What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-23 compared with 2021-03-29 · 262 added, 509 removed, 93 unchanged (89% of the section changed)

1946, operated

1,330 fashion specialty

states, principally

southeastern United

States, under

“Cato,” “Cato

Fashions,” “Cato

Fashion,” “It’s

Fashion Metro”

and “Versona.”

concept seeks

fashion apparel and accessories at low prices every day, in junior/missy and plus sizes.

concept’s stores and e-commerce website feature a broad assortment of apparel and accessories, including

dressy, career,

sportswear, dresses,

coats, shoes,

lingerie, costume jewelry

and handbags.

major portion of the Cato concept’s merchandise is sold under

its private label and is produced by various

vendors in accordance with the concept’s specifications.

The It’s Fashion and

It’s Fashion Metro

major portion of the Cato concept’s

merchandise is sold under its private label and is produced by various

specifications.

concepts offer fashion with a focus on the latest trendy styles for the entire family at low prices every day.

concept’s stores

and e-commerce website

offer quality

fashion apparel

items, jewelry and

accessories at exceptional

values every day.

e-commerce website

quality fashion

apparel items,

accessories at

exceptional values

market-dominant

presentations

the Company’s

stores range in

size from 2,100

located primarily

shopping centers

national discounters

market-dominant grocery

emphasizes friendly

customer service

and coordinated

merchandise presentations

appealing store

Company offers

and layaway plan.

Credit and layaway

sales under the

Company’s plan

represented 5% of

retail sales in

Consolidated Financial Statements,

“Reportable Segment Information,”

plan represented

Consolidated Financial

Statements, “Reportable

Information,”

for a discussion of information regarding the Company’s two reportable segments:

retail and credit.

Cato-branded retail

approximately

originated as a family-owned business and made its

first initial public offering of stock

the Company went private and in 1987 again conducted an initial public offering.

originated as a family-owned business and

made its first initial public offering

of stock in 1968.

the Company went private and in 1987 again conducted an initial public

Business Strategy

The Company’s

primary objective is

leading fashion specialty

retailer for fashion

in its markets.

believes the Company’s

success is dependent upon

its ability to differentiate

its stores from

department stores, mass

merchandise discount stores

and competing specialty

elements of the Company’s business strategy are:

Merchandise Assortment.

The Company’s

assortment of

on-trend apparel

accessory items in

primarily junior/missy,

toddler to boys

product coordination

and selection.

coordinated and presented so that outfit selection is easily made.

The Company offers

quality merchandise that

is generally priced

primary objective

leading fashion

specialty retailer

Management believes the

Company’s success

is dependent upon

its ability to

differentiate

from department

merchandise discount

competing specialty

key elements of the Company’s business strategy are:

accessory items in primarily junior/missy,

plus sizes, men and kids sizes, toddler to

boys size 20 and girls

an emphasis on color,

product coordination and selection.

Colors and styles are

and presented so that outfit selection is easily made.

Company offers

merchandise that

generally priced

below comparable

merchandise offered by department stores and mall specialty apparel chains,

but is generally more

fashionable than

merchandise offered

believes that

positioned itself as the every day low price leader in its market

Strip Shopping

Center Locations.

stores principally

in convenient

centers anchored by national

discounters or market-dominant grocery stores

positioned itself as the every day low price leader in its market segment.

centers anchored by

national discounters or

market-dominant grocery stores

that attract large

1 unchanged sentence

Customer Service.

Store managers and

sales associates are

trained to provide

prompt and courteous

Store managers

associates are

provide prompt

and courteous

service and to assist customers in merchandise selection and wardrobe

coordination.

and Layaway Programs

Layaway Programs

The Company offers

its own credit card

and a layaway plan

its own credit

layaway plan to

the purchase of its merchandise more convenient for its customers.

1 unchanged sentence

Merchandising

broad selection

exceptional value

accessories to suit the

various lifestyles of fashion and value-conscious customers.

In addition, the

value-conscious

Company strives to offer on-trend fashion in exciting colors with consistent fit and

1 unchanged sentence

include dressy, career,

and casual sportswear, dresses, coats,

lingerie, costume jewelry,

and casual sportswear, dresses,

coats, shoes,

lingerie, costume

handbags, men’s

wear and lines

offers exclusive merchandise

with fashion and

quality comparable to

mall specialty stores

at low prices,

Company primarily

offers exclusive

merchandise with

quality comparable

specialty stores

The Company believes that the collaboration of its merchandising and design teams with an expanded

in-house product

delivers quality,

exclusive on-trend

lower prices.

development and

direct sourcing

enhanced merchandise

offerings and

delivers quality,

exclusive on-trend styles

at lower prices.

