Cato is shutting approximately 70 additional underperforming stores in the second fiscal half, as the women’s fashion retailer continues to face a challenging economic environment.

The decision brings total planned store closures to approximately 120 stores this year.

“Annually we review approximately one-third of our stores to exercise available lease options or negotiate an extension based on each store’s performance, including store sales trend and current and projected store profitability,” said CEO John Cato.

While the company often renewed marginal stores for an additional year to improve, it does not expect them to deliver considerable improvement in the current economic environment, especially with pressure on customers’ discretionary income.

“As a result, we are closing more stores than expected this year. We believe that closing these additional stores will have a positive impact on our operating results in fiscal 2027 and beyond,” Cato added.

The company expects to incur between $1 million and $1.3 million in costs to exit these additional stores. As the stores are at the end of their lease term, the retailer will not be paying rent for these locations beyond this year. 

Founded in 1946 and based in Charlotte, North Carolina, Cato operates approximately 1100 stores under the banners Cato, Cato Plus, It’s Fashion, It’s Fashion Metro and Versona. 

In the second quarter ended August 1, the company’s sales fell 6 per cent to $163.9 million, while its net income dropped significantly from $6.8 million a year ago to $1.1 million.

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