The Cato Corporation 10K 2023 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

10-K

☑

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended

February 3, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number

1-31340

The Cato Corporation

Registrant

Delaware

56-0484485

State of Incorporation

I.R.S. Employer Identification Number

8100 Denmark Road

Charlotte

North Carolina

28273-5975

Address of Principal Executive Offices

704

554-8510

Registrant’s Telephone

Number

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A - Common Stock, par value $.033 per share

CATO

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☐

☑

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes

☐

☑

Indicate by check mark whether the Registrant (1) has

filed all reports required to be filed

by Section 13 or 15(d) of the Securities Exchange

Act of

1934 during

the preceding

12 months (or

for such

shorter period

that the

Registrant was

required to

file such

reports), and

(2) has been

subject to

such filing requirements for the past 90 days.

Yes

☑

☐

Indicate by

check mark

whether the

registrant has

submitted electronically

every Interactive

Data File

required to

be submitted

pursuant to

Rule

405

Regulation

S-T

(§

232.405 of

this

chapter) during

the preceding

months

(or

for

such

shorter period

that

the

registrant was

required

submit such files). Yes

☑

☐

Indicate by check mark

whether the registrant is

a large accelerated

filer, an accelerated

filer, a non

-accelerated filer, a

smaller reporting company,

or an

emerging growth

company.

See the

definitions of

“large accelerated

filer,”

“accelerated filer,”

“smaller reporting

company” and

“emerging

growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Emerging Growth Company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

use

the

extended

transition

period

for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate

check

mark

whether

the

registrant

has

filed

report

and

attestation

its

management’s

assessment

the

effectiveness

its

internal control

over financial

reporting

under Section

404(b) of

the Sarbanes-Oxley

Act (15

U.S.C. 7262(b))

by the

registered public

accounting

firm that prepared or issued its audit report.

☑

If securities are registered

pursuant to Section

12(b) of the

Act, indicate by check

mark whether the

financial statements of

the registrant included

in the filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check

mark whether any

of those error

corrections are restatements

that required a

recovery analysis of incentive-based

compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes

☐

☑

The aggregate market value of the Registrant’s Class A Common Stock held by non-affiliates of the Registrant as of July 29, 2023, the last business

day of the Company’s most recent second quarter, was $

146,852,671

based on the last reported sale price per share on the New York Stock Exchange

on that date.

As of February 3, 2024, there were

18,802,742

shares of Class A common stock and

1,763,652

shares of Class B common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement relating to the 2024 annual meeting of shareholders are incorporated by reference into Part III.

THE CATO CORPORATION

FORM 10-K

TABLE OF CONTENTS

Page

PART

Item 1.

Business

..........................................................................................................................

5 – 10

Item 1A.

Risk Factors

....................................................................................................................

10 – 22

Item 1B.

Unresolved Staff Comments

...........................................................................................

Item 1C.

Cybersecurity

..................................................................................................................

Item 2.

Properties

........................................................................................................................

Item 3.

Legal Proceedings

...........................................................................................................

Item 3A.

Executive Officers of the Registrant

...............................................................................

Item 4.

Mine Safety Disclosures

.................................................................................................

PART

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

........................................................................................

26 – 28

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results

of Operations ..................................................................................................................

29 – 35

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

........................................

Item 8.

Financial Statements and Supplementary Data ..............................................................

36 – 66

Item 9.

Changes in and Disagreements with Accountants on Accounting

and Financial

Disclosure

.......................................................................................................................

Item 9A.

Controls and Procedures

.................................................................................................

Item 9B.

Other Information

...........................................................................................................

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

............................

PART

III

Item 10.

Directors, Executive Officers and Corporate Governance .............................................

Item 11.

Executive Compensation

................................................................................................

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

........................................................................................................

Item 13.

Certain Relationships and Related Transactions, and Director Independence

...............

Item 14.

Principal Accountant Fees and Services

.........................................................................

PART

Item 15.

Exhibits and Financial Statement Schedules

..................................................................

Item 16.

Form 10-K Summary ………………………………………………………………….

Forward-looking Information

The

following

information

should

read

along

with

the

Consolidated

Financial

Statements,

including the

accompanying Notes

appearing in

this report.

Any of

the following

are “forward-looking”

statements within the meaning of Section 27A of the Securities Act of 1933, as amended,

and Section 21E

of the Securities Exchange Act of 1934, as amended: (1) statements in this Form 10-K and any documents

incorporated

reference

that

reflect

projections

expectations

our

future

financial

economic

performance;

(2) statements

that

are

not

historical information;

(3) statements

our

beliefs,

intentions,

plans

and

objectives for

future operations,

including those

contained in

“Management’s

Discussion and

Analysis of

Financial Condition

and Results

Operations”; (4) statements

relating to

our operations

activities for our fiscal year ended February 3, 2024 (“fiscal 2023”) and beyond, including,

but not limited

to,

statements

regarding

expected

amounts

capital

expenditures

and

store

openings,

relocations,

remodels and closures,

statements regarding the

potential impact of

the COVID-19 pandemic and

responses

and

mitigation

efforts,

well

the

potential

impact

supply

chain

disruptions,

extreme

weather

conditions,

inflationary

pressures

and

other

economic

conditions

our

business,

results

operations

and

financial

condition

and

statements

regarding

new

store

development

strategy;

and

(5) statements relating to our future contingencies. When possible, we have attempted to identify forward-

looking statements

by using

words

such

“will,” “expects,”

“anticipates,” “approximates,”

“believes,”

“estimates,”

“hopes,”

“intends,”

“may,”

“plans,”

“could,”

“would,”

“should”

and

any

variations

negative formations

of such

words and

similar expressions.

can give

no assurance

that actual

results

events

will

not

differ

materially

from

those

expressed

implied

any

such

forward-looking

statements. Forward-looking statements included in this report are based on information available to us as

of the

filing date

of this

report, but

subject to

known and

unknown risks,

uncertainties and

other factors

that

could

cause

actual

results

differ

materially

from

those

contemplated

the

forward-looking

statements.

Such

factors

include,

but

are

not

limited

to,

the

following:

any

actual

perceived

deterioration in the conditions that drive consumer confidence and spending, including, but not limited to,

prevailing

social,

economic,

political

and

public

health

conditions

and

uncertainties,

levels

unemployment, fuel,

energy

and

food

costs, inflation,

wage rates,

tax

rates, interest

rates, home

values,

consumer

net

worth

and

the

availability

credit;

changes

laws,

regulations

government

policies

affecting

our

business,

including

but

not

limited

tariffs;

uncertainties

regarding

the

impact

any

governmental action regarding, or

responses to, the

foregoing conditions; competitive factors

and pricing

pressures; our

ability to

predict and

respond to

rapidly changing

fashion trends

and consumer

demands;

our ability to

successfully implement our

new store development

strategy to increase

new store openings

and our

ability of

any such

new stores

to grow

and perform

as expected;

adverse weather,

public health

threats

(including

the

global

COVID-19

pandemic)

similar

conditions

that

may

affect

our

sales

operations;

inventory

risks

due

shifts

market

demand,

including

the

ability

liquidate

excess

inventory

anticipated

margins;

adverse

developments

volatility

affecting

the

financial

services

industry or broader financial markets; and

other factors discussed under “Risk Factors”

in Part I, Item 1A

of this annual report on Form 10-K for the fiscal year ended February 3, 2024 (“fiscal 2023”), as amended

or supplemented, and in

other reports we file

with or furnish to

the Securities and Exchange

Commission

(“SEC”)

from

time

time.

not

undertake, and

expressly

decline,

any

obligation

update

any

such forward-looking information contained

in this report,

whether as a

result of new

information, future

events, or otherwise.

As used herein,

the terms “we,”

“our,”

“us,” the “Company”

or “Cato”

include The Cato

Corporation

and

its

subsidiaries,

unless

the

context

indicates

another

meaning

and

except

that

when

used

with

reference

common

stock

other

securities

described

herein

and

describing

the

positions

held

management of

the Company,

such terms

include only

The Cato

Corporation.

Our website

is located

www.catofashions.com

where

make

available,

free

charge,

our

annual

reports

Form 10-K,

quarterly

reports

Form 10-Q,

current

reports

Form 8-K,

proxy

statements

and

other

reports

(including amendments

these

reports) filed

furnished

pursuant to

Section 13(a) or

15(d)

under

the

Securities Exchange

Act of

1934. These

reports are

available as

soon as

reasonably practicable

after we

electronically file

these

materials with

the

SEC. We

also post

on our

website the

charters of

our

Audit,

Compensation

and

Corporate

Governance

and

Nominating

Committees;

our

Corporate

Governance

Guidelines; Code of Business Conduct and Ethics and

Code of Ethics for the

Principal Executive Officer,

Principal Financial Officer

and Principal Accounting

Officer and

any amendments or

waivers thereto for

any of our directors or executive officers; and any other publicly available corporate governance materials

contemplated

SEC

New

York

Stock

Exchange

regulations.

The

information

contained

our

website, www.catofashions.com,

is not,

and should in

no way be

construed as, a

part of this

or any other

report that we filed with or furnished to the SEC.

PART

Item 1.

Business:

Background

The

Company,

founded

1946,

operated

1,178

fashion

specialty

stores

February

2024,

states,

principally

the

southeastern

United

States,

under

the

names

“Cato,”

“Cato

Fashions,”

“Cato

Plus,”

“It’s

Fashion,”

“It’s

Fashion

Metro”

and

“Versona.”

The

Cato

concept

seeks

offer

quality

fashion

apparel

and

accessories

low

prices

every

day,

junior/missy

and

plus

sizes.

The

Cato

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

dressy,

career,

and

casual

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

accordance

with

the

concept’s

specifications.

The

It’s

Fashion

and

It’s

Fashion

Metro

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

The

Versona

concept’s

stores

and

e-commerce website

offer

quality fashion

apparel items,

jewelry

and

accessories at

exceptional values

every day.

The

Company’s

stores

range in

size from

2,400 to

19,000

square

feet

and

are

located

primarily

strip

shopping

centers

anchored

national

discounters

market-dominant

grocery

stores.

The

Company

emphasizes

friendly

customer

service

and

coordinated

merchandise

presentations

appealing

store

environment.