The product development

and direct sourcing

operations provide research on

emerging fashion and

color trends, technical

services and direct

of its merchandising

strategy, members

of the Company’s

merchandising and design

frequently attend trade shows to stay abreast of latest trends and styles, visit selected stores to monitor the

operations provide

emerging fashion

trends, technical

direct sourcing

its merchandising

the Company’s

merchandising and

visit selected

merchandise offerings

2 unchanged sentences

store operations

associates and

frequently confer

aggressive markdowns

merchandise and typically does not carry over merchandise to the next season.

associates and frequently

Purchasing, Allocation and Distribution

Although the Company purchases

merchandise from approximately 540 suppliers,

merchandise is purchased

from approximately 100

approximately

merchandise is

purchased from

approximately 100

primary vendors.

purchases from the

Company’s largest

vendor accounted

for approximately

the Company’s

total purchases.

Company is not

dependent on its

largest vendor or

any other vendor

for merchandise purchases,

purchases from

approximately

not dependent

largest vendor

for merchandise

purchases, and

loss of any single vendor or group of

vendors would not have a material adverse effect on the

vendors would not have a material adverse effect on

the Company’s

operating results or financial condition.

A substantial portion of the Company’s merchandise is sold under

accordance with the

Company’s strict

specifications.

The Company sources a majority of its merchandise

directly from manufacturers overseas,

The Company sources a majority of its

merchandise directly from manufacturers overseas,

Southeast Asia.

These manufacturers

dependence on

materials that

are primarily

are dependent

primarily sourced

Company purchases

its remaining

merchandise from

remaining merchandise

domestic importers

vendors, which typically minimizes the

time necessary to purchase

and obtain shipments;

vendors are dependent on materials primarily sourced from

The Company opened its

overseas sourcing operations in the fall

of 2014, replacing the Company’s

former sourcing agent in 2015.

significant portion

Company’s merchandise

red overseas,

Southeast Asia, the Company

does not expect

that any economic, political,

public health or

social unrest

adverse effect

Company’s ability

supplies of merchandise.

Company can give no

assurance that any changes

or disruptions

which typically

minimizes the

time necessary to

obtain shipments;

these vendors

sourcing operations in the fall of 2014, replacing the Company’s former sourcing agent in 2015.

Asia, the Company does

not expect that any

economic, political, public health

or social unrest in

merchandise supply

1 unchanged sentence

and adversely

Factors – Risks

Our Business –

Because we source a

significant portion of our

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

changes, disru

other problems affecting

Company’s merchandise

could materially

and adversely

Company’s business,

merchandise directly

and indirectly from overseas, we are subject to risks associated with international operations and risks that

results of operations and financial condition.”

the Company’s

the allocation

of merchandise

to individual

by merchandise

category, customer

merchandise control

system provides

current information

sales activity

merchandise style

Company’s stores.

Point-of-sale terminals

stores collect

Point-of-sale

transmit sales and inventory information to the Company’s central database, permitting timely response to

sales trends on a store-by-store basis.

All merchandise is shipped directly to the Company’s distribution center

in Charlotte, North Carolina,

inspected and then

allocated by the

merchandise distribution staff

for shipment to

merchandise from receipt at

the distribution center to

shipment to stores is

on-line system.

Shipments are

common carrier,

store receives

shipment per week.

The centralization of

the Company’s

distribution process also

subjects it to

the event of damage to or destruction of

its distribution facility or other disruptions affecting the

distribution center

of Charlotte,

North Carolina.

Risks Relating To

Our Information Te

chnology and Related

disruption or shutdown

centralized distribution center

or transportation network could

materially and adversely

All merchandise is shipped directly to the Company’s distribution

center in Charlotte, North Carolina,

the merchandise

distribution staff

to individual

of merchandise from

the distribution center

to shipment to

stores is controlled

The centralization

distribution process

also subjects

Risks Relating

Our Information

transportation

business and results of operations.”

uses television,

in-store signage,

Company website,

primary advertising

The Company’s

total advertising

expenditures were

approximately

1 unchanged sentence

Store Operations

The Company’s store

operations management team consists of

The Company’s

store operations management team

three territorial managers, 12

managers and 109 district managers.

managers receive a salary plus a bonus based

Regional managers receive

a salary plus a bonus based

targeted goals

shrinkage control.

managers receive a

achieving targeted

District managers

objectives for

district sales

increases and

shrinkage control.

typically staffed with

a manager, two

assistant managers and additional

part-time sales associates

seasonal personnel

are typically

two assistant

personnel needs.

store managers

salary or on an hourly

basis as are all other

store personnel.

