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Item 1A. Risk Factors

2021-03-29 compared with 2020-03-27 · 1429 added, 220 removed, 8 unchanged (100% of the section changed)

1 unchanged sentence

An investment in our common stock involves numerous types of risks.

You should carefully consider the following risk factors, in addition to the other information contained in this report, including the disclosures under “Forward-looking Information” above in evaluating our Company and any potential investment in our common stock.

If any of the following risks or uncertainties occur or persist, our business, financial condition and operating results could be materially and adversely affected, the trading price of our common stock could decline and you could lose all or a part of your investment in our common stock.

The risks and uncertainties described in this section are not the only ones facing us.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially and adversely affect our business operating results and financial condition.

should carefully consider

the following

risk factors,

other information

including the

disclosures under

“Forward-looking Information”

evaluating our

any potential

investment in

the following

uncertainties occur

business, financial condition and ope

rating results could be

materially and adversely affected,

your investment

common stock.

and uncertainties

Additional risks and

uncertainties not presently

currently deem immaterial

also materially and adversely affect our business operating results and financial condition.

Risks Relating to the COVID-19 Pandemic:

The outbreak and persistence of the COVID-19 pandemic

has and will adversely affect our business,

financial condition and results of operations.

has adversely

Company's business,

financial condition

operating results

through fiscal

will continue

possibly beyond.

financial impacts associated

with the outbreak

include, but are

not limited to,

(i) lower net

sales in markets

affected by the

actual or potential

outbreak, whether due to

state and local

close stores,

reductions in

store traffic

labor shortages,

factors, (ii) lower net sales caused

by the delay of inventory production and fulfillment,

incremental costs

associated with

the outbreak,

including increased

freight and logistics costs and other expenses.

local governments

orders mandating

closures and other

measures to mitigate

the spread of

addition, public health

officials have

issued precautions and

guidance intended to

reduce the spread

of the virus,

including particular cautions

about congregating in

or heavily populated

areas, such as

malls and shopping

temporarily closed

It’s Fashion,

Beginning on May 1, 2020, we began to re-open stores based on the pertinent state and local orders.

June 15, 2020,

were re-opened,

but our stores

have been and continue

to operate at reduced

health guidance

public activity

and gatherings

the spread of the virus,

and may also continue

affect consumer

There continues to

be significant uncertainty

regarding the breadth

severity and duration

of business disruptions

COVID-19, as well as its impact on the global and U.S.

economy, consumer willingness to visit malls and

shopping centers,

appropriate associate

staffing levels

national, state

action, initiatives,

legislation, guidelines

economic effects

customers, suppliers

Company also remain fluid.

While the Company currently

anticipates that our

results for fiscal

2021 and possibly beyond

adversely impacted,

COVID-19 impacts the

Company’s results

course of future developments, which are highly uncertain,

including the relative speed and success of, as

public confidence

in, mitigation

measures such

current effort

portions of the

population, emerging information

regarding variants of

viruses and their

potential impact on

current mitigation efforts,

public attitudes toward

compliance with containment

and mitigation measures, and

possible new information and

understanding

that could alter the course and duration of current measures to combat the spread

It is also possible

the COVID-19 pandemic may

result in longer term

behavioral changes by

customers and

could adversely

business, including

shift to greater reliance

on online versus in-person shopping,

which could reduce traffic

to our stores and

strip shopping

disadvantage us relative to competitors

who are better established in

e-commerce sales, and reductions in

face-to-face work, travel and socializing occasions, which may lead customers to less

frequently desire or

perceive the need to update their wardrobes.

The far-reaching impacts of the COVID-19 pandemic may also intensify other risks we discuss in

report and other filings we make from time to time with the SEC.

Future outbreaks of

similar public

health threats,

occurrence, may

also have a material adverse effect on the Company’s business, financial condition and operating results.

Risks Relating to Our Business:

An outbreak of disease or similar public health threat, or fear of such an event, could have a material adverse impact on the Company's business, operating results and financial condition.

An outbreak of disease or similar public health threat (including the global coronavirus outbreak), or fear of such an event, could have a material adverse impact on the Company's business, financial condition and operating results.

Potential financial impacts associated with the actual or feared occurrence of such an event include, but are not limited to, (i) lower net sales in markets affected by the actual or potential outbreak, whether due to reductions in store traffic and customer demand, labor shortages, or both, (ii) lower net sales caused by the delay of inventory production and fulfillment, (iii) and potential incremental costs associated with mitigating the effects of such an actual or potential event, including increased freight and logistics costs and other expenses.

The spread of COVID-19 has caused public health officials to recommend, and in some cases mandate, precautions to mitigate the spread of the virus, especially when congregating in heavily populated areas, such as malls and shopping centers.

We temporarily closed all Cato, Its Fashion, Its Fashion Metro and Versona stores for an expected period of two weeks beginning March 19, 2020.

There is significant uncertainty around the duration, breadth and severity of these store closures and other business disruptions related to COVID-19, as well as its impact on the global and U.S.

economy, consumer willingness to visit malls and shopping centers, and appropriate associate staffing levels for our stores once they re-open.

The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact.

We are also unable to predict the outcome or effect of national, state or local legislation that attempts to address the economic effects of COVID-19 on our customers, suppliers or the Company.

We currently believe our first quarter results of operations will be negatively impacted by these developments.

Given the many uncertainties and far reaching consequences of potential developments, we cannot assure that the COVID-19 outbreak and the many related impacts will not require extended or additional store closures and other disruptions to our business or will not materially and adversely affect our business, results of operations and financial condition in the first quarter of fiscal 2020 and beyond.

Unusual weather, natural disasters, public health threats or similar events may adversely affect our sales or operations.

Extreme changes in weather, natural disasters, public health threats or similar events can influence customer trends and shopping habits.

For example, heavy rainfall or other extreme weather conditions over a prolonged period might make it difficult for our customers to travel to our stores and thereby reduce our sales and profitability.

Our business is also susceptible to unseasonable weather conditions.

For example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our inventory incompatible with those unseasonable conditions.

Reduced sales from extreme or prolonged unseasonable weather conditions would adversely affect our business.

The occurrence or threat of extreme weather, natural disasters, power outages, terrorist acts, outbreaks of flu or other communicable diseases (such as the global coronavirus) or other catastrophic events could reduce customer traffic in our stores and likewise disrupt our ability to conduct operations, which could materially and adversely affect us.

Because we source a significant portion of our merchandise directly and indirectly from overseas, we are subject to risks associated with international operations and risks that affect the prevailing social, economic, political, public health and other conditions in the areas from which we source merchandise;

changes, disruptions, cost changes or other problems affecting the Company’s merchandise supply chain could materially and adversely affect the Company’s business, results of operations and financial condition.

A significant amount of our merchandise is manufactured overseas, principally in East Asia.

We directly import some of this merchandise and indirectly import the remaining merchandise from domestic vendors who acquire the merchandise from foreign sources.

Further, our third-party vendors are dependent on materials primarily sourced from China.

As a result, political unrest, labor disputes, terrorism, public health threats, including but not limited to communicable diseases (such as the global coronavirus), financial or other forms of instability or other events resulting in the disruption of trade from countries affecting our supply chain, increased security requirements for imported merchandise, or the imposition of, or changes in, laws, regulations or changes in duties, quotas, tariffs, taxes or governmental policies regarding these matters or other factors affecting the availability or cost of imports, could cause significant delays or interruptions in the supply of our merchandise or increase our costs.