The

Company

offers

its

own

credit

card

and layaway

plan. Credit

and layaway

sales under

the Company’s

plan represented

6% of

retail sales

fiscal

2023.

See

Note

the

Consolidated Financial

Statements, “Reportable

Segment

Information,”

for a discussion of information regarding the Company’s two reportable segments: Retail and Credit.

The

Company

has

operated

Cato-branded

retail

stores

for

approximately

years.

The

Company

originated as a family-owned business and

made its first initial public offering

of stock in 1968.

In 1980,

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

offering.

Business Strategy

The Company’s

primary objective

is to

be the

leading fashion

specialty retailer

for fashion

and value

in its

markets. Management believes the

Company’s success

is dependent upon

its ability to

differentiate

its stores

from department

stores, mass

merchandise discount

stores and

competing specialty

stores. The

key elements of the Company’s business strategy are:

Merchandise

Assortment.

The

Company’s

stores

offer

wide

assortment

on-trend

apparel

and

accessory items in primarily junior/missy,

plus sizes, men and kids sizes, toddler to

boys size 20 and girls

size 16 with

an emphasis on color,

product coordination and selection.

Colors and styles are

coordinated

and presented so that outfit selection is easily made.

Value

Pricing.

The

Company offers

quality

merchandise that

generally priced

below comparable

merchandise

offered

department

stores

and

mall

specialty

apparel

chains,

but

generally

fashionable

than

merchandise

offered

discount

stores.

Management

believes

that

the

Company

has

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

segment.

Strip

Shopping

Center

Locations.

The

Company

locates

its

stores

principally

convenient

strip

centers anchored by

national discounters or

market-dominant grocery stores

that attract large

numbers of

potential customers.

Customer Service.

Store managers

and sales

associates are

trained

provide prompt

and courteous

service and to assist customers in merchandise selection and wardrobe

coordination.

Credit and

Layaway Programs

The Company offers

its own credit

card and a

layaway plan to

make

the purchase of its merchandise more convenient for its customers.

Merchandising

The

Company

seeks

offer

broad

selection

high

quality

and

exceptional

value

apparel

and

accessories

suit

the

various

lifestyles

fashion

and

value-conscious

customers.

addition,

the

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

quality.

The Company’s merchandise lines

include dressy, career,

and casual sportswear, dresses,

coats, shoes,

lingerie, costume

jewelry,

handbags, men’s

wear and

lines for

kids and

infants. The

Company primarily

offers exclusive

merchandise with

fashion and

quality comparable

to mall

specialty stores

at low

prices,

every day.

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

in-house

product

development

and

direct

sourcing

function

has

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 sourcing

options.

As a

part of

its merchandising

strategy,

members of

the Company’s

merchandising and

design staff

visit selected

stores to

monitor the

merchandise offerings

of other

retailers, regularly

communicate with

store operations

associates and frequently

confer with

key vendors.

The Company

also takes

aggressive

markdowns

slow-selling

merchandise

and

typically

does

not

carry

over

merchandise

the

season.

Purchasing, Allocation and Distribution

Although

the

Company

purchases

merchandise

from

approximately

600

suppliers,

most

its

merchandise is

purchased from

approximately 100

primary vendors.

fiscal

2023,

purchases from

the

Company’s

largest

vendor

accounted

for

approximately

13%

the

Company’s

total

purchases.

The

Company is

not dependent

on its

largest vendor

or any

other vendor

for merchandise

purchases, and

the

loss of any single vendor or group of

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

its

private

labels

and

produced

various

vendors

accordance

with

the

Company’s

strict

specifications. The Company sources a majority of its

merchandise directly from manufacturers overseas,

primarily in

Southeast Asia.

These manufacturers

are dependent

on materials

that are

primarily sourced

from

China. The

Company purchases

its

remaining merchandise

from

domestic importers

and

vendors,

which typically

minimizes the

time necessary to

purchase and

obtain shipments; however,

these vendors

are

dependent

materials

primarily

sourced

from

China.

The

Company

opened

its

own

overseas

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

significant

portion

the

Company’s

merchandise

manufactured

overseas,

primarily

Southeast

Asia, the Company does

not expect that any

economic, political, public health or

social unrest in any

one

country

would

have

material

adverse

effect

the

Company’s

ability

obtain

adequate

supplies

merchandise.

However,

the

Company

can

give

assurance

that

any

changes

disruptions

its

merchandise supply

chain would

not materially

and adversely

affect the

Company.

See “Risk

Factors –

Risks Relating to Our Business – Because we source a significant portion of our merchandise directly and

indirectly from overseas,

we are

subject to risks

associated with changes,

disruptions, increased costs

other problems

affecting the

Company’s

merchandise supply

chain; the

risks of

conducting international

operations

and

risks

that

affect

the

prevailing

social,

economic,

political,

public

health

and

other

conditions

the

areas

from

which

source

merchandise

have

and

could

continue

materially

and

adversely affect the Company’s business, results of operations and financial condition.”

important

component

the

Company’s

strategy

the

allocation

merchandise

individual

stores

based

analysis

sales

trends

merchandise

category,

customer

profiles

and

climatic

conditions.

merchandise

control

system

provides

current

information

the

sales

activity

each

merchandise

style

each

the

Company’s

stores.

Point-of-sale

terminals

the

stores

collect

and

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,

where it

is inspected

and then

allocated by

the merchandise

distribution staff

for shipment

to individual

stores. The flow

of merchandise from

receipt at

the distribution center

to shipment to

stores is controlled

online

system.

Shipments

are

made

common

carrier,

and

each

store

receives

least

one

shipment per

week.

The centralization

of the

Company’s

distribution process

also subjects

it to

risks in

the

event

damage

destruction

its

distribution

facility

other

disruptions

affecting

the

distribution

center

the

flow

goods

into

out

Charlotte,

North

Carolina.

See

“Risk

Factors

–

Risks

Relating

Our

Information

Technology,

Systems

and

Cybersecurity

–

disruption

shutdown of

our centralized

distribution center

or transportation

network could

materially and

adversely

affect our business and results of operations.”

Advertising

The

Company

uses

television,

in-store

signage,

graphics,

Company

website,

two

e-commerce

websites

and

social

media

its

primary

advertising

media.

The

Company’s

total

advertising

expenditures

were

approximately

1.0%,

1.0%

and

0.9%

retail

sales

for

fiscal

years

2023,

2022

and

2021, respectively.

Store Operations

The Company’s

store operations

management team

consists of

four territorial

managers, 11

regional

managers and 104 district managers. Regional managers receive

a salary plus a bonus based

on achieving

targeted goals

for sales

and payroll.

District managers

receive a

salary plus

a bonus

based on

achieving

targeted

objectives for

district sales

increases. Stores

are typically

staffed

with a

manager,

two assistant

managers

and

additional

part-time

sales

associates

depending

the

size

the

store

and

seasonal

personnel needs.

In general,

store managers

are paid

a salary

or on

an hourly

basis as

are all

other store

personnel.

Store

managers,

assistant

managers

and

sales

associates

are

eligible

for

monthly

and

semi-

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

Store Locations

Most

the

Company’s

stores

are

located

the

southeastern

United

States in

variety of

markets

ranging

from

small

towns

large

metropolitan

areas

with

trade

area

populations

20,000

more.

Stores average approximately 4,500 square feet in size.

All of the

Company’s stores

are leased. Approximately 93% are

located in strip shopping

centers and

7% in enclosed

shopping malls. The

Company typically locates stores

in strip shopping

centers anchored

national

discounter,

primarily

Walmart

Supercenters,

market-dominant

grocery

stores.

The

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

The

Company’s

store

development

activities

consist

opening

new

stores

new

and

existing

markets,

relocating

selected

existing

stores

desirable

locations

the

same

market

area

and

closing underperforming stores. The following table sets forth information

with respect to the Company’s

development activities since fiscal 2019:

Store Development

Number of Stores

Beginning of

Number

Number of Stores

Fiscal Year

Year

Opened

Closed

End of Year

2019………………….……...………….

1,311

1,281

2020………………….……...………….

1,281

1,330

2021……………………….……...…….

1,330

1,311

2022…………....………….……...…….

1,311

1,280

2023………….………...….……...…….

1,280

111

1,178

The Company periodically

reviews its store

base to determine

whether any particular

store should be

closed based on its sales

trends and profitability.

The Company intends to continue this

review process to

identify underperforming stores.

Credit and Layaway

Credit Card Program

The Company offers its own credit card, which accounted for 3.4%, 3.1% and 2.5% of

retail sales in

fiscal 2023, 2022 and 2021, respectively. The Company’s net bad debt expense was 3.6%, 2.0% and 3.0%

of credit sales in fiscal 2023, 2022 and 2021, respectively.

Customers applying for the Company’s credit card are approved for credit if

they have a satisfactory

credit

record

and

the

Company

has

considered

the

customer’s

ability

make

the

required

minimum

payment.

Customers are required

to make minimum

monthly payments based

on their account

balances.

the

balance

not

paid

full

each

month,

the

Company

assesses

the

customer

finance

charge.

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

fee subject to regulatory limits.

The

Company

introduced

its

loyalty

program

October

2021.

The

loyalty

program

credits

the

customer points based on their purchases of

merchandise using the Company’s proprietary

credit card.

point is earned for every dollar spent on merchandise purchases.

$5.00 rewards card is earned for every

250

points

accumulated

the

customer.

The

rewards

card

expires

days

after

the

rewards

card

issued.

The fiscal 2023 loyalty program impact is immaterial to the fiscal 2023 financial statements.

The

loyalty

program

accounted

for

accordance

with

ASU

2014-09,

Revenue

from

Contracts

with

Customers (Topic 606)

Layaway Plan

Under

the

Company’s

layaway

plan,

merchandise

set

aside

for

customers

who

agree

make

periodic

payments.

The

Company adds

nonrefundable

administrative

fee

each

layaway

sale.

payment is made within four weeks,

the customer is considered to have

defaulted, and the merchandise is

returned

the

selling floor

and again

offered

for

sale, often

a reduced

price. All

payments made

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

less the administrative fee and a restocking fee.

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

and

completely pays

for

layaway

merchandise.

Administrative fees

are

recognized

the

period

which the

layaway is

initiated.

Recognition of

restocking fees occurs

in the

accounting period

when the

customer

defaults

the

layaway

purchase.