Store managers, assistant managers and

associates are eligible

for monthly and

semi-annual bonuses based

on achieving targeted

goals for their

respective store’s sales increases and shrinkage control.

annual bonuses based on achieving targeted goals for their respective store’s sales increases.

Store Locations

Company’s stores

are located in

the southeastern United

variety of markets

metropolitan areas

Stores average approximately 4,500 square feet in size.

All of the Company’s

stores are leased.

Approximately 93%

are located in strip shopping

7% in enclosed shopping

The Company typically locates

stores in strip shopping centers

by a national discounter,

primarily Walmart

Supercenters, or market-dominant grocery stores.

Company’s stores

Approximately 93% are

located in strip shopping

7% in enclosed

shopping malls.

Company typically locates stores

in strip shopping

centers anchored

Supercenters,

market-dominant

Company’s strip center locations provide ample parking and shopping convenience for its customers.

The Company’s

store development

activities consist

markets, relocating

selected existing

more desirable

closing underperforming stores.

The following table sets forth information with respect

to the Company’s

The following table sets forth information

with respect to the Company’s

development activities since fiscal 2017:

7 unchanged sentences

2021………….………...….……...…….

The Company periodically reviews

its store base to

determine whether any particular

The Company periodically

reviews its store

base to determine

whether any particular

store should be

closed based on its sales trends

and profitability.

Company intends to continue this review process

closed based on its sales

trends and profitability.

The Company intends to continue this

review process to

identify underperforming stores.

1 unchanged sentence

Credit Card Program

The Company offers its own credit card, which accounted for 2.7%, 3.3% and 3.3% of

retail sales in

The Company offers its own credit card, which accounted for 2.5%, 2.7% and 3.3% of retail

fiscal 2021, 2020 and 2019, respectively.

3 unchanged sentences

they have a satisfactory

credit record

considered the

customer’s ability

Customers are required to

make minimum monthly payments based

on their account balances.

finance charge.

Customers are required

to make minimum

monthly payments based

on their account

payments are not received on time, the customer is assessed a late

fee subject to regulatory limits.

Company’s layaway

plan, merchandise

customers who

periodic payments.

nonrefundable administrative

payment is made within four weeks, the

customer is considered to have defaulted, and the

merchandise is

returned to the

selling floor and

again offered

for sale, often

reduced price.

payments made by

customer points based on their purchases of

merchandise using the Company’s proprietary

points accumulated by

the customer.

The rewards card

expires 90 days

after the rewards

program impact

is immaterial

2021 financial

with Customers (Topic 606)

nonrefundable

administrative

payment is made within four weeks,

the customer is considered to have

defaulted, and the merchandise is

selling floor

payments made

customers who subsequently default on their layaway purchase are returned to the customer upon request,

1 unchanged sentence

The Company defers recognition of layaway sales to the accounting period when the customer picks

completely pays for

layaway merchandise.

Administrative fees are

recognized in

which the layaway is

Recognition of restocking fees

occurs in the

accounting period when the

customer defaults

layaway purchase.

Layaway sales

represented approximately 2.8%,

completely pays

Administrative fees

Recognition of

restocking fees occurs

accounting period

approximately

4.1% of retail sales in fiscal 2021, 2020 and 2019, respectively.

Information Technology Systems

The Company’s

information technology

systems provide

daily financial

and merchandising

information that

by management to

timeliness and effectiveness

of purchasing and

pricing decisions.

Management uses

report comparing

weekly ranking

control purchasing

also produced

which reflect sales,

weeks of supply

of inventory and

other critical data

by product categories,

and by various levels of responsibility reporting.

Purchases are made based on projected sales,

merchandising

management to

effectiveness

purchasing and

which reflect

inventory and

other critical

product categories,

and by various levels of

responsibility reporting.

Purchases are made based

on projected sales, but can

modified to accommodate unexpected increases or decreases in demand

for a particular item.