Our costs are also affected by currency fluctuations, and changes in the value of the dollar relative to foreign currencies may increase our cost of goods sold.

Any of these factors could have a material adverse effect on our business and results of operations.

In addition, increased energy and transportation costs have caused us significant cost increases from time to time, and future adverse changes in these costs or the disruption of the means by which merchandise is transported to us could cause additional cost increases or interruptions of our supply chain which could be significant.

Further, we are subject to increased costs or potential disruptions impacting any port or trade route through which our products move or we may be subject to increased costs and delays if forced to route freight through different ports than the ones through which our products typically move.

If we are forced to source merchandise from other countries or other domestic vendors with foreign sources in different countries, those goods may be more expensive or of a different or inferior quality from the ones we now sell.

The inability of third-party vendors to produce goods on time and to the Company’s specification may adversely affect the Company’s business, results of operations and financial condition.

Our dependence on third-party vendors to manufacture and supply our merchandise subjects us to numerous risks that our vendors will fail to perform as we expect.

For example, the deterioration in any of our key vendors’ financial condition, their failure to ship merchandise in a timely manner that meets our specifications, or other failures to follow our vendor guidelines or comply with applicable laws and regulations, including compliant labor, environmental practices and product safety, could expose us to operational, quality, competitive, reputational and legal risks.

If we are not able to timely or adequately replace the merchandise we currently source with merchandise produced elsewhere, or if our vendors fail to perform as we expect, our business, results of operations and financial condition could be adversely

Activities conducted by us or on our behalf outside the United States further subject us to numerous U.S.

and international regulations and compliance risks, as discussed below under “Our business operations subject us to legal compliance and litigation risks, as well as regulations and regulatory enforcement priorities, which could result in increased costs or liabilities, divert our management’s attention or otherwise adversely affect our business, results of operations and financial condition.”

Our ability to attract consumers and grow our revenues is dependent on the success of our store location strategy and our ability to successfully open new stores as planned.

Our sales are dependent in part on the location of our stores in shopping centers where we believe our consumers and potential consumers shop.

In addition, our ability to grow our revenues has been substantially dependent on our ability to secure space for and open new stores in attractive locations.

Shopping Centers where we currently operate existing stores or seek to open new stores may be adversely affected by, among other things, general economic downturns or those particularly affecting the commercial real estate industry, the closing of anchor stores, changes in tenant mix and changes in customer shopping preferences.

To take advantage of consumer traffic and the shopping preferences of our consumers, we need to maintain and acquire stores in desirable locations where competition for suitable store locations is intense.

A decline in customer popularity of the strip shopping centers where we generally locate our stores or in availability of space in desirable centers and locations, or an increase in the cost of such desired space, limiting our ability to open new stores, could adversely affect consumer traffic and reduce our sales and net earnings or increase our operating costs.

Our ability to open and operate new stores depends on many factors, some of which are beyond our control.

These factors include, but are not limited to, our ability to identify suitable store locations, negotiate acceptable lease terms, secure necessary governmental permits and approvals and hire and train appropriate store personnel.

In addition, our continued expansion into new regions of the country where we have not done business before may present new challenges in competition, distribution and merchandising as we enter these new markets.

Our failure to successfully and timely execute our plans for opening new stores or the failure of these stores to perform up to our expectations could adversely affect our business, results of operations and financial condition.

If we are unable to anticipate, identify and respond to rapidly changing fashion trends and customer demands in a timely manner, our business and results of operations could materially suffer.

Customer tastes and fashion trends, particularly for women’s apparel, are volatile, tend to change rapidly and cannot be predicted with certainty.

Our success depends in part upon our ability to consistently anticipate, design and respond to changing merchandise trends and consumer preferences in a timely manner.

Accordingly, any failure by us to anticipate, identify, design and respond to changing fashion trends could adversely affect consumer acceptance of our merchandise, which in turn could adversely affect our business, results of operations and our image with our customers.

If we miscalculate either the market for our merchandise or our customers’ tastes or purchasing habits, we may be required to sell a significant amount of unsold inventory at below-average markups over cost, or below cost, which would adversely affect our margins and results of operations.

Fluctuating comparable sales or our inability to effectively manage inventory may negatively impact our gross margin and our overall results of operations.

Comparable sales are expected to continue to fluctuate in the future.

Factors affecting comparable sales include fashion trends, customer preferences, calendar and holiday shifts, competition, weather, actual or potential public health threats and economic conditions.

In addition, merchandise must be ordered well in advance of the applicable selling season and before trends are confirmed by sales.

If we are not able to accurately predict customers’ preferences for our fashion items, we may have too much inventory , which may cause excessive markdowns.

If we are unable to accurately predict demand for our

merchandise, we may end up with inventory shortages , resulting in missed sales.

A decrease in comparable sales or our inability to effectively manage inventory may adversely affect our gross margin and results of operations.

Existing and increased competition in the women’s retail apparel industry may negatively impact our business, results of operations, financial condition and market share.

The women’s retail apparel industry is highly competitive.

We compete primarily with discount stores, mass merchandisers, department stores, off-price retailers, specialty stores and internet-based retailers, many of which have substantially greater financial, marketing and other resources than we have.

Many of our competitors offer frequent promotions and reduce their selling prices.

In some cases, our competitors are expanding into markets in which we have a significant market presence.

In addition, our competitors also compete for the same retail store space.

As a result of this competition, we may experience pricing pressures, increased marketing expenditures, increased costs to open new stores, as well as loss of market share, which could materially and adversely affect our business, results of operations and financial condition.

The operation of our sourcing offices in Asia may present increased legal and operational risks.

In October 2014, we established our own sourcing offices in Asia.

Our experience with legal and regulatory practices and requirements in Asia is limited.

If our sourcing offices are unable to successfully oversee merchandise production to ensure that product is produced on time and within the Company’s specifications, our business, brand, reputation, costs, results of operations and financial condition could be materially and adversely affected.

Further, the activities conducted by our sourcing offices outside the United States subject us to foreign operational risks, as well as U.S.

and international regulations and compliance risks, as discussed elsewhere in this “Risk Factors” section, in particular below under “Our business operations subject us to legal compliance and litigation risks, as well as regulations and regulatory enforcement priorities, which could result in increased costs or liabilities, divert our management’s attention or otherwise adversely affect our business, results of operations and financial condition.”

Any actual or perceived deterioration in the conditions that drive consumer confidence and spending may materially and adversely affect consumer demand for our apparel and accessories and our results of operations.

Consumer spending habits, including spending for our apparel and accessories, are affected by, among other things, prevailing social, economic, political and public health conditions and uncertainties (such as matters under debate in the U.S.

from time to time regarding budgetary, spending and tax policies, the potential outcome of 2020 political elections in the U.S.

and the impact of the global coronavirus outbreak), levels of employment, fuel, energy and food costs, salaries and wage rates and other sources of income, tax rates, home values, consumer net worth, the availability of consumer credit, consumer confidence and consumer perceptions of adverse changes in or trends affecting any of these conditions.

Any perception that these conditions may be worsening or continuing to trend negatively may significantly weaken many of these drivers of consumer spending habits.

