The Cato Corporation will shut about 120 stores before the end of its fourth quarter after second-quarter net income fell to $1.1 million, down from $6.8 million a year earlier. The 80-year-old off-price fashion chain added 70 closures to a prior list, reaching about 15% of its retail base.
Sales for the quarter came to $163.9 million, a 6% decrease from $174.7 million in the period ended Aug. 2, 2025. The drop was driven mainly by a 3.7% same-store sales decline against the prior year.
CEO John Cato tied the results to household budgets. “Our results in the quarter are in large part due to the continued pressure on our customers’ discretionary income, which is being negatively impacted in part by persistent inflation, higher fuel prices and continued elevated interest rates,” he said in the earnings release. He expects the back half of 2026 to remain challenging.
Cato reviews about a third of its retail base each year to decide whether to renew or extend leases based on each store’s sales trends and profitability. In prior years, marginal stores were often renewed for an additional year, but the company no longer expects those locations to improve materially given current conditions.
Ross and TJX reported higher sales. Ross Dress for Less posted a 13% sales increase for the second quarter of fiscal 2026, with comparable store sales up 10%, led by customer traffic. TJX’s Marshalls and TJ Maxx reported a 1% same-store sales rise and a 3% gain in overall sales.
Morningstar analysts believe Ross operates roughly 2,200 stores and holds about 30% market share as the second-largest off-price retailer in the U.S., while Cato ran more than 800 stores before the planned closures.