Sales information is

projected by merchandise

category and, in

some cases, is

further projected and

actual performance

measured by stock

Merchandise allocation

distribute merchandise to individual

stores based upon historical

sales trends, climatic differences,

Sales information

by merchandise

category and,

further projected

performance measured

customer demographic differences and targeted inventory turnover rates.

retail apparel industry

is highly competitive.

The Company believes

that the principal

competitive factors in

its industry include

merchandise assortment and

presentation, fashion, price,

customer service.

Company competes with

retail chains

similar women’s

retail apparel

highly competitive.

believes that

the principal

competitive factors

industry include

merchandise assortment

and presentation,

fashion, price,

Company competes

operate similar

apparel specialty stores.

In addition, the Company competes with mass

merchandise chains, discount store

chains, major department

stores, off-price retailers

and internet-based retailers.

Although we believe

compete favorably with

respect to the

principal competitive factors

described above, many

of our direct

competitors are

well-established national,

local chains,

substantially greater financial,

marketing and other

The Company expects

its stores in

In addition, the Company competes with

mass merchandise chains, discount store

chains, major

department stores, off

-price retailers

and internet-based

compete favorably

principal competitive

factors described

well-established

substantially greater

financial, marketing

cities and metropolitan areas to face more intense competition.

business, the

historically experienced

expects to continue to experience

seasonal fluctuations in its revenues,

operating income and net income.

period shorter than

indicative of results

expected for the

Furthermore, the seasonal nature

of our business

may affect comparisons

between periods.

Consolidated Financial

Statements for

information regarding

our quarterly

operations for the last two fiscal years.

The Company’s

operations subject

local, state,

international laws and

regulations in a

variety of areas,

including but not

limited to, trade,

licensing and

permit requirements,

export matters,

data protection,

credit regulation,

environmental matters,

recordkeeping and

information management,

tariffs, taxes,

intellectual property

expects to continue to

experience seasonal fluctuations in its

revenues, operating income and net

indicative of

results expected

Furthermore, the seasonal nature of our business may affect comparisons between

international laws

and regulations

areas, including

trade, licensing

requirements,

environmental

recordkeeping

and anti-corruption.

Though compliance with these laws and

regulations has not had a

Though compliance with these

laws and regulations has

material effect on

the capital expenditures, results

of operations or competitive

position of the Company

in fiscal 2020,

Company faces ongoing

risks related

these laws and

regulations and

noncompliance, as

discussed generally

below throughout

Factors” section

particular under

“Risk Factors – Risks Relating to Accounting and

Legal Matters

– Our business

operations subject

legal compliance

and litigation

regulations and

enforcement priorities,

which could result

in increased costs

or liabilities, divert our management’s

expenditures, results of

operations or competitive

position of the

fiscal 2021, the

Company faces

noncompliance,

attention or otherwise adversely affect our business, results of operations and financial condition.”

Human Capital

As of January 30,

2021, the Company employed approximately

7,400 full-time and part-time

The Company also

employs additional part

-time associates during

the peak retailing

The Company’s full-time team

associates are engaged in various

executive, operating, and administrative

functions in the

Home Office and

distribution center and

the remainder are

engaged in store

The Company is not

a party to any

collective bargaining agreements and

considers its associate relations

Company offers

its associates

medical and dental

plans, paid vacation,

a 401(k) plan,

Employee Stock Purchase

Plan, Employee Stock

Ownership Plan, disability insurance, associate assistance programs, life insurance

and an associate

eligibility vary

the associate’s

promotes diversity,

opportunities for

advancement, and

associates with

constantly strives

develop associates.

management are

promoted from

within, allowing

to internally

Company has training

programs at each

level of store

also performs ongoing

reviews of its safety protocols,

including extensive efforts undertaken during the

COVID-19 pandemic to

ensure the health and safety of

its associates by performing frequent cleanings, ensuring

social distancing

and providing masks for all of its stores.

approximately

employs additional

part-time associates

peak retailing

The Company’s

full-time team associates are

engaged in various executive, operating,

and administrative

and distribution

the remainder

The Company is

collective bargaining agreements

and considers its

associate relations

dental plans,

paid vacation,

plan, Employee

Stock Purchase

Plan, Employee

promote diversity,

opportunities

Company constantly

management are promoted from

within, allowing the

Company to internally

social distancing and providing masks for all of its stores.

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 1. Business