Adverse perceptions of these conditions or uncertainties regarding them also generally cause consumers to defer purchases of discretionary items, such as our merchandise, or to purchase cheaper alternatives to our merchandise, all of which may also adversely affect our net sales and results of operations.

In addition, numerous events, whether or not related to actual economic conditions, such as downturns in the stock markets, acts of war or terrorism, political unrest or natural disasters, outbreaks of disease or similar events, may also dampen consumer confidence, and accordingly, lead to reduced consumer spending.

Any of these events could have a material adverse effect on our business, results of operations and financial condition.

Fluctuations in the price, availability and quality of inventory may result in higher cost of goods, which the Company may not be able to pass on to its customers.

Vendors are increasingly passing on higher production costs, which may impact our ability to maintain or grow our margins.

The price and availability of raw materials may be impacted by demand, regulation, weather and crop yields, currency value fluctuations, as well as other factors.

Additionally, manufacturers have and may continue to have increases in other manufacturing costs, such as transportation, labor and benefit costs.

These increases in production costs result in higher merchandise costs to the Company.

Due to the Company’s limited flexibility in price point, the Company may not be able to pass on those cost increases to the consumer, which could have a material adverse effect on our results of operations and financial condition.

A failure or disruption relating to our information technology systems could adversely affect our business.

We rely on our existing information technology systems for merchandise operations, including merchandise planning, replenishment, pricing, ordering, markdowns and product life cycle management.

In addition to merchandise operations, we utilize our information technology systems for our distribution processes, as well as our financial systems, including accounts payable, general ledger, accounts receivable, sales, banking, inventory and fixed assets.

Despite the precautions we take, our information systems may be vulnerable to disruption or failure from numerous events, including but not limited to, natural disasters, severe weather conditions, power outages, technical malfunctions, cyber-attacks, acts of war or terrorism, similar catastrophic events or other causes beyond our control or that we fail to anticipate.

Any disruption or failure in the operation of our information technology systems, our failure to continue to upgrade or improve such systems, or the cost associated with maintaining, repairing or improving these systems, could adversely affect our business, results of operations and financial condition.

Modifications and/or upgrades to our current information technology systems may also disrupt our operations.

A disruption or shutdown of our centralized distribution center or transportation network could materially and adversely affect our business and results of operations.

The distribution of our products is centralized in one distribution center in Charlotte, North Carolina and distributed through our network of third-party freight carriers.

The merchandise we purchase is shipped directly to our distribution center, where it is prepared for shipment to the appropriate stores and subsequently delivered to the stores by our third-party freight carriers.

If the distribution center or our third-party freight carriers were to be shut down or lose significant capacity for any reason, including but not limited to, any of the causes described under “A failure or disruption relating to our information technology systems could adversely affect our business,” our operations would likely be seriously disrupted.

Such problems could occur as the result of any loss, destruction or impairment of our ability to use our distribution center, as well as any broader problem generally affecting the ability to ship goods into our distribution center or deliver goods to our stores.

As a result, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores during the time it takes for us to reopen or replace the distribution center and/or our transportation network.

Any such occurrence could adversely affect our business, results of operations and financial condition.

Changes to accounting rules and regulations may adversely affect our reported results of operations and financial condition.

In an effort to provide greater comparability of financial reporting in an increasing global environment, accounting regulatory authorities have been in discussions for many years regarding efforts to either converge U.S.

Generally Accepted Accounting Principles with International Financial Reporting Standards (“IFRS”), have U.S.

companies provide supplemental IFRS-based information or continue to work toward a single set of globally accepted accounting standards.

If implemented, these potential changes in accounting rules or regulations could significantly impact our future reported results of operations and financial position.

Changes in accounting rules or regulations and varying interpretations of existing accounting rules and regulations have significantly affected our reported financial statements and those of other participants in the retail industry in the past and may continue to do so in the future.

For example, changes to lease accounting standards effective for the Company beginning in fiscal 2019 required the Company to capitalize operating leases in its financial statements.

These changes required us to record a significant amount of lease-related assets and liabilities on our balance sheet, resulting in an increase of 40% to each of our total assets and total liabilities on our balance sheet, and required us to make other changes to the recording and classification of lease-related expenses on our statements of income and cash flows.

These changes could lead to the perception by investors that we are highly leveraged and also change the calculation of numerous financial metrics and measures of our performance and financial condition.

These and future changes to accounting rules or regulations may adversely affect our reported results of operations and financial position or perceptions of our performance and financial condition.

If the Company is unable to successfully integrate new businesses into its existing business, the Company’s financial condition and results of operations will be adversely affected.

The Company’s long-term business strategy includes opportunistic growth through the development of new store concepts.

This growth may require significant capital expenditures and management attention.

The Company may not realize any of the anticipated benefits of a new business and integration costs may exceed anticipated amounts.

We have incurred substantial financial commitments and fixed costs related to our retail stores that we will not be able to recover if our stores are not successful and that could potentially result in impairment charges.

If we cannot successfully execute our growth strategies, our financial condition and results of operations may be adversely impacted.

A security breach that results in unauthorized disclosure of employee, Company or customer information could adversely affect our costs, reputation and results of operations, and efforts to mitigate these risks may continue to increase our costs.

The protection of employee, Company and customer data is critical to the Company.

Any security breach, mishandling, human or programming error or other event that results in the misappropriation, loss or other unauthorized disclosure of employee, Company or customer information, including but not limited to credit card data or other personally identifiable information, could severely damage the Company's reputation, expose it to remediation and other costs and the risks of legal proceedings, disrupt its operations and otherwise adversely affect the Company's business and financial condition.

Despite measures the Company takes to protect confidential information, which are ongoing and may continue to increase our costs, there is no assurance that such measures will prevent the compromise of such information.

The security of certain of this information also depends on the ability of third-party service providers, such as those we use to process credit and debit card payments as described below under “We are subject to payment-related risks,” to properly handle and protect such information.

If any such compromise or unauthorized disclosure of this information were to occur, it could have a material adverse effect on the Company's reputation, business, operating results, financial condition and cash flows.

We are subject to payment-related risks.

We accept payments using a variety of methods, including third-party credit cards, our own branded credit cards, debit cards, gift cards and physical bank checks.

For existing and future payment methods we offer to our customers, we may become subject to additional regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in increased costs and reduce the ease of use of certain payment methods), as well as fraud.

For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time, raising our operating costs and lowering profitability.

We rely on third-party service providers for payment processing services, including the processing of credit and debit cards.

In each case, it could disrupt our business if these third-party service providers become unwilling or unable to provide these services to us.

We are also subject to payment card association operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to

make it difficult or impossible for us to comply.

If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for card-issuing banks’ costs, subject to fines and higher transaction fees.

In addition, we may lose our ability to accept credit and debit card payments from our customers and process electronic funds transfers or facilitate other types of payments, and our business and operating results could be adversely affected.

The Company’s failure to successfully operate its e-commerce websites or fulfill customer expectations could adversely impact customer satisfaction, our reputation and our business.

Although the Company's e-commerce platform provides another channel to drive incremental sales, provide existing customers the on-line shopping experience and introduce the Company to a new customer base, it also exposes us to numerous risks.

We are subject to potential failures in the efficient and uninterrupted operation of our websites, customer contact center or our distribution center, including system failures caused by telecommunication system providers, order volumes that exceed our present system capabilities, electrical outages, mechanical problems and human error.