Layaway

sales

represented

approximately

3.0%,

2.7%

and

2.7% of retail sales in fiscal 2023, 2022 and 2021, respectively.

Information Technology Systems

The

Company’s

information

technology

systems

provide

daily

financial

and

merchandising

information

that

used

management to

enhance

the

timeliness

and

effectiveness

purchasing and

pricing

decisions.

Management

uses

daily

report

comparing

actual

sales

with

planned

sales

and

weekly

ranking

report

monitor

and

control

purchasing

decisions.

Weekly

reports

are

also

produced

which reflect

sales, weeks

supply of

inventory and

other critical

data by

product categories,

by store

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,

some cases,

further projected

and

actual

performance measured

stock

keeping

unit

(SKU).

Merchandise

allocation

models

are

used

distribute

merchandise

individual

stores

based

upon

historical

sales

trends,

climatic

conditions,

customer demographics and targeted inventory turnover rates.

Competition

The women’s

retail apparel

industry is

highly competitive.

The Company

believes that

the principal

competitive factors

in its

industry include

merchandise assortment

and presentation,

fashion, price,

store

location

and

customer

service. The

Company competes

with

retail

chains that

operate similar

women’s

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 we

compete favorably

with respect

to the

principal competitive

factors described

above, many

of our

direct

and

indirect

competitors

are

well-established

national,

regional

local

chains,

and

some

have

substantially greater

financial, marketing

and other

resources.

The Company

expects its

stores in

larger

cities and metropolitan areas to face more intense competition.

Seasonality

Due

the

seasonal

nature

the

retail

business,

the

Company

has

historically

experienced

and

expects to continue to

experience seasonal fluctuations in its

revenues, operating income and net

income.

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.

Results of a

period shorter than a

full year

may

not

indicative

results

expected

for

the

entire

year.

Furthermore,

the

seasonal

nature

our

business may affect comparisons between periods.

Regulation

The

Company’s

business

and

operations

subject

wide

range

local,

state,

national

and

international laws

and regulations

in a

variety of

areas, including

but not

limited to,

trade, licensing

and

permit

requirements,

import

and

export

matters,

privacy

and

data

protection,

credit

regulation,

environmental

matters,

recordkeeping

and

information

management,

tariffs,

taxes,

intellectual

property

and anti-corruption.

Though compliance with these

laws and regulations has

not had a

material effect on

our capital

expenditures, results

of operations

or competitive

position in

fiscal 2023,

the Company

faces

ongoing

risks

its

efforts

comply

with

these

laws

and

regulations

and

risks

noncompliance,

discussed

generally

below

throughout

the

“Risk

Factors”

section

and

particular

under

“Risk Factors – Risks Relating to Accounting and Legal Matters –

Our business operations subject

legal

compliance and

litigation

risks, as

well as

regulations and

regulatory enforcement

priorities,

which

could

result

increased

costs

liabilities,

divert

our

management’s

attention

otherwise

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

Human Capital

February

2024,

the

Company

employed

approximately

7,300

full-time

and

part-time

associates. The

Company also

employs additional

part-time associates

during the

peak retailing

seasons.

The

Company’s

full-time

associates

are

engaged

various

executive,

operating,

and

administrative

functions in

the Home

Office

and distribution

center and

the remainder

are engaged

in store

operations.

The Company is

not a party

to any

collective bargaining agreements

and considers its

associate relations

good.

The

Company

offers

broad

range

Company-paid

benefits

its

associates

including

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

associate

discount.

The

level

benefits

and

eligibility

vary

depending

the

associate’s

full-time

part-time

status, date

of hire,

length of

service and

level of

pay.

The Company

endeavors to

promote diversity,

provide

opportunities

for

advancement,

and

treat

all

its

associates

with

dignity

and

respect.

The

Company constantly

strives

improve

its

training

programs

develop

associates.

Over

80%

store

and field

management are promoted from

within, allowing the

Company to internally

staff its

store base.

The

Company

has

training

programs

each

level

store

operations.

The

Company

also

performs

ongoing

reviews

its

safety

protocols,

including

measures

promote

the

health

and

safety

its

associates.

Item 1A.

Risk Factors:

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

You

should carefully consider

the

following

risk

factors,

addition

the

other

information

contained

this

report,

including

the

disclosures

under

“Forward-looking

Information”

above

evaluating

our

Company

and

any

potential

investment

our

common

stock.

any

the

following

risks

uncertainties

occur

persist,

our

business, financial condition and

operating results could

be materially and

adversely affected, the

trading

price

our

common

stock

could

decline

and

you

could

lose

all

part

your

investment

our

common

stock.

The

risks

and

uncertainties

described

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,

financial condition

and value

of our

common stock.

Risks Relating to Our Business:

Continued high interest rates and inflationary conditions have and

may continue to adversely

impact our customers’ discretionary income or willingness to purchase

discretionary items, which

may adversely affect our business, margins, results of operations and financial

condition.

Continued high interest rates have adversely affected our customers’ discretionary income, in part due

to increased

interest costs

associated with

credit accounts

including revolving

credit accounts,

car loans,

mortgage loans and other credit accounts.

In addition, the increased payments due to

higher interest rates

deter our

customers from

purchasing discretionary

items such

as apparel,

shoes and

jewelry.

Continued

inflationary pressures

limit our

customers’ willingness

to purchase

apparel, shoe

or jewelry

products, as

prices associated

with non-discretionary

items, including

food, fuel

and shelter

costs increase

or remain

high,

reducing

our

customers’

discretionary

income.

Any

reduction

our

customers’

discretionary

spending on our products could

erode our sales volume and

adversely affect our results

of operations and

financial condition.

Because we source a significant portion of our merchandise directly

and indirectly from overseas,

we are subject to risks associated with changes, disruptions, increased

costs or other problems

affecting the Company’s merchandise supply chain; the risks of conducting international

operations and risks that affect the prevailing social, economic, political, public health

and other

conditions in the areas from which we source merchandise have

and could continue to 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 Asia. We

are

subject

supply

chain

disruptions

affecting

transit

times

and

costs,

including

issues

sustained drought

in Panama

that is

causing longer

transit times

through the

Panama Canal

and limiting

the number of containers on a vessel due to vessel draft restrictions.

also face disruptions from issues

related to

vessels transiting the

Suez Canal and

Red Sea, which

are being forced

to travel

a much

longer

distance around the

Cape of Good

Hope due to

the hostilities in

the Middle East.

These continued issues

have and

may continue to

drive up our

ocean freight costs,

delay merchandise deliveries,

and impact our

ability to access the already limited supply of

ocean container shipping capacity that we require.

also

are

subject

domestic

supply

chain

disruptions,

including

lack

domestic

intermodal

transportation

(trucks

and

drivers),

domestic

port

congestion,

including

increased

dwell

times

for

incoming

container

ships, lack

of container

yard capacity

and lack

of available

drayage from

the ports

and other

conditions

that impact our domestic

supply chain.

These supply chain risks

have and may continue

to result in

both

higher costs to transport our merchandise and delayed merchandise arrivals to our stores, which adversely

affect our ability to sell this merchandise and increase markdowns of it.

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,

we are subject

to numerous risks

that

can cause significant delays or interruptions in the supply of our merchandise

or increase our costs.

These

risks

include

political

unrest,

labor

disputes,

terrorism,

war,

public

health

threats,

including

but

not

limited

communicable

diseases

(such

COVID-19),

financial

other

forms

instability

other

events

resulting in

the

disruption

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 or

responses to

these matters

or other

factors

affecting

the

availability

cost

imports.

addition,

geopolitical

tensions,

sanctions,

prohibitions,

additional

tariffs,

compliance

and

reporting

requirements

have

resulted

increased

costs

associated

with

merchandise

produced

certain

regions.

Any

new

sanctions,

tariffs

and

reporting

requirements enacted in

the future may

further increase our

costs associated with

sourcing products from

those

regions

limit

our

ability

procure

the

products

source,

and

our

ability

source

these

products from other regions may be limited or result in increased sourcing

costs.

Our costs are

also affected by currency

fluctuations, and changes in

the value of the

dollar relative to

foreign currencies have impacted and may continue to impact our cost of goods sold. Any of these

factors

can materially

and adversely affect

our business

and results

of operations.

In addition,

increased energy

and transportation

costs have

caused

us significant

cost increases

from time

time, and

future adverse

changes

these

costs

the

disruption

the

means

which

merchandise

transported

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.

are

forced

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 operation of our sourcing offices in Asia presents increased operational and

legal risks.

In October

2014, we

established our

own sourcing

offices in

Asia. 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

operations

and

financial

condition could be materially and adversely affected.

In addition, the current business environment, including geopolitical issues, make operating in

certain

Asian

markets

challenging.

the

extent

explore

other

countries

source

our

product

explore

increasing

the

amount

product

sourced

from

current

countries,

may

subject

additional

increased

legal

and

operational risks

associated

with

doing

business

new

countries

increasing our

business in other countries.

Further,

the

activities

conducted

our

sourcing

offices

outside

the

United

States

subject

foreign operational risks,

as well as

U.S. and international regulations

and compliance risks, as

discussed

elsewhere

this

“Risk

Factors”

section,

particular

below

under

“Risk

Factors

–

Risks

Relating

Accounting

and

Legal

Matters

Our

business

operations

subject

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

otherwise

adversely

affect

our

business,

results

operations and financial condition.”

Any actual or perceived deterioration in the conditions that drive

consumer confidence and

spending have and may continue to 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), levels

employment,

fuel,

inflation,

interest

rates,

energy

and

food

costs,

salaries

and

wage

rates

and

other

sources

income,

tax

rates,

home

values,

consumer

net

worth,

the

availability

consumer

credit,

consumer

confidence

and

consumer

perceptions

adverse

changes

trends

affecting

any

these

conditions.

Any perception that these conditions may be worsening or continuing to trend negatively may

significantly

weaken

many

these

drivers

consumer spending

habits.

Adverse

perceptions

these

conditions

uncertainties

regarding

them

also

generally

cause

consumers

defer

purchases

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

reduced consumer

spending.

Any of

these

events could

have a material adverse effect on our business, results of operations and financial

condition.

Increased product costs, freight costs, wage increases and operating

costs due to inflation and

other factors, as well as limitations in our ability to offset these cost increases by increasing

the

retail prices of our products or otherwise, have and may continue to adversely

affect our business,

margins, results of operations and financial condition.

