities: Deferred Compensation $ ( 8,383 ) $ - $ - $ ( 8,383 ) Total Liabilities $ ( 8,383 ) $ - $ - $ ( 8,383 )

The Company’s investment portfolio was primarily invested in corporate bonds held in managed accounts with underlying ratings of A or better at May 2, 2026. The corporate bonds have contractual maturities which range from 13 days to 2.9 years. Additionally, at May 2, 2026, the Company had deferred compensation plan assets of $ 9.8 million. At January 31, 2026, the Company had deferred compensation plan assets of $ 9.7 million. These assets are recorded within Other assets in the Condensed Consolidated Balance Sheets. Level 2 investment securities include corporate 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 2, 2026 and the year ended January 31, 2026 (dollars in thousands):

14

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 January 31, 2026 $ 9,693 Redemptions - Additions - Total gains or (losses): Included in interest and other income, net (or changes in net assets) 134 Ending Balance at May 2, 2026 $ 9,827 Fair Value Measurements Using Significant Unobservable Liability Inputs (Level 3) Deferred Compensation Beginning Balance at January 31, 2026 $ ( 8,383 ) Redemptions 231 Additions ( 30 ) Total (gains) or losses: Included in interest and other income, net (or changes in net assets) ( 161 ) Ending Balance at May 2, 2026 $ ( 8,343 ) Fair Value Measurements Using Significant Unobservable Asset Inputs (Level 3) Cash Surrender Value Beginning Balance at February 1, 2025 $ 9,301 Redemptions ( 365 ) Additions - Total gains or (losses): Included in interest and other income, net (or changes in net assets) 757 Ending Balance at January 31, 2026 $ 9,693 Fair Value Measurements Using Significant Unobservable Liability Inputs (Level 3) Deferred Compensation Beginning Balance at February 1, 2025 $ ( 8,548 ) Redemptions 1,246 Additions ( 206 ) Total (gains) or losses: Included in interest and other income, net (or changes in net assets) ( 875 ) Ending Balance at January 31, 2026 $ ( 8,383 )

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THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Targeted Improvements to the Accounting for Internal-Use Software” (ASU 2025-06). The FASB issued ASU 2025-06 to modernize the accounting for costs related to internal-use software to better align with how software is developed and to clarify the threshold to be applied to begin capitalizing costs. ASU 2025-06 is effective for our annual and quarterly reporting periods beginning January 30, 2028. Early adoption is permitted. The Company is currently assessing the impact that the adoption of ASU 2025-06 will have on our consolidated financial statements. 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 interim periods 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 fiscal 2026 of 5.3 % compared to an effective tax rate of 21.9 % for the first quarter of fiscal 2025. Income tax expense for the quarter decreased to $ 0.5 million in 2026 from $ 0.9 million in 2025. The decrease in tax expense was primarily due to lower foreign income taxes.

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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.

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THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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. In addition, a provision is made for estimated rewards cards issued to customers based on their purchases with the Company’s propriety credit card. The rewards cards issued by the Company have a 90-day expiration. 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 $ 207,000 and $ 215,000 for the periods ended May 2, 2026 and May 3, 2025, respectively, on sales purchased using the Company’s proprietary credit card of $ 5.2 million and $ 5.4 million for the periods ended May 2, 2026 and May 3, 2025, respectively. The following table provides information about receivables and contract liabilities from contracts with customers (in thousands):

Balance as of May 2, 2026 January 31, 2026 Proprietary Credit Card Receivables, net $ 10,444 $ 10,711 Gift Card Liability $ 6,919 $ 7,475

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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 the 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 2, 2026 May 3, 2025 Operating lease cost $ 16,319 $ 16,588 Variable lease cost (a) $ 519 $ 438 (a) Primarily relates to monthly percentage rent for stores not presented on the balance sheet.

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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 2, 2026 May 3, 2025 Cash paid for amounts included in the measurement of lease liabilities $ 13,939 $ 14,534 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations, net of rent violations $ 8,836 $ 1,206

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

As of May 2, 2026 May 3, 2025 Weighted-average remaining lease term 2.3 Years 2.1 Years Weighted-average discount rate 6.29 % 5.90 %

As of May 2, 2026, the maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):

Fiscal Year 2026 (a) $ 47,815 2027 47,369 2028 32,929 2029 20,990 2030 11,566 Thereafter 2,313 Total lease payments 162,982 Less: Imputed interest 17,955 Present value of lease liabilities $ 145,027 (a) Excluding the 3 months ended May 2, 2026.