Our e-commerce platform may also expose us to greater potential for security or data breaches involving the unauthorized disclosure of customer information, as discussed above under “A security breach that results in unauthorized disclosure of employee, Company or customer information could adversely affect our costs, reputation and results of operations, and efforts to mitigate these risks may continue to increase our costs.” We are also subject to risk related to delays or failures in the performance of third parties, such as shipping companies, including delays associated with labor strikes or slowdowns or adverse weather conditions.

If the Company does not successfully meet the challenges of operating e-commerce websites or fulfilling customer expectations, the Company's business and sales could be adversely affected.

Adverse litigation matters may adversely affect our business and our financial condition.

From time to time the Company is involved in litigation and other claims against our business.

Primarily these arise from our normal course of business but are subject to risks and uncertainties, and could require significant management time.

The Company’s periodic evaluation of litigation-related matters may change our assessment in light of the discovery of facts with respect to legal actions pending against us, not presently known to us or by determination of judges, juries or other finders of fact.

We may also be subjected to legal matters not yet known to us.

Adverse decisions or settlements of disputes may negatively impact our business, reputation and financial condition.

Failure to attract, train, and retain skilled personnel could adversely affect our business and our financial condition.

Like most retailers, we experience significant associate turnover rates, particularly among store sales associates and managers.

Because our continued store growth will require the hiring and training of new associates, we must continually attract, hire and train new store associates to meet our staffing needs.

A significant increase in the turnover rate among our store sales associates and managers would increase our recruiting and training costs, as well as possibly cause a decrease in our store operating efficiency and productivity.

We compete for qualified store associates, as well as experienced management personnel, with other companies in our industry or other industries, many of whom have greater financial resources than we do.

In addition, we depend on key management personnel to oversee the operational divisions of the Company for the support of our existing business and future expansion.

The success of executing our business strategy depends in large part on retaining key management.

We compete for key management personnel with other retailers, and our inability to attract and retain qualified personnel could limit our ability to continue to grow.

If we are unable to retain our key management and store associates or attract, train, or retain other skilled personnel in the future, we may not be able to service our customers effectively or execute our business strategy, which could adversely affect our business, operating results and financial condition.

Our business operations subject us to legal compliance and litigation risks, as well as regulations and regulatory enforcement priorities, which could result in increased costs or liabilities, divert our management’s attention or otherwise adversely affect our business, results of operations and financial condition.

Our operations are subject to federal, state and local laws, rules and regulations, as well as U.S.

and foreign laws and regulations relating to our activities in foreign countries from which we source our merchandise and operate our sourcing offices.

Our business is also subject to regulatory and litigation risk in all of these jurisdictions, including foreign jurisdictions that may lack well-established or reliable legal systems for resolving legal disputes.

Compliance risks and litigation claims have arisen and may continue to arise in the ordinary course of our business and include, among other issues, intellectual property issues, employment issues, commercial disputes, product-oriented matters, tax, customer relations and personal injury claims.

International activities subject us to numerous U.S.

and international regulations, including but not limited to, restrictions on trade, license and permit requirements, import and export license requirements, privacy and data protection laws, environmental laws, records and information management regulations, tariffs and taxes and anti-corruption laws, such as the Foreign Corrupt Practices Act, violations of which by employees or persons acting on the Company’s behalf may result in significant investigation costs, severe criminal or civil sanctions and reputational harm.

These and other liabilities to which we may be subject could negatively affect our business, operating results and financial condition.

These matters frequently raise complex factual and legal issues, which are subject to risks and uncertainties and could divert significant management time.

The Company may also be subject to regulatory review and audits, which results may have the potential to materially and adversely affect our business, results of operations and financial condition.

In addition, governing laws, rules and regulations, and interpretations of existing laws are subject to change from time to time.

Compliance and litigation matters could result in unexpected expenses and liability, as well as have an adverse effect on our operations and our reputation.

New legislation or regulation and interpretation of existing laws and regulations related to data privacy could increase our costs of compliance, technology and business operations.

The interpretation of existing or new laws to existing technology and practices can be uncertain and may lead to additional compliance risk and cost.

If we fail to protect our trademarks and other intellectual property rights or infringe the intellectual property rights of others, our business, brand image, growth strategy, results of operations and financial condition could be adversely affected.

We believe that our “Cato”, “It’s Fashion”, “It’s Fashion Metro” and “Versona” trademarks are integral to our store designs, brand recognition and our ability to successfully build consumer loyalty.

Although we have registered these trademarks with the U.S.

Patent and Trademark Office (“PTO”) and have also registered, or applied for registration of, additional trademarks with the PTO that we believe are important to our business, we cannot assure that these registrations will prevent imitation of our trademarks, merchandising concepts, store designs or private label merchandise or the infringement of our other intellectual property rights by others.

Infringement of our names, concepts, store designs or merchandise generally, or particularly in a manner that projects lesser quality or carries a negative connotation of our image could adversely affect our business, financial condition and results of operations.

In addition, we cannot assure that others will not try to block the manufacture or sale of our private label merchandise by claiming that our merchandise violates their trademarks or other proprietary rights.

In the event of such a conflict, we could be subject to lawsuits or other actions, the ultimate resolution of

which we cannot predict;

however, such a controversy could adversely affect our business, financial condition and results of operations.

We may experience market conditions that could adversely impact the valuation and liquidity of, and our ability to access, our short-term investments and cash and cash equivalents.

Our short-term investments and cash equivalents are primarily comprised of investments in federal, state, municipal and corporate debt securities.

The value of those securities may be impacted by factors beyond our control, such as changes to credit ratings, rates of default, collateral value, discount rates, and strength and quality of market credit and liquidity, and changes in the underlying economic, financial and other conditions that drive these factors.

As federal, state and municipal entities struggle with declining tax revenues and budget deficits, we cannot be assured of our ability to timely access these investments if the market for these issues declines.

Similarly, the default by issuers could adversely affect our financial condition, results of operations and ability to execute our business strategy.

In addition, we have significant amounts of cash and cash equivalents at financial institutions that are in excess of the federally insured limits.

An economic downturn or development of adverse conditions affecting the financial sector and stability of financial institutions could cause us to experience losses on our deposits.

Our ability to access credit markets and our revolving line of credit may be impacted by factors beyond our control such as changes in credit rating and collateral, as well as potential disruptions in the Capital markets.

This may adversely affect our results of operation and our ability to execute our business strategy.

Similarly, our ability to access credit markets at favorable terms could be adversely impacted due to changes in credit ratings, collateral and potential disruptions in the Capital markets.

This may adversely affect our financial condition, results of operations and our ability to execute our business strategy.

Maintaining and improving our internal control over financial reporting and other requirements necessary to operate as a public company may strain our resources, and any material failure in these controls may negatively impact our business, the price of our common stock and market confidence in our reported financial information.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the rules of the SEC and New York Stock Exchange and certain aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and related rule-making that has been and may continue to be implemented over the next several years under the mandates of the Dodd-Frank Act.

The requirements of these rules and regulations have, and may continue to, increase our compliance costs and place significant strain on our personnel, systems and resources.

To satisfy the SEC’s rules implementing the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we must continue to document, test, monitor and enhance our internal control over financial reporting, which is a costly and time-consuming effort that must be re-evaluated frequently.

We cannot give assurance that our disclosure controls and procedures and our internal control over financial reporting, as defined by applicable SEC rules, will be adequate in the future.

