CATO

• Sales for the quarter decreased 6% to $163.9 million from $174.7 million, primarily due to a 3.7% same-store sales decrease.
• Gross margin fell to 32.8% of sales from 36.2% due to lower merchandise margins and occupancy cost deleveraging.
• For the six months ended August 1, 2026, net income was $10.5 million, or $0.53 per diluted share, on sales of $333.3 million, compared to $10.1 million, or $0.51 per diluted share, on sales of $343.1 million in the prior year.
• The company closed eight stores during the quarter, ending with 1,057 stores in 31 states, and expects continued pressure on customers' discretionary income and a challenging back half of 2026.

2.02 Results of Operations and Financial Condition · 9.01 Financial Statements and Exhibits

• Sales for the quarter were $169.5 million, up 0.7% from $168.4 million in the same period last year; same-store sales increased 3%.
• Gross margin as a percentage of sales improved to 37.2% from 35.1%, partly due to a pre-tax $5.7 million tariff refund claim.
• SG&A expense decreased to $53.9 million from $55.3 million, and as a percentage of sales declined to 31.8% from 32.8%.
• The company repurchased 107,823 shares during the quarter and operated 1,065 stores in 31 states as of May 2, 2026.

2.02 Results of Operations and Financial Condition · 5.07 Submission of Matters to a Vote of Security Holders · 9.01 Financial Statements and Exhibits

• Full-year fiscal 2025 net loss was ($5.9) million or ($0.31) per diluted share, compared to a net loss of ($18.1) million or ($0.97) per diluted share in 2024.
• Fourth quarter sales decreased 3.4% to $150.0 million from $155.3 million; same-store sales were flat.
• Full-year sales increased 0.7% to $646.8 million from $642.1 million; same-store sales increased 4%.
• Fourth quarter gross margin improved to 29.2% of sales from 28.0% in 2024; full-year gross margin improved to 33.3% from 32.0%.

2.02 Results of Operations and Financial Condition · 9.01 Financial Statements and Exhibits

• Q3 sales rose 6% to $153.7 million from $144.6 million; same-store sales increased 10%.
• Gross margin improved to 32.0% of sales from 28.8%; SG&A expenses fell to $57.0 million from $57.9 million.
• Nine-month results: net income of $5.0 million, or $0.25 per diluted share, versus net loss of $4.0 million, or ($0.24) per diluted share; sales up 2% to $496.8 million.
• Company closed 16 stores year-to-date; store count was 1,101 as of November 1, 2025, down from 1,167 a year earlier.

2.02 Results of Operations and Financial Condition · 9.01 Financial Statements and Exhibits

• Q2 sales rose 5% to $174.7 million from $166.9 million, driven by a 9% same-store sales increase.
• Gross margin improved to 36.2% of sales from 34.6% in the prior-year quarter, and SG&A expenses fell to 32.8% of sales from 34.9%.
• For the six months ended August 2, 2025, net income was $10.1 million ($0.51 per diluted share) on sales of $343.1 million, versus $11.1 million ($0.54 per diluted share) on sales of $342.2 million in the prior-year period.
• The company closed eight stores in Q2 and ended the quarter with 1,101 stores in 31 states; management expects the back half of 2025 to be challenging due to tariff uncertainty and potential product cost impacts.

2.02 Results of Operations and Financial Condition · 9.01 Financial Statements and Exhibits

• Sales decreased 4% to $168.4 million from $175.3 million in the first quarter of 2024; same-store sales were flat.
• Gross margin as a percentage of sales was 35.1% in 2025 versus 35.8% in 2024, due to lower merchandise contribution partly offset by lower buying costs.
• SG&A expense decreased to $55.3 million from $56.8 million, but as a percentage of sales increased to 32.8% from 32.4%.
• The company bought back 294,036 shares during the quarter and permanently closed eight stores, ending with 1,109 stores in 31 states.

2.02 Results of Operations and Financial Condition · 5.07 Submission of Matters to a Vote of Security Holders · 9.01 Financial Statements and Exhibits

• Full-year fiscal 2024 net loss was $18.1 million, or $0.97 per diluted share, versus a net loss of $23.9 million, or $1.17 per diluted share, in 2023.
• Fourth-quarter sales decreased 10.0% to $155.3 million from $172.1 million; on a comparable 13-week basis, total sales decreased 5.1% and same-store sales decreased 0.8%.
• Full-year sales decreased 8.3% to $642.1 million from $700.3 million; on a comparable 52-week basis, total sales decreased 6.8% and same-store sales decreased 3.1%.
• The company eliminated approximately 40 corporate positions in February 2025 and plans to open up to 15 new stores and close up to 50 underperforming stores during 2025.

2.02 Results of Operations and Financial Condition · 9.01 Financial Statements and Exhibits

• The ABL Facility replaces the Prior Credit Agreement dated May 19, 2022, which was terminated on March 13, 2025 with no principal or accrued interest outstanding.
• The facility includes a $15 million uncommitted accordion feature that could increase total commitments to $50 million, and a $5 million sub-limit for letters of credit.
• Borrowings are limited by a borrowing base based on eligible credit card receivables and inventory, with interest at base rate plus 50 basis points or SOFR plus 160 basis points.
• The ABL Facility matures on March 13, 2028, and includes customary covenants, cash dominion provisions, and mandatory prepayment requirements.

1.01 Entry into a Material Definitive Agreement · 1.02 Termination of a Material Definitive Agreement · 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement · 9.01 Financial Statements and Exhibits