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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 30, 2027 (“fiscal 2026”) 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 public health threats and related responses and mitigation efforts, as well as the potential impact of supply chain disruptions, extreme weather conditions, tariffs and other 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 risks or 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 threats and uncertainties, war or similar hostilities and their collateral effects, levels of unemployment, fuel, energy and food costs, inflation, wage rates, tax rates, 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 open new stores in attractive locations and the 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 or prospects; adverse weather, public health threats, acts of war or aggression or similar conditions and related consequences 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 the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (“fiscal 2025”), 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.

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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 January 31, 2026. 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.

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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 2, 2026 | May 3, 2025 | |
| Total retail sales | 100.0 | % | 100.0% |
| Other revenue | 1.0 | | 1.1 |
| Total revenues | 101.0 | | 101.1 |
| Cost of goods sold (exclusive of depreciation) | 62.8 | | 64.9 |
| Selling, general and administrative (exclusive of depreciation) | 31.8 | | 32.8 |
| Depreciation | 1.3 | | 1.5 |
| Interest and other income | (0.7) | | (0.7) |
| Income before income taxes | 5.8 | | 2.5 |
| Net income | 5.5 | | 2.0 |

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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 Annual Report on Form 10-K for fiscal 2025.

Recent Developments

Tariff Issues

There remains a significant degree of uncertainty regarding the status of U.S. trade policy and the types and amount of tariffs to which the Company will be subject. On February 20, 2026, the Supreme Court issued a ruling that struck down the series of tariffs that had been imposed under the International Economic Emergency Powers Act (“IEEPA”) beginning in February 2025. In response, the administration transitioned under Section 122 of the Trade Act of 1974 (the “Trade Act”) to a new 10% baseline global tariff that is scheduled to expire in July 2026 unless otherwise extended by Congress. On May 7, 2026, the U.S. Court of International Trade issued a ruling finding that these Section 122 tariffs are unlawful, but limited its permanent injunction to the specific plaintiffs in that case, and these tariffs continue to be collected from all other importers, including the Company. The administration has appealed this decision, and it remains uncertain whether these duties will remain in effect or possibly be replaced by other tariffs.

On March 11, 2026, the U.S. Trade Representative announced investigations under Section 301 of the Trade Act into various countries, including countries where much of our products are manufactured, that could result in the imposition of increased tariffs. Beginning in May 2026, the U.S. Trade Representative held Section 301 hearings for certain countries, including countries where we source most of our product. The extent to which these hearings will result in increased tariffs is currently unknown. Our acquisition costs in future periods will be negatively impacted to the extent that any tariffs imposed due to Section 301 findings are greater than the current Section 122 tariffs.

In April 2026, following the Supreme Court’s invalidation of the IEEPA tariffs and the establishment of procedures for processing tariff refunds, the Company submitted a refund claim and recorded a $5.7 million reduction in cost of goods sold in the first quarter of fiscal 2026. On May 15, 2026, the Company received a $2.6 million partial payment for its tariff refund claim. The Company anticipates receiving payment for the balance of its tariff refund claim by the end of the second quarter of fiscal 2026.

Pricing Pressures

The pressure on our customers’ discretionary income continued in the first quarter of 2026 with increasing fuel prices. Additionally, the Core Price Index (CPI) rose in April, further pressuring our customers’ discretionary income both now and into the foreseeable future. We believe these additional pricing pressures will cause our customers to be more cautious with their discretionary spending. In addition, our ability to pass through costs caused by rising fuel prices and potential increased tariff costs will be limited due in part to the pressure on our customers’ discretionary spending.

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THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of First Quarter of 2026 with 2025

Total retail sales for the first quarter were $169.4 million compared to last year’s first quarter sales of $168.4 million. Sales increased due to a same-store sales increase of 3%, partially offset by stores that were closed in the past 12 months. 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 4.0% of sales for the first quarter of fiscal 2026 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 ecommerce purchases and layaway fees), were $171.1 million for the first quarter ended May 2, 2026, compared to $170.2 million for the first quarter ended May 3, 2025. The Company operated 1,065 stores at May 2, 2026 compared to 1,109 stores at the end of last fiscal year’s first quarter. For the first three months of fiscal 2026, the Company opened two stores and closed six stores. The Company currently expects to open up to 15 new stores and close approximately 35 stores in fiscal 2026.

Other revenue, a component of total revenues, was $1.7 million for the first quarter of fiscal 2026, 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 2026, flat both in dollars and percentage compared to 2025. 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 2026, flat to the first quarter of 2025.

Cost of goods sold was $106.3 million, or 62.8% of retail sales for the first quarter of fiscal 2026, compared to $109.3 million, or 64.9% of retail sales in the first quarter of fiscal 2025. The decrease in cost of goods sold as a percent of sales was due in part to a pre-tax tariff refund claim of $5.7 million and lower freight costs, partially offset by increased sales of marked down goods. 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 in-bound 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) increased by 6.8% to $63.1 million for the first quarter of fiscal 2026 compared to $59.1 million in the first quarter of fiscal 2025. 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 $53.9 million, or 31.8% of retail sales for the first quarter of fiscal 2026, compared to $55.3 million, or 32.8% of retail sales in the first quarter of fiscal 2025. SG&A expense was lower in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 primarily due to lower corporate payroll expense, insurance costs and equipment maintenance, partially offset by increases in incentive compensation expense.