Any failure to maintain the effectiveness of internal control over financial reporting or to comply with the other various laws and regulations to which we are and will continue to be subject, or to which we may become subject in the future, as a public company could have an adverse material impact on our business, our financial condition and the price of our common stock.

In addition, our efforts to comply with these requirements, particularly with new requirements under the Dodd-Frank Act that have yet to be implemented, could significantly increase our compliance costs.

Unusual weather, natural disasters,

public health threats or similar events may adversely affect

Extreme changes

natural disasters,

public health

similar events

can influence

customer trends and

shopping habits.

For example, heavy

rainfall or other

extreme weather conditions

including but

period, might

difficult for

profitability.

susceptible to

unseasonable weather conditions.

For example, extended

unseasonably warm

temperatures during the

winter season or

cool weather during

the summer season

could render a

inventory incompatible

unseasonable conditions.

Reduced sales

prolonged unseasonable

weather conditions

would adversely

The occurrence

extreme weather,

natural disasters,

power outages,

terrorist acts,

communicable diseases

COVID-19 pandemic)

catastrophic events

reduce customer traffic

in our stores

and likewise disrupt

our ability to

conduct operations, which

materially and adversely affect us.

Because we source a significant portion of our merchandise directly

and indirectly from overseas, we are

subject to risks associated with international operations and

risks that affect the prevailing social, economic,

political, public health and other conditions in the areas from

which we source merchandise;

disruptions, cost changes or other problems affecting

the Company’s merchandise

supply chain could

materially and adversely affect the Company’s

business, results of operations and financial condition.

A significant amount of our

merchandise is manufactured overseas, principally in Southeast

directly import some of this merchandise and indirectly import

the remaining merchandise from domestic

vendors who acquire

the merchandise from

foreign sources.

our third-party vendors

materials primarily

result, political

unrest, labor

terrorism, public health

threats, including but

to communicable diseases

COVID-19 pandemic), financial or other forms of

instability or other events resulting in

the disruption of

countries affecting

chain, increased

security requirements

merchandise, or

the imposition of,

or changes in,

laws, regulations or

changes in duties,

quotas, tariffs,

taxes or governmental policies regarding these matters or other

factors affecting the availability or cost of

imports, could cause

significant delays or

interruptions in the

supply of our

merchandise or increase

disruptions affecting

ocean freight,

including lack

container ship

capacity, lack

containers, port

congestion and

other conditions

impacting ocean

including lack

domestic intermodal

transportation (trucks

and drivers),

domestic port

congestion and

other conditions

impact domestic

supply chain.

transport our merchandise and delayed merchandise arrivals to our stores, which may adversely affect our

merchandise and

increase markdowns

fluctuations, and changes in the

value of the dollar relative

to foreign currencies may increase our

these factors

adverse effect

In addition, increased energy and transportation

costs have caused us significant

increases from time

future adverse changes in

these costs or

the disruption of

which merchandise

is transported

additional cost

interruptions of

supply chain which could be significant.

Further, we are subject to increased costs or potential disruptions

impacting any port

route through which

route freight

through different

through which

products typically move.

forced to source

merchandise from other

countries or other

vendors with foreign sources

in different countries, those

goods may be more

expensive or of a

or inferior quality from the ones we now sell.

The inability of third-party vendors to produce goods on

time and to the Company’s

specification may

adversely affect the Company’s

business, results of operations and financial condition.

Our dependence

party vendors

to manufacture

our merchandise

numerous risks that our

vendors will fail to

perform as we expect.

For example, the deterioration

vendors’ financial condition,

their failure to

ship merchandise in

a timely manner

our specifications, or

other failures to

follow our vendor

guidelines or comply

with applicable laws

regulations, including

compliant labor,

environmental practices

safety, could

operational, quality,

competitive, reputational and

timely or adequately

replace the merchandise we currently source

with merchandise produced elsewhere, or if our

to perform as

our business,

operations and financial

condition could

Activities conducted

United States

further subject

numerous U.S.

and international regulations and compliance risks, as discussed

below under “Risk

Factors – Risks

Relating to Accounting

and Legal Matters

- Our business

operations subject us

compliance and litigation risks,

as well as regulations

and regulatory enforcement priorities,

result in increased costs or liabilities, divert our

management’s attention or otherwise adversely affect

business, results of operations and financial condition.”

Our ability to attract consumers and grow our revenues is dependent

on the success of our store location

strategy and our ability to successfully open new stores as planned.

Our sales are dependent

the location of our

stores in shopping centers

and malls where we

believe our consumers

and potential consumers

In addition, our

ability to grow

our revenues has

been substantially dependent on our ability to secure space for and open new stores in attractive locations.

Shopping centers and malls where we currently operate existing stores

or seek to open new stores may be

adversely affected by, among other

things, general economic downturns or those particularly affecting the

commercial real

estate industry,

stores, changes

customer shopping preferences, including but not limited to an increase in preference for online versus in-

person shopping.

advantage of consumer traffic

and the shopping preferences of

our consumers,

we need to maintain and acquire stores in desirable locations where competition

for suitable store

decline in customer

popularity of the

strip shopping centers

where we generally

locate our stores or in

availability of space in desirable centers

and locations, or an increase in

stores, adversely

affect consumer

reduce our sales and net earnings or increase our operating costs.

Our ability to

open and operate

new stores depends

on many factors,

some of which

are beyond our

These factors

suitable store

negotiate acceptable lease terms, secure necessary governmental

permits and approvals and hire and

appropriate store personnel.

In addition, our continued

expansion into new regions

of the country where

business before

new challenges

in competition, distribution

merchandising as we enter these new markets.

Our failure to successfully and timely

execute our plans for

opening new stores or

the failure of these

stores to perform up

to our expectations could

adversely affect

our business, results of operations and financial condition.

If we are unable to anticipate, identify and respond to

rapidly changing fashion trends and customer

demands in a timely manner,

our business and results of operations could materially

Customer tastes

trends, particularly

volatile, tend

rapidly and cannot be predicted

with certainty.

Our success depends in part

upon our ability to

consistently anticipate, design and respond to changing merchandise trends and consumer preferences in a

timely manner.

Accordingly, any

anticipate, identify,

fashion trends

could adversely

onsumer acceptance

merchandise, which

adversely affect our business, results of

operations and our image with our customers.

If we miscalculate

either the market

for our merchandise

or our customers’ tastes

or purchasing habits, we

to sell a significant amount of unsold inventory at below-average markups over cost, or below cost, which

would adversely affect our margins and results of operations.

Fluctuating comparable sales or our inability to effectively

manage inventory may negatively impact our

gross margin and our overall results of operations.

Comparable sales

affecting comparable

sales include

fashion trends,

customer preferences,

holiday shifts,

competition, weather,

potential public

health threats

addition, merchandise

ordered well in

advance of the

applicable selling season

and before trends

are confirmed by

able to accurately

predict customers’ preferences

fashion items, we

inventory, which may

cause excessive markdowns.

are unable to accurately predict

demand for our

merchandise, we may

inventory shortages,

resulting in missed

comparable sales or

our inability to

effectively manage inventory

may adversely affect

our gross margin

and results of operations.

Existing and increased competition in the women’s

retail apparel industry may negatively impact our

business, results of operations, financial condition and market

retail apparel

highly competitive.

primarily with

merchandisers, department

-price retailers,

specialty stores

and internet-

retailers, many of which have substantially greater financial, marketing and other resources than

our competitors offer

frequent promotions and

selling prices.