Tight

labor markets

have caused

wages to

increase

at the

store, distribution

center and

home office

levels, as well

as making it

more difficult to

hire new associates

and retain existing associates.

The tight

labor

market

and

continued

inflation

also

are

driving

our

operating

costs.

addition,

inflationary

pressures on labor and raw materials

used to make our products may continue

to increase the cost we

pay

for

our

products.

are

unable

offset

the

effects

these

increased

costs

our

business

increasing the

retail prices

of our

products, reducing other

expenses or

otherwise, our business,

margins,

results of operations and financial condition may be adversely affected.

Our

ability

raise

retail

prices

response

these

cost

increases

limited,

part

due

our

customers’

unwillingness

pay

higher

prices

for

discretionary

items

light

actual

perceived

effects

inflation

increasing

our

customers’

cost

essential

items

and

diminishing

customers’

disposable income, sentiment or financial outlook.

Moreover, the persistence or worsening of inflationary

conditions

and

high

interest

rates

could

also

lead

our

customers

reduce

their

amount

current

discretionary

spending

our

products

even

the

absence

price

increases,

which

could

erode

our

sales volume and adversely affect our results of operations and financial condition.

Adverse

developments

affecting

the

financial

services

industry

events

concerns

involving

liquidity,

defaults

non-performance

financial

institutions

transactional

counterparties

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

Actual

events

involving limited

liquidity,

defaults,

non-performance or

other

adverse

developments

that affect

financial institutions,

transactional counterparties

or other

companies in

the financial

services

industry

the

financial

services

industry

generally,

concerns

rumors

about

any

events

these

kinds

other

similar

risks,

have

the

past

and

may

the

future

lead

sporadic

market-wide

liquidity problems that

could adversely affect

us.

If any of

our transactional counterparties,

such as

our

merchandise vendors

and their

factors, our

landlords, our

payment processors

including credit

card, gift

card and checks, our transportation vendors and other vendors that provide services and supplies to us, are

unable to

access funds

or lending

arrangements with

such

a financial

institution, such

parties’ ability

pay their obligations could be adversely affected.

If this occurred we could be

adversely impacted by not

receiving

the

product

ordered

the

payments

generated

our

sales,

not

being

able

receive

products to our distribution center or

our stores in a timely

manner or at all, or

by not being able to

retain

services from

third parties

that we

require.

These impacts

may adversely

affect our

financial condition,

results

operations

and

our

ability

execute

our

business

strategy.

Furthermore,

these

adverse

developments affecting the financial services or related perceptions may negatively

impact our customers’

discretionary income or

our customers’

willingness to purchase

apparel, shoes or

jewelry products.

Any

reduction

our

customers’

discretionary

spending

our

products

could

erode

our

sales

volume

and

adversely affect our results of operations and financial condition.

Extreme weather, natural disasters, impacts of climate change, public health threats or similar

events have and may continue to adversely affect our sales or operations from time

to time.

Extreme

changes

weather,

natural

disasters,

physical

impacts

climate

change,

public

health

threats or similar

events can influence

customer trends and

shopping habits.

For example, heavy rainfall

or other extreme weather conditions, including but

not limited to winter weather over a

prolonged period,

might

make

difficult

for

our

customers

travel

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 can

render a

portion of

our inventory incompatible

with those unseasonable

conditions.

Reduced

sales

from extreme

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

other

communicable

diseases

(such

COVID-19)

other

catastrophic

events

could

reduce

customer

traffic

our

stores

and

likewise

disrupt

our

ability

conduct

operations,

which

would

materially and adversely affect us.

The

long-term

impacts

global

climate

change

are

expected

unpredictable

and

widespread.

The

potential

impacts

climate

change

present

variety

potential

risks.

The

physical

effects

climate

change

such

extreme

weather

and

drought

could

adversely

affect

our

results

operations,

including disrupting our

supply chain, the

costs of our

products and negatively

impacting our workforce.

addition,

the

potential

impacts

climate

change

present

transition

risks

including

regulatory

and

reputational

risks.

The

potential

cost

compliance

with

any

future

regulations

may

substantially

increase our

costs. For

example, the

use of

certain commodities

in the

manufacture of

our products

and

energy

use

our

operations

may

face

increased

regulation

due

climate

change

other

environmental concerns, which could

increase our costs.

Furthermore, any failure of

or perceived failure

by us

to comply

with any

potential future

climate change

regulatory requirements

including stakeholder

expectations regarding the environment, could adversely affect our reputation and

results of operations.

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 and malls

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

and malls

where we

currently operate

existing stores

or seek

open new

stores have

been and

may continue

to be

adversely affected

by,

among other

things, general

economic downturns

those

particularly affecting

the

commercial real

estate industry,

the

closing of

anchor

stores, changes

tenant

mix

and

changes

customer

shopping

preferences,

including

but

not

limited

increase

preference for online versus in-person shopping.

To take

advantage of consumer traffic and the

shopping

preferences

our

consumers,

need

maintain

and

acquire

stores

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, has limited and could further limit our ability to open new

stores,

adversely

affecting

consumer

traffic

and

reducing

our

sales

and

net

earnings

increasing

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

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

have

not

done

business

before

may

present

new

challenges

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

change

rapidly

and

cannot

predicted

with

certainty.

Our

success

depends

part

upon

our

ability

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

timely

manner.

Accordingly,

any

failure

anticipate,

identify,

design

and

respond

changing

fashion

trends

could

adversely

affect

consumer

acceptance

our

merchandise,

which

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 inventory at below-average markups over

cost, or below cost, which would

adversely affect our margins and results of operations.

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

third-party

vendors

manufacture

and

supply

our

merchandise

subjects

numerous risks that

our vendors will

fail to perform

as we expect.

For example, the

deterioration in any

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

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

perform as

expect,

our

business, results

operations

and

financial

condition

could

adversely

affected.

Activities

conducted

our

behalf

outside

the

United

States

further

subject

numerous

U.S.

and

international

regulations

and

compliance

risks,

discussed

below

under

“Risk

Factors –

Risks Relating

to Accounting

and Legal

Matters -

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.”

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

highly

competitive.

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

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.

result

this

competition,

may

experience

pricing

pressures,

increased

marketing

expenditures,

increased

costs

open

new

stores,

well

loss

market

share,

which

could

materially

and

adversely

affect

our

business,

results

operations and financial condition.

Our inability to effectively manage inventory has impacted and may continue

to negatively impact

our gross margin and our overall results of operations.

Factors

affecting

sales

include

fashion

trends,

customer

preferences,

calendar

and

holiday

shifts,

competition,

weather,

supply

chain

issues,

actual

potential

public

health

threats

and

economic

conditions, including

but not

limited to

continued high

interest rates

and persistent

inflation. In

addition,

merchandise

must

ordered

well

advance

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.

Our

inability

effectively

manage

inventory

may

adversely

affect

our

gross

margin

and

results

operations.

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.

Moreover,

attracting and

retaining skilled

personnel has

become increasingly

challenging in

the tight

labor market

that has

persisted since

the onset

of the

COVID-19 pandemic.

offset this

turnover as

well as

support new

store growth,

we must

continually attract,

hire and

train new

store

associates

meet

our

staffing

needs.

significant

increase

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.

compete for qualified store associates, as

well

experienced

management

personnel,

with

other

companies

our

industry

other

industries,

many of whom have greater financial resources than we do.

addition,

depend

key

management

personnel

oversee

the

operational

divisions

the

Company

for

the

support

our

existing

business

and

future

expansion.

The

success

executing

our

business strategy

depends in

large part

on retaining

key management.

compete for

key management

personnel

with

other

retailers, and

our

inability

attract

and

retain

qualified personnel

could

limit

our

ability to continue to grow.

are

unable

retain

our

key

management

and

store

associates

attract,

train,

retain

other

skilled

personnel in

the

future,

may not

able

service

our

customers effectively

execute

our

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

The currently

competitive environment

for

hiring new

associates and

retaining existing

associates is

causing

wages

increase,

which

has

affected

and

could

continue

adversely

affect

our

business,

margins, operating results and financial condition if we cannot offset these cost increases.

Fluctuations in the price, availability and quality of inventory have and

may continue to result in

higher cost of goods, which the Company may not be able to pass on

to its customers.

The price and availability of raw

materials may be impacted by demand, regulation,

weather and crop

yields, currency

value fluctuations,

inflation, 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 may result in higher merchandise costs to the Company.

Due to

the

Company’s

limited

flexibility

price

point,

the

Company

may

not

able

pass

those

cost

increases

the

consumer,

which

could

have

material

adverse

effect

our

margins,

results

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 affected.

The Company’s

long-term business

strategy includes

opportunistic growth

through the

development

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.

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

have

resulted

and

could

result

future

impairment

charges.

cannot

successfully

execute

our

growth strategies, our financial condition and results of operations may

be adversely impacted.

Risks Relating to Our Information Technology, Related Systems and Cybersecurity:

failure or disruption relating to our information technology systems could

adversely affect our

business.

rely

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,

well

our

financial

systems,

including

accounts

payable,

general

ledger,

accounts

receivable, sales,

banking, inventory

and fixed

assets.

Despite the

precautions we

take, our

information

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,

cyberattacks, acts

war

terrorism,

similar

catastrophic

events

other

causes

beyond

our

control

that

fail

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

continue

upgrade

improve

such

systems,

the

cost

associated

with

maintaining,

repairing

improving

these

systems,

could

adversely

affect

our

business,

results

operations

and

financial

condition. Modifications and/or upgrades to

our current information technology systems may also

disrupt

our operations.

A security breach that results in unauthorized access to or disclosure of

employee, Company or

customer information or a ransomware attack could adversely affect our costs,

reputation and

results of operations, and efforts to mitigate these risks may continue to

increase our costs.

The

protection

employee,

Company and

customer

data

critical

the

Company.

Any

security

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

other

unauthorized

disclosure

employee,

Company

customer

information,

including

but

not

limited

credit

card

data

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.

The

security of certain of

this information also depends on

the ability of third-party

service providers, such as

those

use

process

credit

and

debit

card

payments

described

below

under

“We

are

subject

payment-related

risks,”

properly

handle

and

protect

such

information.

