The Cato Corporation (NYSE: CATO) said it will close 70 additional underperforming stores during the third and fourth quarters, bringing its total planned store closures for fiscal 2026 to approximately 120.
The closures will occur as leases expire, and the company said it will not pay rent at those locations beyond 2026. Cato expects to incur between $1 million and $1.3 million in costs related to exiting the stores through the end of fiscal 2026, primarily for removal of external signage and fixtures and return of store systems to corporate.
The company reviews roughly one-third of its store portfolio each year to decide whether to exercise lease options or negotiate extensions, factoring in performance, sales trends and profitability. Marginal stores were previously renewed on additional terms in hopes of turning them around.
John Cato, the company's chairman, president and chief executive officer, said the economic environment continues to weigh on the retailer's customer base.
"In light of the current economic environment, especially with the negative pressure on our customers' discretionary income, we do not expect these marginal stores to improve appreciably," John Cato said.
The company said it expects the closures to have a positive impact on operating results in fiscal 2027 and beyond.