In some cases,

competitors are expanding into markets

in which we have a

significant market presence.

In addition, our

competitors also compete

same retail store space.

As a result of this

competition, we may

experience pricing

pressures, increased

marketing expenditures,

increased costs

well as loss of market share, which could materially and adversely affect

our business, results of

operations and financial condition.

The operation of our sourcing offices in Asia may

present increased legal and operational risks.

established our

experience with

regulatory practices and requirements in Asia is

If our sourcing offices are

unable to successfully

oversee merchandise

production to

specifications, our business, brand, reputation, costs, results of operations

financial condition could be

materially and

adversely affected.

activities conducted

sourcing offices

United States

operational risks,

and international

regulations and

compliance risks, as

discussed elsewhere in

this “Risk Factors”

section, in particular

below under “Risk

Factors – Risks

Relating to Accounting

and Legal Matters

- Our business

operations subject us

compliance and litigation risks,

as well as regulations

and regulatory enforcement priorities,

result in increased costs or liabilities, divert our

management’s attention or otherwise adversely affect

business, results of operations and financial condition.”

Any actual or perceived deterioration in the conditions that drive

consumer confidence and spending may

materially and adversely affect consumer demand

for our apparel and accessories and our results of

Consumer spending habits, including spending for our apparel and accessories, are affected by, among

other things, prevailing social, economic, political and

public health conditions and uncertainties (such as

matters under debate in the U.S.

from time to time regarding budgetary,

spending and tax policies and the

impact of the

global COVID-19 pandemic),

levels of employment,

fuel, energy and

food costs, salaries

and wage rates

and other sources of

income, tax rates, home

values, consumer net worth,

the availability

credit, consumer

confidence and

consumer perceptions

affecting any of

these conditions.

Any perception that these

conditions may be worsening

or continuing

to trend negatively may significantly weaken many of these drivers of consumer spending habits.

perceptions of these

conditions or uncertainties

regarding them also

generally cause consumers

discretionary items,

our merchandise,

purchase cheaper

alternatives to

merchandise, all of

which may also

adversely affect our

net sales and

results of operations.

numerous events, whether

related to actual

economic conditions, such

as downturns in

markets, acts

or terrorism,

political unrest

disasters, outbreaks

consumer confidence,

and accordingly,

reduced consumer

adverse effect

business, results

of operations

financial condition.

Fluctuations in the price, availability and quality of

inventory may result in higher cost of goods, which the

Company may not be able to pass on to its customers.

are increasingly passing on higher

production costs, which may impact

our ability to

maintain or grow

price and availability

of raw materials

may be impacted

regulation, weather and

crop yields, currency

value fluctuations, as

well as other

Additionally,

manufacturers have

have increases

manufacturing costs,

transportation, labor and

benefit costs.

increases in production

costs result in

higher merchandise

the Company’s

limited flexibility in price

point, the Company may

on those cost

increases to the

consumer, which

material adverse effect

results of operations and financial condition.

If the Company is unable to successfully integrate new businesses into

its existing business, the Company’s

financial condition and results of operations will be adversely

The Company’s

long-term business strategy

includes opportunistic growth

through the development

This growth may

require significant capital expenditures

and management

The Company may not

realize any of the anticipated

benefits of a new business

and integration

exceed anticipated

have incurred

substantial financial

commitments and

costs related to our retail stores that we will not be

able to recover if our stores are not successful and that

could potentially result

in impairment charges.

successfully execute our

growth strategies,

our financial condition and results of operations may be adversely impacted.

Failure to attract, train, and retain skilled personnel could adversely

affect our business and our financial

Like most retailers, we

experience significant associate turnover

rates, particularly among store

associates and managers.

Because our continued store growth

will require the hiring and

training of new

associates, we must

continually attract, hire

and train new

store associates to

meet our staffing

significant increase in the turnover rate among our store sales associates and managers would increase our

recruiting and

training costs, as

possibly cause a

operating efficiency

productivity.

for qualified store

experienced management personnel,

with other companies in

our industry or other

industries, many of whom

have greater financial resources

management personnel

the operational

existing business

executing our

business strategy depends

in large part

on retaining key

compete for key

personnel with

other retailers, and

our inability to

retain qualified personnel

ability to continue to grow.

our key management

associates or

attract, train,

skilled personnel

able to service

our customers effectively

business strategy, which could adversely affect our business, operating results and financial condition.

Risks Relating to Our Information Technology and Related Systems:

A failure or disruption relating to our information technology

systems could adversely affect our business.

on our existing information technology systems for merchandise operations,

merchandise planning, replenishment, pricing,

ordering, markdowns and

product life cycle

In addition to merchandise operations,

we utilize our information technology systems

for our distribution

processes, as well

as our financial

systems, including accounts

payable, general ledger,

receivable, sales, banking,

inventory and fixed

Despite the precautions

systems are or may be vulnerable to disruption or failure

from numerous events, including but not limited

to, natural disasters, severe weather conditions, power outages, technical malfunctions, cyber-attacks, acts

or terrorism,

similar catastrophic

Any disruption or failure in the operation of our information technology systems, our failure to

associated with

maintaining, repairing

improving these systems,

could adversely affect

our business, results

of operations and

Modifications and/or upgrades to our current

information technology systems may also disrupt

our operations.

A disruption or shutdown of our centralized distribution center or

transportation network could materially

and adversely affect our business and results of

The distribution of

our products is

centralized in one

distribution center in

Charlotte, North Carolina

and distributed

third-party freight

The merchandise

shipped directly to our

distribution center, where it

is prepared for shipment to

the appropriate stores and

subsequently delivered to

third-party freight carriers.

If the distribution

third-party freight carriers were to be

shut down or lose significant capacity

for any reason, including but

not limited to, any of the causes described above under “A failure or disruption relating

to our information

technology systems could adversely affect

our business,” our operations would likely

Such problems could occur as the result of any loss, destruction or impairment of our ability to

distribution center,

as any broader

problem generally affecting

the ability to

into our distribution center or deliver goods to

As a result, we could incur significantly higher

costs and longer lead times associated

with distributing our products to our

stores during the time it

for us to reopen or replace the

distribution center and/or our transportation network.

Any such occurrence

could adversely affect our business, results of operations and financial condition.

A security breach that results in unauthorized access to or disclosure

of employee, Company or customer

information could adversely affect our costs, reputation

and results of operations, and efforts to mitigate

these risks may continue to increase our costs.

The protection

customer data

breach, mishandling, human or programming error or other event that results in the misappropriation, loss

unauthorized disclosure

customer information,

including but

limited to credit card data or

other personally identifiable information, could severely damage the

Company's reputation, expose it to remediation

and other costs and the

of legal proceedings, disrupt

its operations and otherwise adversely affect

the Company's business and financial

security of certain of this

information also depends on the

ability of third-party service providers,

process credit

card payments

payment-related risks,”

information systems

those of our third-party service

providers are subject to ongoing

and persistent cybersecurity threats from

those seeking unauthorized access

through means which are

continually evolving and may be

anticipate or detect for long periods

Despite measures the Company takes to

protect confidential

information against unauthorized

access or disclosure,

which are ongoing

and may continue

our costs, there

is no assurance

that such measures

will prevent the

compromise of such

any such compromise

or unauthorized access

to or disclosure

of this information

were to occur,

have a material

adverse effect on

the Company's reputation,

business, operating results,

condition and cash flows.