Our

information

systems

and

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 difficult

anticipate or detect for long periods

of time.

Despite measures the Company takes

to protect confidential

information against

unauthorized access

or disclosure, which

measures are

ongoing and

may continue

increase

our

costs,

there

assurance

that

such

measures

will

prevent

the

compromise

such

information. If

our measures

are unsuccessful

due to

cyberattacks or

otherwise, it

could have

a material

adverse

effect

the

Company's

reputation,

business,

operating

results,

financial

condition

and

cash

flows.

In addition, the

Company may be

subject to ransomware

attacks, which if

successful could result

disruptions

the

Company’s

operations

and

expose

remediation

and

other

costs,

risks

legal

proceedings,

damage the

Company’s

reputation

and

otherwise adversely

affect

the

Company's business

and financial condition.

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

third-party

freight

carriers.

The

merchandise

purchase

shipped directly to

our distribution center,

where it is

prepared for shipment

to the appropriate

stores and

subsequently delivered

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 above under “A failure or disruption

relating to our information

technology

systems

could

adversely

affect

our

business,”

our

operations

would

likely

seriously

disrupted.

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

use

our

distribution center,

well

any broader

problem generally

affecting

the ability

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.

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

drive

incremental

sales,

provide existing customers the online shopping experience and introduce the Company to a new customer

base,

also

exposes

numerous

risks.

are

subject

potential

failures

the

efficient

and

uninterrupted

operation

our

websites,

customer

contact

center

our

distribution

center,

including

system

failures

caused

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 access

disclosure

customer

information,

discussed

above

under

“A

security

breach

that

results

unauthorized

access

disclosure

employee,

Company

customer

information

ransomware

attack 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

operating

e-commerce

websites

fulfilling

customer

expectations,

the

Company's

business

and

sales

could be adversely affected.

We are subject to payment-related risks.

accept payments

using a

variety of

methods, including

third-party credit

cards, our

own branded

credit

card,

debit

cards,

gift

cards

and

physical

and

electronic

bank

checks.

For

existing

and

future

payment methods we offer to our customers, we are subject to fraud risk and

to additional regulations and

compliance

requirements

(including

obligations

implement

enhanced

authentication

processes

that

could

result

increased

costs

and

reduce

the

ease

use

certain

payment

methods).

For

certain

payment

methods,

including

credit

and

debit

cards,

pay

interchange

and

other

fees,

which

have

increased

from

time

and

may

continue

increase

over

time,

raising

our

operating

costs

and

lowering profitability. We

rely on third-party service providers for payment processing

services, including

the

processing

credit

and

debit

cards.

each

case,

could

disrupt

our

business if

these

third-party

service

providers

become

unwilling

unable

provide

these

services

us.

are

also

subject

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

facilitate

other

types

payments,

and

our

business and operating results could be adversely affected.

Risks Relating to Accounting and Legal Matters:

Continued scrutiny and changing

expectations surrounding environmental, social and governance

(“ESG”)

matters

from

investors,

customers,

government

regulators

and

other

stakeholders

may

impose additional reporting requirements, additional costs and compliance

risks.

Public companies from

across all

industries are facing

increasing scrutiny from

investors, customers,

government regulators and other stakeholders concerning ESG matters.

In the U.S., there are various new

rules

proposals

for

new

enhanced

disclosure

requirements

regarding

climate

emissions,

sustainability,

workforce

diversity

and

other

human

capital

resources

metrics,

among

other

topics.

Complying

with

these

complex

reporting

obligations or

expectations

may

increase

our

costs

associated

with compliance, disclosure and reporting.

Furthermore, evolving ESG laws, regulations and stakeholder

expectations may

result in

uncertain and

potentially burdensome

reporting requirements

as stakeholders,

agencies and government authorities adjust

their expectations or change laws

and regulations, such as the

new rules regarding climate emissions reporting and

auditing requirements.

Failure to comply with all

the

new

rules

and

regulations

and

proposed

regulatory requirements

timely

manner

may

adversely

affect our reputation, business and financial performance.

Changes to accounting rules and regulations may adversely affect our reported

results of

operations and financial condition.

U.S.

Generally

Accepted

Accounting

Principles

and

SEC

accounting,

disclosures

and

reporting

changes are

common and have

become more frequent

and significant

in the

past several years.

Changes

accounting

rules,

disclosures

regulations

and

varying

interpretations

existing

accounting

rules,

disclosures 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

the future.

Future changes

accounting

rules,

disclosures

regulations may

adversely

affect

our

reported

results

operations and

financial position or perceptions of our performance and financial condition.

fail

protect

our

trademarks

and

other

intellectual

property

rights

infringe

the

intellectual

property

rights

others,

our

business,

brand

image,

growth

strategy,

results

operations and financial condition could be adversely affected.

believe

that

our

“Cato”,

“It’s

Fashion”,

“It’s

Fashion

Metro”,

“Versona”,

“Cache”

and

“Body

Central”

trademarks

are

integral

our

store

designs,

brand

recognition

and

our

ability

successfully

build

consumer

loyalty.

Although

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

believe

are

important

our

business,

cannot

give

assurance

that

these

registrations

will

prevent

imitation

our

trademarks,

merchandising

concepts,

store

designs

private

label merchandise or

the infringement of

our other intellectual

property rights by

others. Infringement of

our

names,

concepts,

store

designs

merchandise

generally,

particularly

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

give assurance

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.

the

event

such

conflict,

could

subject

lawsuits

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.

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

our

activities

foreign

countries

from

which

source

our

merchandise

and

operate our

sourcing offices.

Our

business is

also

subject

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

arise

the

ordinary

course

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

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

which we

may

subject

could

negatively

affect

our

business,

operating

results

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

risks

and

uncertainties

and

could

divert

significant

management

time.

The

Company

may

also

subject

regulatory

review

and

audits,

the

results

which

could

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

change from

time to

time.

Compliance and

litigation

matters

could

result

unexpected

expenses

and

liability,

well

have

adverse

effect

our

operations and our reputation.

New

legislation

regulation

and

interpretation

existing

laws

and

regulations,

including

those

data

privacy,

climate

change

ESG

matters

could

increase

our

costs

compliance,

technology and business operations. The interpretation of existing or new laws

to existing technology and

business practices can be uncertain and may lead to additional compliance

risk and cost.

Adverse litigation matters may adversely affect our business and our financial

condition.

From

time

the

Company

involved

litigation

and

other

claims

against

our

business.

Primarily these arise in the

normal course of business but are

subject to risks and uncertainties, and

could

require

significant

management

time.

The

Company’s

periodic

evaluation

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

subjected

legal

matters

not

yet

known

us.

Adverse

decisions

settlements

disputes

may

negatively impact our business, reputation and financial condition.

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 increased, and

may continue to increase, our compliance costs and

place significant strain on our personnel, systems and

resources.

satisfy

the

SEC’s

rules

implementing

the

requirements

Section

404

the

Sarbanes-

Oxley Act

2002, we

must continue

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

internal

control

over

financial

reporting

comply

with

the

other

various

laws

and

regulations to

which we

are and

will continue

to be

subject, or

which we

may become

subject in

the

future,

public

company

could

have

adverse

material

impact

our

business,

our

financial

condition and

the price

of our

common stock.

In 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 credit.

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 adversely

impacted

by factors relating to these securities,

similar securities or the broader credit

markets in general.

Many of

these factors

are beyond our

control, and include

but are

not limited to

changes to credit

ratings, rates of

default, collateral

value, discount

rates, and

strength and

quality of

market credit

and liquidity,

potential

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

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

value or

liquidity of

our investments.

The development

or persistence

any of

these

conditions could

adversely affect

our financial

condition, results

of operations

and ability

to execute

our

business

strategy.

addition,

have

significant

amounts

cash

and

cash

equivalents

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

financial

institutions

could

cause

experience losses on our deposits.

Our ability

to access

credit markets

and our

revolving line

of credit,

either generally

or on

favorable

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

any

of these

adverse factors or

failure to

comply with covenants

on which our

borrowing is conditioned

may

adversely affect

our financial

condition, results

of operations

and our

ability to

access our

revolving line

of credit and to execute our business strategy.

Risks Relating to the Market Value of Our Common Stock:

The interests of our principal shareholder may limit the ability of other

shareholders to influence

the direction of the Company and otherwise affect our corporate governance and

the market price

of our common stock.

As of March 27, 2024, John P. D. Cato, Chairman, President and Chief Executive Officer, beneficially

owned approximately 51.9%

of the combined

voting power of

our common stock.

As a result,

Mr.

Cato

has the ability to substantially influence or determine the outcome of all matters requiring approval by the

shareholders,

including

the

election

directors

and

the

approval

mergers

and

other

business

combinations

other

significant

Company

transactions.

Mr.

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.

The concentration of voting power held by Mr.

Cato could discourage potential

investors from acquiring our

common stock and could

also have the effect

of preventing, discouraging or

deferring a change in control of the Company or other fundamental transaction,

all of which could depress

the market price of our common stock.

In addition, Mr.

Cato has the ability to control the

management of

the

Company

result

his

position

Chief

Executive

Officer.

qualify

for

exemption

“controlled

company”

from

compliance

with

certain

New

York

Stock

Exchange

corporate

governance

rules,

including

the

requirements

that

have

majority

independent

directors

our

Board,

independent

compensation

committee

and

independent

corporate

governance

and

nominating

committee.

If we

elected to

utilize these

“controlled company” exceptions,

our other shareholders

could

lose the

benefit of

these corporate

governance requirements

and the

market value

our common

stock

could be adversely affected.

There can be no assurance that we will choose to declare or be able

to declare cash dividends in

the future.

The declaration and payment of any dividend is subject to the approval of our Board of Directors.

Our

Board of

Directors regularly

evaluates

our ability

pay a

dividend based

on many

factors,

such as

but

not

limited

to,

applicable

legal

requirements,

the

financial

position

the

Company,

contractual

restrictions

and

our

capital

allocation strategy.

There

can

assurance

that a

cash

dividend

will

declared in the future in any particular amount, or at all.

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

be expected

from any

future

period,

and

such

seasonal

and

quarterly

fluctuations

could

adversely

affect

the

market

price

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

our common stock to

fluctuate, perhaps

substantially,

including,

but

not

limited

to,

those

discussed

elsewhere

this

report,

well

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; 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

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

times

been

unrelated

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.