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THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Depreciation expense was $2.2 million, or 1.3% of retail sales for the first quarter of fiscal 2026, compared to $2.6 million, or 1.5% of retail sales for the first quarter of fiscal 2025. The decrease in depreciation expense was due to fully depreciated older stores.

Interest and other income was $1.2 million, or 0.7% of retail sales for the first quarter of fiscal 2026, compared to $1.2 million, or 0.7% of retail sales for the first quarter of fiscal 2025.

Income tax expense was $0.5 million or 0.3% of retail sales for the first quarter of fiscal 2026, compared to income tax expense of $0.9 million, or 0.6% of retail sales for the first quarter of fiscal 2025. The effective income tax rate for the first quarter of fiscal 2026 was 5.3% compared to 21.9% for the first quarter of fiscal 2025. The decrease in tax expense was primarily due to lower foreign 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 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 from the issuance of this quarterly report on Form 10-Q.

Cash provided by operating activities for the first three months of fiscal 2026 was primarily generated by earnings adjusted for depreciation and changes in working capital. The increase in cash provided of $4.2 million for the first three months of fiscal 2026 as compared to the first three months of fiscal 2025 was primarily attributable to higher net income and the relative change in accounts payable from year-end to the first quarter for both years, partially offset by an increase in accounts receivable and the relative change in inventory from year-end to the first quarter for both years.

At May 2, 2026, the Company had working capital of $49.0 million compared to $37.4 million at January 31, 2026. The increase was primarily attributable to an increase in cash, inventory and accounts receivable, partially offset by higher accounts payable.

The ABL Credit Agreement (“ABL Facility”) of up to $35.0 million is committed through March 2028 and is secured primarily by inventory and third-party credit card receivables. The proceeds from the ABL Facility may be used to provide funding for ongoing working capital and general corporate purposes.
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 2, 2026 and January 31, 2026. The weighted average interest rate under the credit facility was zero at May 2, 2026 and January 31, 2026 due to no outstanding borrowings.

Expenditures for property and equipment totaled $1.1 million in the first three months of fiscal 2026, compared to $1.0 million in last fiscal year’s first three months. For the full fiscal 2026 year, the Company expects to invest approximately $7.4 million in capital expenditures.

Net cash provided by investing activities totaled $0.8 million in the first three months of fiscal 2026 compared to $7.9 million provided in the comparable period of fiscal 2025. The decrease was primarily due to an increase in purchases of short-term investments, partially offset by a decrease in the sales of short-term investments.

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THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Net cash used in financing activities totaled $0.2 million in the first three months of fiscal 2026 compared to $0.9million used in the comparable period of fiscal 2025. The decrease was primarily due to lower stock repurchases.

The Company purchased 107,823 shares in the first quarter of 2026. As of May 2, 2026, the Company had 572,917 shares remaining in open authorizations under its share repurchase program.

The Company does not use derivative financial instruments.

The Company’s investment portfolio was primarily invested in corporate bonds held in managed accounts with underlying ratings of A or better at May 2, 2026 and January 31, 2026. The corporate bonds have contractual maturities which range from 13 days to 2.9 years.

Additionally, at May 2, 2026, the Company had deferred compensation plan assets of $9.8 million. At January 31, 2026, the Company had deferred compensation plan assets of $9.7 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.

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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 2, 2026. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of May 2, 2026, 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 2, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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 January 31, 2026.
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 2, 2026:

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 2026 | | -$ | | - | - | |
| March 2026 | 62,599 | | 2.85 | | 62,599 | |
| April 2026 | 45,224 | | 2.86 | | 45,224 | |

Total107,823$2.85107,823572,917

(1)Prices include trading costs.

(2)As of January 31, 2026, the Company’s share repurchase program had 680,740 shares remaining

in open authorizations. During the first quarter ended May 2, 2026, the Company repurchased and retired 107,823 shares under this program for approximately $307,697 or an average market price of $2.85 per share. As of May 2, 2026, the Company had 572,917 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

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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 2, 2026, 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.

31.1Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32.1Section 1350 Certification of Principal Executive Officer.
32.2Section 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.

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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 28, 2026/s/ John P. D. Cato DateJohn P. D. Cato Chairman, President and Chief Executive Officer

May 28, 2026/s/ Charles D. Knight DateCharles D. Knight Executive Vice President Chief Financial Officer

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