We are subject to payment

-related risks.

payments using a

variety of methods,

including third-party credit

cards, our own

credit cards,

and electronic

payment methods

customers, we

additional regulations

compliance requirements

(including obligations

enhanced authentication

processes that

could result in

increased costs and

reduce the ease

certain payment methods),

For certain payment methods,

including credit and debi

cards, we pay interchange and

other fees, which

operating costs

profitability.

service providers for

payment processing services,

including the processing

of credit and

each case, it could

disrupt our business if

these third-party service providers

become unwilling or unable

to provide these services to us.

are also subject to payment card association operating rules, including

data security rules, certification

requirements and rules governing electronic

funds transfers, which could

reinterpreted to make

it difficult or

impossible for us

to comply with

or requirements,

security systems

liable for card-issuing banks’

costs, subject to fines

and higher transaction fees.

In addition, we may

payments from

our customers

electronic funds

transfers or facilitate

other types of

payments, and our

business and operating

results could be

The Company’s

failure to successfully operate its e-commerce websites or fulfill customer

expectations could

adversely impact customer satisfaction, our reputation and

our business.

Company's e-commerce platform

provides another

drive incremental

provide existing customers the on-

line shopping experience and

introduce the Company to a

customer base, it

also exposes us

to numerous risks.

subject to potential

failures in the

and uninterrupted operation of

our websites, customer contact

center or our distribution

center, including

system failures

telecommunication system

providers, order

system capabilities, electrical outages, mechanical problems

and human error.

Our e-commerce platform

may also expose us to

greater potential for security or

data breaches involving the unauthorized access

or disclosure of customer information, as discussed

above under “A

security breach that

unauthorized disclosure of employee, Company or customer information could

adversely affect our costs,

reputation and

operations, and

mitigate these

are also subject to risk related

to delays or failures in the

performance of third parties, such as

shipping companies,

including delays

associated with

labor strikes

Company does not successfully

meet the challenges of

operating e-commerce websites

or fulfilling customer expectations, the Company's business and sales could be

adversely affected.

Risks Relating to Accounting and Legal Matters:

Changes to accounting rules and regulations may

adversely affect our reported results of operations

financial condition.

provide greater

comparability of

financial reporting

increasing global

environment, accounting regulatory authorities have

been in discussions for many

years regarding efforts

to either converge U.S.

Accepted Accounting Principles with International Financial Reporting

Standards (“IFRS”), have

companies provide

supplemental IFRS-based information

or continue to

globally accepted

accounting standards.

If implemented,

these potential

changes in accounting rules or regulations could

significantly impact our future reported

operations and financial position.

Changes in accounting rules

or regulations and varying interpretations

of existing accounting

rules and regulations

have significantly affected

our reported financial

and those of other participants in the retail industry in the past and may

continue to do so in the future.

lease accounting

standards effective

Company beginning

2019 required

to capitalize

operating leases

financial statements.

These changes

a significant

lease-related assets

and liabilities

balance sheet,

resulting in an

increase of 40%

our total assets

and total liabilities

on our balance

other changes

recording and

classification of

lease-related expenses

statements of income and cash flows.

These changes

could lead to the perception by investors

highly leveraged

calculation of

numerous financial

performance and

financial condition.

future changes

to accounting

regulations may

adversely affect

operations and

financial position

or perceptions

performance and financial condition.

Adverse litigation matters may adversely affect

our business and our financial condition.

in litigation

claims against

our business.

Primarily these

arise from our

normal course of

and uncertainties,

could require

significant management time.

The Company’s periodic evaluation of litigation-

matters may change our assessment in light of

the discovery of facts with respect to legal

actions pending

not presently known

or by determination

of judges, juries

or other finders

subjected to legal matters

not yet known to

Adverse decisions or

settlements of disputes

may negatively impact our business, reputation and financial condition.

Our business operations subject us to legal compliance

and litigation risks, as well as regulations and

regulatory enforcement priorities, which could result in increased

costs or liabilities, divert our

attention or otherwise adversely affect our business, results

of operations and financial

Our operations are

subject to federal,

state and local

laws, rules and

regulations, as well

and regulations

our activities

countries from

merchandise and operate

our sourcing offices.

subject to regulatory

and litigation

of these jurisdictions, including

foreign jurisdictions that

may lack well-established or

legal systems

for resolving

legal disputes.

Compliance risks

and litigation

issues, intellectual

property issues,

employment issues,

commercial disputes,

product-oriented matters, tax,

relations and personal injury claims.

International activities

subject us to numerous U.S.

and international

regulations, including but not limited to, restrictions on trade, license and permit requirements, import and

export license

requirements, privacy

protection laws,

environmental laws,

information management

regulations, tariffs

corruption laws,

Corrupt Practices Act, violations of

which by employees or persons acting

on the Company’s behalf

result in significant

investigation costs, severe

criminal or civil

sanctions and reputational

liabilities to

could negatively affect

our business,

operating results

and financial condition.

These matters frequently raise complex factual and legal issues, which are subject

and uncertainties

divert significant

management time.

subject to regulatory review

and audits, which results

potential to materially and

business, results of

operations and financial

governing laws, rules

regulations, and interpretations of existing laws are subject to change

from time to time.

Compliance and

litigation matters could

result in unexpected

expenses and liability,

have an adverse

our operations and our reputation.

New legislation or regulation and interpretation of existing laws and regulations related to data privacy

could increase our costs of compliance, technology and business operations.

The interpretation of existing

or new laws to

existing technology and practices can be

uncertain and may lead to

additional compliance

risk and cost.

If we fail to protect

our trademarks and other

intellectual property rights or infringe

the intellectual property

business, brand

image, growth

strategy, results

of operations

and financial

could be adversely affected.

“Cato”, “It’s

Fashion”, “It’s

Fashion Metro”

and “Versona”

trademarks are

designs, brand

recognition and

to successfully

build consumer

Although we have

registered these trademarks

with the U.S.

Patent and Trademark

Office (“PTO”)

have also registered, or applied for registration

of, additional trademarks with the PTO that we believe are

important to our

business, we cannot

give assurance that these

registrations will prevent

imitation of our

trademarks, merchandising concepts, store designs or private label merchandise or the infringement

other intellectual property rights by

Infringement of our names,

concepts, store designs or

merchandise generally,

or particularly

projects lesser

connotation of our

image could adversely

business, financial condition

and results of

In addition, we

cannot give assurance that

others will not

the manufacture or

private label merchandise by

claiming that our merchandise violates

their trademarks or other proprietary

resolution of which

we cannot predict;

however, such a

controversy could adversely affect

our business,

financial condition and results of operations.

Maintaining and improving our internal control over financial

reporting and other requirements necessary

to operate as a public company may strain our resources, and

any material failure in these controls may

negatively impact our business, the price of our common

stock and market confidence in our reported

financial information.

are subject to

the reporting requirements

of the Securities

Exchange Act of

1934, the Sarbanes

-Oxley Act of

2002, the rules

Stock Exchange and

aspects of the Dodd-Frank Wall

Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and

related rule-making that has

been and may continue

to be implemented over

the next several years

the mandates of the Dodd-Frank Act.

