Cato Corp. extending store closuresApr 07, 2020 10:44AM ● By David Dykes
The Charlotte-based Cato Corporation (NYSE: CATO) said it will extend the closure of all brick and mortar stores until further notice.
Company management will continue to assess the situation, market by market, as additional guidance is issued from U.S. and local governments, as well as the Centers for Disease Control, as they develops their plan to reopen stores at a future date, Cato officials said.
"We are taking decisive actions in the face of the uncertainties around the length and severity of the pandemic and its potential impact to the Company," said John Cato, chairman, president and chief executive officer. "It is a difficult decision to extend our store closures, but we are committed to protecting our customers, associates and communities we serve. However, during this closure we will continue to serve our customers through our e-commerce sites catofashions.com and shopversona.com."
As a result of the extended store closure, coupled with the North Carolina's "Stay-at-Home" executive order impacting the home office, Cato has temporarily furloughed its store associates, a majority of distribution center associates, as well as additional corporate associates, whose work has been significantly reduced by the store closures, company officials said. Those impacted will continue to receive enrolled benefits, company officials said.
They said that as part of the business response to COVID-19, the company has taken the following actions to protect its financial position:
- Temporarily discontinued monthly sales releases, until further notice
- Temporarily suspended the quarterly dividend
- Suspended hiring and eliminated all merit raises for 2020
- Drawn down $30 million from the company's $35 million line of credit to protect cash reserves
- Significantly decreased capital expenditures
- Delayed or cancelled some planned new store openings
- Continue to review non-payroll expenses across the business
- Managing inventory by aggressively cancelling and/or delaying merchandise to better align with anticipated sales
- Evaluating extending payment terms for vendor invoices and suspending rent payments
- Temporarily reduced CEO salary by 50 percent
- Temporarily reduced board fees by 50 percent
- Temporarily reducing other associates salaries by 25 percent but not below $55,000.
"Given the extraordinary circumstances we are facing today we must operate with great care and discipline," Cato said. "We have taken difficult steps to safeguard the health of our company, looking forward to the day we can reopen our stores, welcoming back our associates and again serving our customers and the communities in which we are located."