Item 1B.

Unresolved Staff Comments:

None.

Item 1C.

Cybersecurity:

Risk Management Strategy

recognize

the

importance

effectively

managing

cybersecurity

risk

protecting

our

business,

customers

and

employees,

and

manage

cybersecurity

risk

part

our

overall

risk

management

system

and

compliance

processes.

maintain

process

designed

identify,

assess

and

manage

material

risks

from

cybersecurity

threats,

including

risks

relating

theft

customer

data,

primarily

payment cards, disruption

to business operations

or financial reporting

systems, fraud, extortion,

harm to

employee

data

and

violation

privacy

laws.

recent

years,

have

increased

our

investments

cybersecurity

risk

management within

our

environment and

have

developed an

enterprise

cybersecurity

program designed

detect, identify,

classify and

mitigate cybersecurity

and other

data security

threats.

This

program classifies

potential threats

risk

levels,

and

typically prioritize

our

threat

mitigation

efforts

based

on those

risk classifications.

In the

event

identify a

potential cybersecurity,

privacy or

other data security issue,

we have defined procedures for

responding to such issues,

including procedures

that

address

when

and

how

engage

with

Company

executives,

our

Board

Directors,

other

stakeholders and

law enforcement

when responding

such

issues. Additionally,

various aspects

our

cybersecurity program,

particularly compliance

with the

Payment Card

Industry standards,

are regularly

reviewed by independent third

parties. We

also maintain cybersecurity insurance, which

we believe to

commensurate

with

our

size

and

the

nature

our

operations,

part

our

comprehensive

insurance

portfolio.

utilize

third-party

intrusion

detection

and

prevention

systems

and

vulnerability

and

penetration

testing to

monitor our

environment. We

also use

third-party software

to test

our employees' responses

suspicious emails and to

inform targeted cyber

awareness training.

Our information security and

privacy

policies

are

informed

regulatory

requirements

and

are

reviewed

periodically

for

compliance

and

alignment

with

current

state

and

federal

laws

and

regulations.

comply

with

applicable

industry

security

standards,

including the

Payment Card

Industry

Data

Security

Standard (“PCI

DSS”).

Because

are

aware

the

risks

associated

with

third-party

service

providers,

also

have

implemented

processes

oversee

and manage

these

risks.

conduct

security

assessments

third-party

providers

before

engagement

and

maintain ongoing

monitoring to

help

ensure

compliance with

our

cybersecurity

standards.

Additionally,

maintain

cybersecurity

incident

response

plan,

which

reviewed

regularly,

and

provides

framework

for

handling

and

escalating

cybersecurity

incidents

based

the

severity

the

incident and facilitates cross-functional coordination across the Company.

Through the

processes described

above,

did

not

identify

risks

during the

year

ended

February 3,

2024 from current or

past cybersecurity threats or cybersecurity

incidents that have materially affected

are

reasonably

likely

materially

affect

our

business

strategy,

results

operations,

financial

condition.

However,

face

ongoing

risks

from

certain

cybersecurity

threats

that,

realized,

are

reasonably likely

materially affect

our

business strategy,

results

operations, or

financial condition.

See

the

risk

factors

discussed

under

the

heading,

“Risk

Factors

—

Risks

Relating

Our

Information

Technology,

Related Systems and Cybersecurity” for further information.

Governance

Our

Board

Directors

recognizes

the

important

roles

that

information

security

and

mitigating

cybersecurity and other data security threats

play in our efforts

to protect and maintain the

confidentiality

and security of

customer, employee and

vendor information, as

well as non-public

information about our

Company.

Although

the

Board

whole

ultimately

responsible

for

the

oversight

our

risk

management

function,

the

Board

has

delegated

its

Audit

Committee

primary

responsibility

for

oversight

risk

assessment

and

risk

management,

including

risks

cybersecurity

and

other

technology

issues.

The

Audit

Committee

also

oversees

the

Company’s

internal

control

over

financial

reporting, including

with respect

to financial

reporting-related information

systems. The

Chief Financial

Officer (CFO) and Chief

Accounting Officer (CAO) meet regularly

with the Audit Committee and

Board

of Directors.

The

Audit

Committee

reviews

quarterly

our

cybersecurity

activities,

including

review

annual

external assessment

results, training

results, and

discussion of

cybersecurity risks

and resolutions,

and is

responsible for elevating

significant matters to

the Board as

events arise.

The Audit

Committee receives

reports

from

our

Chief

Information

Officer

(CIO)

annually

regarding

our

cybersecurity

framework,

well as our plans to mitigate cybersecurity risks and respond to any data breaches.

From

management

perspective,

our

enterprise

cybersecurity

overseen

our

cybersecurity

committee, which is chaired by our

CFO and includes our CAO, CIO, Chief

Information Security Officer

(CISO),

well

key

members

financial

management,

information

technology

and

audit.

Our

cybersecurity infrastructure

overseen by

our

CISO, who

reports

our

CIO.

Our

CIO reports

our

CFO

and

has

served

various

roles

information

technology

and

information

security

for

over

years.

Item 2.

Properties:

The Company’s

distribution center

and general

offices

are located

in a

Company-owned building

approximately

552,000

square

feet

located

15-acre

tract

Charlotte,

North

Carolina.

The

Company’s

automated

merchandise

handling

and

distribution

activities

occupy

approximately

418,000

square

feet

this

building

and

its

general

offices

and

corporate

training

center

are

located

the

remaining 134,000

square feet.

A building

of approximately

24,000 square

feet located

on a

2-acre tract

adjacent

the

Company’s

existing

location is

used

for

e-commerce

storage.

The

Company also

owns

approximately

185

acres

land

York

County,

South

Carolina

potential

new

site

for

our

distribution center.

Item 3.

Legal Proceedings:

From time

to time,

claims are

asserted against

the Company

arising out

of operations

in the

ordinary

course

business.

The

Company

currently

not

party

any

pending

litigation

that

believes

likely to have a

material adverse effect on

the Company’s

financial position, results of

operations or cash

flows. See Note 15, “Commitments and Contingencies,” for more

information.

Item 3A.

Executive Officers of the Registrant:

The executive officers of the Company and their ages as of March 27, 2024

are as follows:

Name

Age

Position

John P.

D. Cato............................

Chairman, President and Chief Executive Officer

Charles D. Knight........................

Executive Vice President, Chief Financial Officer

Gordon Smith

..............................

Executive Vice President, Chief Real Estate and

Store Development Officer

John P.

D. Cato

has been employed

as an officer

of the Company since

1981 and has

been a director

the

Company

since

1986.

Since

January

2004,

has

served

Chairman,

President

and

Chief

Executive Officer.

From May 1999 to

January 2004, he served

as President, Vice

Chairman of the

Board

and Chief Executive Officer.

From June 1997 to May 1999,

he served as President, Vice

Chairman of the

Board and

Chief Operating Officer.

From August 1996

to June

1997, he served

as Vice

Chairman of the

Board

and Chief

Operating Officer.

From 1989

1996, he

managed the

Company’s

off-price

concept,

serving

Executive Vice

President

and

President and

General Manager

the

It’s

Fashion

concept

from 1993

August 1996.

Mr. Cato

a former

director of

Harris Teeter

Supermarkets, Inc.,

formerly

Ruddick Corporation.

Charles

Knight

has

been

employed

Executive

Vice

President,

Chief

Financial

Officer

the

Company

since

January

2022.

From

2018

2020,

served

various

roles

with

The

Vitamin

Shoppe,

first

Senior

Vice

President,

Chief

Accounting

Officer

from

2018

2019,

and

then

Executive Vice

President, Chief Financial

Officer from 2019

to 2020.

Prior to

that, he served

in various

roles with Toys

“R” Us for 28

years, including as Senior Vice

President, Corporate Controller from 2010

to 2018.

Gordon

Smith

has

been

employed

the

Company

since

1989.

Since

July

2011,

has

served

Executive Vice

President, Chief

Real

Estate and

Store Development

Officer.

From February

2008 until

July 2011,

Mr. Smith served as

Senior Vice President, Real

Estate. From October 1989 to February 2008,

Mr. Smith served as Assistant Vice President, Corporate Real Estate.

Item 4.

Mine Safety Disclosures:

No matters requiring disclosure.

PART

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities:

Market & Dividend Information

The

Company’s

Class A Common

Stock

trades

on the

New York

Stock

Exchange (“NYSE”) under

the symbol CATO.

As of March 25, 2024, the approximate number of record holders of the Company’s Class A Common

Stock was 5,000 and there were 2 record holders of the Company’s Class B Common Stock.

Stock Performance Graph

The

following

graph

compares

the

yearly

change

the

Company’s

cumulative

total

shareholder

return on

the Company’s

Common Stock (which

includes Class

A Stock

and Class

B Stock)

for each

the

Company’s

last

five

fiscal

years

with

(i)

the

Dow

Jones

U.S.

Retailers,

Apparel

Index

and

(ii)

the

Russell 2000 Index.

THE CATO

CORPORATION

STOCK PERFOMANCE TABLE

(BASE 100 – IN DOLLARS)

LAST TRADING DAY

OF THE FISCAL YEAR

THE CATO

CORPORATION

DOW JONES U.S.

RETAILERS,

APPL

INDEX

RUSSELL 2000

INDEX

2/1/2019

100

1/31/2020

118

111

109

1/29/2021

119

142

1/28/2022

128

132

140

1/27/2023

144

136

2/2/2024

161

139

The graph assumes an initial investment of $100 on February 1, 2019,

the last trading day prior to the

commencement of the Company’s 2019 fiscal year, and that all dividends were reinvested.

Issuer Purchases of Equity Securities

The following table summarizes the Company’s purchases of its common stock for the three months

ended February 3, 2024:

Total Number of

Maximum Number

Shares Purchased as

(or Approximate Dollar

Total Number

Part of Publicly

Value) of Shares that may

of Shares

Average Price

Announced Plans or

yet be Purchased Under

Period

Purchased

Paid per Share (1)

Programs (2)

the Plans or Programs (2)

November 2023

December 2023

January 2024

Total

909,653

(1)

Prices include trading costs.

(2)

During

the

fourth

quarter

ended

February

2024,

the

Company

did

not

repurchase

retire

any

shares under

this program.

As of

February 3,

2024, the

Company had

909,653 shares

remaining in

open authorizations. There is no

specified expiration date for the Company’s

repurchase program.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results

of Operations:

Management’s

Discussion and

Analysis of

Financial Condition

and Results

of Operations

is intended

to provide information to assist readers in better

understanding and evaluating our financial condition and

results

operations.

The

following

information

should

read

conjunction

with

the

Consolidated

Financial Statements, including the accompanying Notes appearing in

Part II, Item 8 of this

annual report

on Form 10-K.

This section of the annual report

on Form 10-K generally discusses fiscal 2023

and fiscal

2022

and

year-to-year

comparisons

between

fiscal

2023

and

fiscal

2022,

well

certain

fiscal

2021

items.

Discussions

fiscal

2021

items

and

year-to-year

comparisons

between

fiscal

2022

and

fiscal

2021 that are not included

in this Form 10-K can

be found in “Management’s

Discussion and Analysis of

Financial

Condition

and

Results

Operations”

Part

II,

Item

the

Company’s

annual

report

Form 10-K for the fiscal year ended January 28, 2023.

Recent Developments

Inflationary Cost Pressure and High Interest Rates

Our

customers’

disposable

income

was

negatively

impacted

high

interest

rates

and

continued

inflation related to

fuel, food, housing,

including rent, and

other consumable products

and a flattening

wage rates in 2023. The

persistence of high interest rates and

inflation negatively affected our customers’

willingness to purchase discretionary items such as apparel, jewelry

and shoes.

Though the Federal Reserve paused

raising rates in the

fall of 2023, it

has indicated it is

committed to

maintaining

interest

rates

near

these

elevated

levels

until

inflation

subsides

its

targeted

levels.

These high interest rates have adversely affected the availability and cost of credit for both businesses and

our

customers.

Increasing

costs

revolving

credit,

auto

loans

and

mortgages

continue

negatively

impact

our

customers’

discretionary

income.

Our

customers’

willingness

purchase

our

products may continue to be negatively impacted by these inflationary

pressures and high interest rates.

believe continued

inflation and

high interest

rates negatively

impacted fiscal

2023 and

will likely

continue to have a negative impact on

consumer behavior and, by extension, our results of

operations and

financial condition during fiscal 2024.

Merchandise Supply Chain

significant

amount

our

merchandise

manufactured

overseas,

principally

Southeast

Asia,

and

traverses through the Panama Canal or

the Suez Canal.

Due to a sustained regional

drought, the Panama

Canal

has

reduced

the

number

transits

approximately

37%

and

has

also

reduced

the

permissible

draft of vessels

transiting the Panama Canal,

which reduces the volume

and number of

containers carried

by container

ships and

increases our

costs.

The recent

hostilities affecting

the Red

Sea and

Suez Canal

are

causing

container

ships

travel

much

longer

distance

around

the

Cape

Good

Hope,

which

increasing both lead times for merchandise during our key selling times and our costs to ship

these goods.

Both of these situations have negatively impacted 2023 and will likely continue to have a negative impact

on our results of operations and financial condition during fiscal 2024.

Results of Operations

The table below sets forth certain financial data of the Company

expressed as a percentage of

retail sales for the years indicated:

Fiscal Year Ended

February 3, 2024

January 28, 2023

Retail sales …………………………………………………………..

100.0

Other revenue…………………………………………………………

1.1

0.9

Total revenues ……………………………………………………….

101.1

100.9

Cost of goods sold …………………………………………………..

66.3

67.7

Selling, general and administrative………………………………….

36.1

32.3

Depreciation …………………………………………………………

1.4

1.5

Interest and other income ……………………………………………

0.7

0.8

Income (loss) before income taxes …………………………………………

(2.0)

0.2

Net income (loss)…………………………………………………………..

(3.4)

Fiscal 2023 Compared to Fiscal 2022

Retail sales

decreased by

6.9% to

$700.3 million

in fiscal

2023 compared

to $752.4

million in

fiscal

2022. The decrease in

retail sales in fiscal

2023 was primarily due

to a 5.9% decrease

in same-store sales

and

sales from

closed stores

2022

and

stores

closed

the

first

half

2023,

partially offset

additional

week of sales

in 2023 and a

small increase in

sales from stores opened in 2023. Fiscal

2023 had

53 weeks

versus 52

weeks in

fiscal 2022.

Same-store sales

for the

fiscal year

2023 decreased

primarily

due

lower

transactions,

partially

offset

fewer

returns

and

slightly

higher

average

sales

per

transaction. Same-store

sales includes

stores that

have been

open more

than 15

months. Stores

that have

been relocated or expanded are also included in the same-store sales calculation after they have been open

than

months.

fiscal

2023 and

fiscal

2022,

e-commerce sales

were less

than

and

total sales and same-store sales, respectively.

The method of calculating same-store sales varies across the

retail

industry.

result,

our

same-store

sales

calculation

may

not

comparable

similarly

titled

measures

reported

other

companies.

Total

revenues,

comprised

retail

sales

and

other

revenue

(principally finance

charges and

late

fees

customer accounts

receivable, gift

card

breakage, shipping

charges for e-commerce purchases

and layaway fees), decreased by 6.7%

to $708.1

million in

fiscal 2023

compared

$759.3

million

fiscal

2022.

The

Company

operated

1,178

stores

February

2024

compared to 1,280 stores operated at January 28, 2023.

In fiscal 2023, the Company opened nine new stores and closed 111 stores.

Other

revenue,

component

total

revenues,

increased

$7.7

million

fiscal

2023

from

$6.9

million

fiscal

2022.

The

increase

was

due

increases

gift

card

breakage

and

finance

charges

associated

with

the

Company’s

proprietary

credit

card,

partially

offset

decreases

e-commerce

shipping revenue.

Credit

revenue

$2.6

million

represented

0.4%

total

revenue

fiscal

2023,

$0.4

million

increase compared to fiscal 2022 credit

revenue of $2.2 million or 0.3% of

total revenue.

The increase in

credit revenue was

primarily due to

increases in finance

charges and late

fee income as

a result of

higher

accounts receivable

balances.

Credit revenue

is comprised

of interest

earned on

the Company’s

private

label credit

card portfolio

and related

fee income.

Related expenses

include

principally payroll,

postage

and

other

administrative

expenses

and

totaled

$1.7

million

fiscal

2023

compared

$1.7

million

fiscal

2022.

See

Note 13

the

Consolidated Financial

Statements,

“Reportable Segment

Information”

for

a schedule

credit-related expenses.

Total

credit segment

income before

taxes

was $0.9

million in

fiscal 2023 and $0.6 million in fiscal 2022.

Cost

goods sold

was $464.3

million, or

66.3% of

retail

sales, in

fiscal

2023 compared

$509.7

million, or 67.7% of retail sales, in fiscal 2022. The decrease in cost of goods sold as a percentage of sales

resulted

primarily

from

lower

ocean

freight

costs

and

increased

sales

regular

priced

goods,

partially

offset

by deleveraging

occupancy and

buying costs.

Cost of

goods sold

includes

merchandise costs,

net

discounts

and

allowances,

buying

costs,

distribution

costs,

occupancy

costs,

and

freight

and

inventory

shrinkage.

Net

merchandise

costs

and

in-bound

freight

are

capitalized

inventory

costs.

Buying and distribution costs include

payroll, payroll-related costs and operating expenses for

the buying

departments

and

distribution

center.

Occupancy

expenses

include

rent,

real

estate

taxes,

insurance,

common

area

maintenance,

utilities

and

maintenance

for

stores

and

distribution

facilities.

Total

gross

margin

dollars

(retail

sales

less

cost

goods

sold

and

excluding

depreciation)

decreased

2.8%

$236.0 million

in fiscal

2023 from

$242.7 million

in fiscal

2022. Gross

margin as

presented may

not be

comparable to that of other companies.

Selling, general

and administrative expenses

(“SG&A”), which

primarily include corporate

and store

payroll,

payroll

taxes

and

benefits,

insurance,

supplies,

advertising,

bank

and

credit

card

processing fees were $252.8 million in fiscal

2023 compared to $242.6 million in fiscal

2022, an increase

of 4.2%. As a percent of retail sales, SG&A was 36.1% compared to 32.3% in the prior year. The increase

in SG&A

expense in

fiscal 2023

was primarily

attributable to

higher payroll,

insurance and

closed store

expenses.

Depreciation

expense

was

$9.9

million

fiscal

2023

compared

$11.1

million

fiscal

2022.

Depreciation

expense

decreased

from

fiscal

2022

due

fully

depreciated

older

stores

and

prior

period

impairments

leasehold

improvements

and

fixtures,

partially

offset

store

development

and

information technology expenditures.

Interest and

other income

decreased to

$5.1 million

in fiscal

2023 compared

to $5.9

million in

fiscal

2022.

The

decrease

primarily

attributable

receiving

Business

Recovery

Grant

from

the

State

North

Carolina

fiscal

2022,

partially

offset

higher

amounts

earned

investments

due

higher

interest rates.

Income tax expense was

$10.1 million, or 1.4%

of retail sales in

fiscal 2023 compared to

income tax

expense

$1.7

million,

0.2%

retail

sales

fiscal

2022.

The

income

tax

expense

increase

was

primarily due to a valuation allowance

recorded against U.S. federal and state

deferred tax assets due to

pre-tax loss,

partially offset

by foreign

rate differential.

The effective

tax rate

was (73.5%)

(Expense) in

fiscal

2023

compared

98.4%

(Expense)

fiscal

2022.

See

Note

the

Consolidated

Financial

Statements, “Income Taxes,” for further details.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

The Company’s

accounting policies are

more fully described

in Note

1 to the

Consolidated Financial

Statements.

disclosed

Note

the

Consolidated

Financial

Statements,

the

preparation

the

Company’s

financial

statements

conformity

with

generally

accepted

accounting

principles

the

United

States

(“GAAP”)

requires

management

make

estimates

and

assumptions

about

future

events

that

affect

the

amounts reported

the

financial statements

and

accompanying notes.

Future events

and

their

effects

cannot

determined

with

absolute

certainty.

Therefore,

the

determination

estimates

requires

the

exercise

judgment.

Actual

results

inevitably

will

differ

from

those

estimates,

and

such

differences

may

material

the

financial

statements.

The

most

significant

accounting

estimates

inherent in the preparation of the Company’s financial statements include the calculation of potential asset

impairment, income tax

valuation allowances, reserves relating

to self-insured health

insurance, workers’

compensation, general

and auto

insurance liabilities,

uncertain tax

positions, the

allowance for

customer

credit losses, and inventory shrinkage.

The Company’s critical accounting policies and estimates are discussed with the Audit Committee.

Allowance for Customer Credit Losses

The Company evaluates

the collectability

of customer

accounts receivable

and records

an allowance

for customer

credit losses

based on

the accounts

receivable aging and

estimates of

actual write-offs.

The

allowance is

reviewed for

adequacy and

adjusted, as

necessary,

on a

quarterly basis.

The Company

also

provides

for

estimated

uncollectible

late

fees

charged

based

historical

write-offs.

The

Company’s

financial results

can be

impacted by

changes in

customer loss

write-off experience

and the

aging of

the

accounts receivable portfolio.

Merchandise Inventories

The Company’s

inventory is

valued using

the weighted-average

cost method

and is

stated at

the net

realizable value. Physical inventories

are conducted throughout the

year to calculate actual

shrinkage and

inventory on

hand. Estimates

based on

actual shrinkage results

are used

to estimate

inventory shrinkage,

which is

accrued for

the period

between the

last physical

inventory and

the financial

reporting date.

The

Company

regularly

reviews

its

inventory

levels

identify

slow

moving

merchandise

and

uses

markdowns to clear slow moving inventory.

Lease Accounting

The Company determines whether an arrangement is a lease at inception. The Company has operating

leases for

stores,

offices,

warehouse space

and equipment.

Its leases

have remaining

lease terms

one

year to 10 years, some of which

include options to extend the lease term for

up to five years, and some of

which

include

options

terminate

the

lease

within

one

year.

The

Company considers

these

options

determining

the

lease term

used

establish its

right-of-use assets

and lease

liabilities. The

Company’s

lease agreements do not contain any material residual value guarantees or material

restrictive covenants.

most

the

Company’s

leases

not

provide

implicit

rate,

the

Company

uses

its

estimated

incremental

borrowing

rate

based

the

information

available

commencement

date

the

lease

determining the present

value of lease

payments.

See Note 11

to the

Consolidated Financial Statements,

“Leases” for further information.

Impairment of Long-Lived Assets

The

Company invests

leaseholds,

right-of use

assets

and

equipment primarily

connection

with

the opening and remodeling of stores

and in computer software and hardware. The

Company periodically

reviews its store

locations and estimates

the recoverability of

its long-lived assets,

which primarily relate

Fixtures

and

equipment,

Leasehold

improvements,

Right-of-use

assets

net

Lease

liabilities

and

Information

technology

equipment

and

software.

impairment

charge

recorded

for

the

amount

which the

carrying value

exceeds the

estimated fair

value when

the Company

determines that

projected

cash flows associated with those long-lived assets will not be sufficient to recover the carrying value.

This

determination is based on a

number of factors, including the store’s

historical operating results and future

projected cash flows, which include contribution margin projections. The Company assesses the fair value

of each lease

by considering market

rents and

any lease terms

that may adjust

market rents under

certain

conditions, such as the loss of

an anchor tenant or a leased

space in a shopping center not

meeting certain

criteria. Further,

in determining when

to close a

store, the Company considers

real estate development

the

area and

perceived local

market conditions,

which can

be difficult

predict and

may be

subject

change.

Insurance Liabilities

The

Company

primarily

self-insured

for

healthcare,

workers’

compensation

and

general

liability

costs. These costs are

significant primarily due to the

large number of the

Company’s retail locations

and

associates. The Company’s

self-insurance liabilities are

based on the

total estimated costs

of claims filed

and

estimates

claims

incurred

but

not

reported,

less

amounts

paid

against

such

claims,

and

are

not

discounted.

Management

reviews

current

and

historical

claims

data

developing

its

estimates.

The

Company

also

uses

information

provided

outside

actuaries

with

respect

healthcare,

workers’

compensation and general liability claims.

If the underlying facts and

circumstances of the claims change

the

historical

experience

upon

which

insurance

provisions

are

recorded

not

indicative

future

trends, then

the Company

may be

required to

make adjustments

to the

provision for

insurance costs

that

could

material

the

Company’s

reported

financial condition

and

results

operations.

Historically,

actual results have not significantly deviated from estimates.

Uncertain Tax Positions

The Company records

liabilities for

uncertain tax

positions primarily

related to

state income

taxes as

of the balance sheet

date.

These liabilities reflect the

Company’s best

estimate of its ultimate

income tax

liability

based

the

tax

codes,

regulations,

and

pronouncements

the

jurisdictions

which

business.

Estimating our ultimate tax liability involves significant judgments regarding the

application of

complex tax

regulations across

many jurisdictions.

Despite the

Company’s

belief that

the estimates

and

judgments

are

reasonable,

differences

between

the

estimated

and

actual

tax

liabilities

can

and

exist

from time to time.

These differences may arise from settlements

of tax audits, expiration of the statute of

limitations, and the evolution and application of the

various jurisdictional tax codes and regulations.

Any

differences will

be recorded

in the

period in

which they become

known and

could have

a material

effect

on the results of operations in the period the adjustment is recorded.

Deferred Tax Valuation

Allowance

The

Company

assesses

the

likelihood

that

deferred

tax

assets

will

realized

light

the

Company’s

current

financial

performance

and

projected

future

financial

performance.

Based

this

assessment, the

Company then

determines if

a valuation

allowance should

be recorded.

If the

Company

concludes

that

likely

than

not

that

the

Company

will

not

able

realize

its

tax

deferred

assets, a valuation allowance is recorded for the proportion of the deferred tax asset it

determines may not

be realized.

Liquidity, Capital Resources and Market Risk

The Company

believes that

its cash,

cash equivalents

and short-term

investments, together

with cash

flows from operations, will be

adequate to fund the Company’s

regular operating requirements, including

$66.9

million

lease

obligations

and

planned

investments

$8.7

million

capital

expenditures,

for

fiscal 2024 and for the foreseeable future.

Cash

provided

operating

activities

during

fiscal

2023

was

$0.5

million

compared

$13.4 million in

fiscal 2022

and $59.8

in fiscal

2021. Cash

provided by

operating activities

during 2023

was primarily attributable to net income adjusted for depreciation, share-based compensation, impairment

and changes in

working capital. The

decrease of $12.9

million for fiscal

2023 compared to

fiscal 2022 is

primarily

due

lower

net

operating

income

partially

offset

decrease

merchandise

inventories

and

deferred taxes.

February 3,

2024,

the

Company had

working

capital

$55.1 million compared

$74.7 million

and

$111.5

million

January

28,

2023

and

January

29,

2022,

respectively.

The

decrease in

working

capital

compared

the

prior

year

primarily

due

lower

short-term

investments

and

lower

inventory,

partially offset by lower accounts payable

and current lease liability.

At February 3,

2024, the Company

had an

unsecured revolving credit

agreement, which provided

for

borrowings of

up to

$35.0 million less

the

balance of

any revocable

letters of

credit related

purchase

commitments,

and

was

committed

through

May

2027.

The

credit

agreement

contains

various

financial

covenants and limitations, including the maintenance of specific financial

ratios with which the Company

was in

compliance as

February 3,

2024. There

were no

borrowings outstanding,

nor

any outstanding

letters of

credit that

reduced borrowing

availability,

under this

credit facility

as of

the fiscal

year ended

February 3, 2024 or the fiscal year ended January 28, 2023.

The

Company

had

outstanding

revocable

letters

credit

relating

purchase

commitments

February 3, 2024 or at January 28, 2023.

Expenditures

for

property

and

equipment

totaled

$12.5

million,

$19.4

million

and

$4.1

million

fiscal 2023,

2022 and

2021, respectively.

The

expenditures for

fiscal 2023

were primarily

for additional

investments in nine new stores, our

distribution center and information technology.

Net

cash

provided

investing

activities

totaled

$19.8

million

for

fiscal

2023

compared

$16.0

million provided

in fiscal

2022 and

$25.3 million

used in

fiscal 2021.

In fiscal

2023, the

cash provided

was primarily

attributable to

the net

sales of

short-term investments,

partially offset

by expenditures

for

property and equipment.

Net cash used in financing activities totaled

$16.1 million in fiscal 2023 compared to

net cash used of

$29.3

million

for

fiscal

2022

and

$31.8

million

for

fiscal

2021.

The decrease in

cash used during

fiscal

2023 was primarily due to lower

share repurchase amounts.

The Company does not use derivative financial instruments.

See

Note

the

Consolidated

Financial

Statements,

“Fair

Value

Measurements,”

for

information

regarding the Company’s financial assets that are measured at fair value.

The

Company’s

investment

portfolio

was

primarily

invested

corporate

bonds

and

taxable

governmental debt securities held in managed accounts

with underlying ratings of A or

better at February

3, 2024. The state,

municipal and corporate bonds and

asset-backed securities have contractual maturities

which

range

from

seven

days

3.1

years.

The

U.S.

Treasury

Notes

have

contractual

maturities

which

range

from

four

days to

2.0

years. These

securities are

classified as

available-for-sale and

are recorded

Short-term investments, Restricted cash, and Other assets on the accompanying Consolidated Balance Sheets.

These assets

are carried

at fair

value with

unrealized gains

and losses

reported net

of taxes

in Accumulated

other comprehensive income. The

asset-backed securities are bonds

comprised of auto loans

and bank credit

cards that carry

AAA ratings. The

auto loan

asset-backed securities

are backed

by static

pools of

auto loans

that were originated and serviced by captive auto finance units, banks or finance companies.

The bank credit

card

asset-backed

securities

are

backed

by revolving

pools

of credit

card receivables

generated

by account

holders of cards from American Express, Citibank,

JPMorgan Chase, Capital One, and Discover.

Additionally,

February

2024

and

January

28,

2023,

the

Company

had

$1.1

and

$0.9

million,

respectively,

corporate

equities,

which

are

recorded

within

Other

assets

the

accompanying

Consolidated Balance Sheets.

Level

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	6th grade Good

The Cato Corporation (CATO) 10-K2023 FY Annual report

Content analysis