The requirements of

these rules and regulations have increased, and

may continue to increase,

our compliance costs and place significant strain on our pe

rsonnel, systems and

implementing the

requirements of

2002, we must

continue to document,

test, monitor and

enhance our internal

financial reporting, which is a

costly and time-consuming effort that

must be re-evaluated frequently.

cannot give assurance

that our disclosure

controls and procedures

and our internal

control over financial

reporting, as defined by

applicable SEC rules, will

be adequate in the

to maintain the

effectiveness of

internal control

over financial

other various

regulations to which

will continue to

be subject, or

may become subject

future, as a public company

could have an adverse material impact

on our business, our financial

condition and the

common stock.

addition, our efforts

to comply with

these existing and

new requirements could significantly increase our compliance costs.

Risks Relating to Our Investments and Liquidity:

We may experience

market conditions or other events that could adversely

impact the valuation and liquidity

of, and our ability to access, our short-term investments, cash and

cash equivalents and our revolving line of

-term investments

equivalents are

primarily comprised of

investments in

state, municipal and

corporate debt securities.

those securities may

be adversely impacted

by factors relating to these securities, similar

securities or the broader credit markets in general.

these factors are beyond

our control, and include

limited to changes

to credit ratings, rates

default, collateral value,

discount rates, and

strength and quality

of market credit

and liquidity,

disruptions in the capital markets

and changes in the underlying economic,

financial and other conditions

that drive these factors.

As federal, state and

municipal entities struggle with declining

tax revenues and

budget deficits, we

cannot be assured

of our ability

to timely access

these investments if

the market for

these issues declines.

Similarly, the

default by issuers of

the debt securities we

hold or similar securities

could impair the liquidity of

our investments.

The development or persistence of

any of these conditions

could adversely

financial condition,

operations and

have significant amounts

equivalents at

financial institutions

federally insured

development of

conditions affecting the financial sector and stability

of financial institutions could cause us to

losses on our deposits.

Our ability to

access credit markets

and our revolving

line of credit,

either generally or

market terms, may be impacted

by the factors discussed in

the preceding paragraph, as

well as continued

compliance with covenants under our

revolving credit agreement.

The development or persistence of

of these adverse

factors or failure to

comply with covenants on

which our borrowing is

conditioned may

adversely affect

our financial

condition, results

Risks Relating to the Market Value of Our Common Stock:

Our operating results are subject to seasonal and quarterly fluctuations, which could adversely affect the market price of our common stock.

Our business varies with general seasonal trends that are characteristic of the retail apparel industry.

As a result, our stores typically generate a higher percentage of our annual net sales and profitability in the first and second quarters of our fiscal year compared to other quarters.

Accordingly, our operating results for any one fiscal period are not necessarily indicative of results to be expected from any future period, and such seasonal and quarterly fluctuations could adversely affect the market price of our common stock.

The interests of a principal shareholder may limit the ability of other shareholders to influence the direction of the Company.

Our operating results are subject to seasonal and quarterly

fluctuations, which could adversely affect the

market price of our common stock.

Our business varies

with general seasonal

trends that are

characteristic of the

retail apparel industry.

our stores typically

generate a higher

percentage of our

annual net sales

and profitability in

and second quarters

compared to other

Accordingly, our

results for any

one fiscal period

are not necessarily

indicative of

results to be

expected from any

such seasonal

and quarterly

fluctuations could

adversely affect

common stock.

The interests of a principal shareholder may limit the ability of

other shareholders to influence the direction

of the Company and otherwise affect our corporate

As of March 29, 2021, John P.

Cato, Chairman, President and Chief Executive Officer, beneficially controlled approximately 46.1% of the voting power of our common stock.

Cato, Chairman, President and Chief Executive Officer, beneficially

controlled approximately 48.1% of the voting power of

our common stock.

As a result, Mr.

Cato may be able to control or significantly influence substantially all matters requiring approval by the shareholders, including the election of directors and the approval of mergers and other business combinations or other significant Company transactions.

Cato may have interests that differ from those of other shareholders, and may vote in a way with which other shareholders disagree or perceive as adverse to their interests.

In addition, the concentration of voting power held by Mr.

Cato could have the effect of preventing, discouraging or deferring a change in control of the Company, which could depress the market price of our common stock.

Conditions in the stock market generally, or particularly relating to our industry, Company or common stock, may materially and adversely affect the market price of our common stock and make its trading price more volatile.

The trading price of our common stock at times has been, and is likely to continue to be, subject to significant volatility.

A variety of factors may cause the price of the common stock to fluctuate, perhaps substantially, including, but not limited to, those discussed elsewhere in this report, as well as the following:

low trading volume;

general market fluctuations resulting from factors not directly related to our operations or the inherent value of our common stock;

announcements of developments related to our business;

able to control

or significantly influence

substantially

all matters requiring

approval by the

shareholders,

including the election

of directors and

the approval of

mergers and other

business combinations or other

significant Company

transactions.

have interests

shareholders, and

shareholders disagree

their interests.

In addition, the

concentration of voting power

Cato could have

the effect of

preventing, discouraging

market price of our common stock.

In the future, if Mr.

Cato acquires beneficial control of more than 50%

of the voting power of

our common stock (including as

a result of continued Company stock

stock repurchase

our outstanding

would qualify for

exemption as a

“controlled company” from

compliance with certain

Exchange corporate governance rules, including the

requirements that we have a

majority of independent

an independent

compensation committee

independent corporate

governance and

nominating committee.

became eligible

these “controlled

company” exceptions, our other shareholders could lose

the benefit of these corporate governance

requirements and the market value of our common stock could be adversely

Conditions in the stock market generally,

or particularly relating to our industry, Company

stock, may materially and adversely affect the market

price of our common stock and make its trading price

more volatile.

The trading price

of our common

stock at times

has been, and

continue to be,

significant volatility.

A variety of factors

may cause the price of

our common stock to

fluctuate, perhaps

substantially, including,

those discussed

general market

fluctuations resulting from

factors not directly

our operations or the inherent value of our

common stock;

announcements of developments related to our

fluctuations in our reported operating results;

general conditions or trends affecting or perceived to affect the fashion and retail industry;

conditions or trends affecting or perceived to affect the domestic or global economy or the domestic or global credit or capital markets;

changes in financial estimates or the scope of coverage given to our Company by securities analysts;

negative commentary regarding our Company and corresponding short-selling market behavior;

adverse customer relations developments;

significant changes in our senior management team;

and legal proceedings.

Over the past several years the stock market in general, and the market for shares of equity securities of many retailers in particular, have experienced extreme price fluctuations that have at times been unrelated to the operating performance of those companies.

Such fluctuations and market volatility based on these or other factors may materially and adversely affect the market price of our common stock.

general conditions or trends affecting or perceived

to affect the

fashion and retail industry;

conditions or trends affecting

or perceived to affect

or global economy

or the domestic

or global credit

or capital markets;

changes in financial

coverage given to

our Company by

securities analysts;

egative commentary regarding

corresponding short

-selling market

customer relations

developments;

significant changes in

our senior management

Over the past

several years

the stock market in

general, and the market

for shares of equity

securities of many retailers

in particular,

have experienced

extreme price

fluctuations that

the operating

performance of those companies.

Such fluctuations and market

volatility based on these

or other factors

may materially and adversely affect the market price of our common stock.

Unresolved Staff Comments:

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors