EX-99.1

Charlotte, N.C. (August 17, 2004) – The Cato Corporation (NYSE: CTR) today reported net income of $8.2 million or $.39 per diluted share for the second quarter ended July 31, 2004, compared to net income of $7.7 million or $.30 per diluted share for the second quarter ended August 2, 2003. Net income increased 6% and earnings per diluted share increased 30% from last year. Sales for the second quarter were $197.1 million, a 5% increase over sales of $188.2 million last year. The Company’s second quarter comparable store sales decreased 1%.

For the six months ended July 31, 2004, the Company earned net income of $25.0 million or $1.20 per diluted share, compared with net income of $25.2 million or $.98 per diluted share for the six months ended August 2, 2003, a net income decrease of 1% and a per diluted share increase of 22%. Sales were $402.3 million for the first half of 2004, a 4% increase over sales of $385.5 million last year. Comparable store sales decreased 2% for the first half.

“Our second quarter earnings per share of $.39 exceeded our estimate of $.33 to $.38 due to an improved gross margin rate resulting from less markdowns than last year,” said John Cato, Chairman, President, and Chief Executive Officer.

The Company’s expectations for third quarter earnings per diluted share are in the range of $.05 to $.09 versus $.04 in 2003. These expectations are based on comparable store sales in the range of down 2% to up 2%. The Company’s earnings per diluted share in third quarter 2003

were negatively impacted by a charge of $.08 related to retirement agreements signed with the Company’s founders.

During the first half, the Company opened 30 stores and relocated 17 stores. The Company expects to open 80 new stores for the year, as compared to the original estimate of 90 new stores. As of July 31, 2004, The Cato Corporation operated 1,132 stores in 28 states, compared to 1,051 stores in 26 states as of August 2, 2003.

The Cato Corporation is a leading specialty retailer of value-priced women’s fashion apparel operating two divisions, “Cato” and “It’s Fashion!”. The Company primarily offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices, everyday. Additional information on The Cato Corporation is available at www.catocorp.com.

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected financial results for the third quarter and expected plans for full year store openings are considered “forward-looking” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations that are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements. Such factors include, but are not limited to, the following: general economic conditions; competitive factors and pricing pressures; the Company’s ability to predict fashion trends; consumer apparel buying patterns; adverse weather conditions and inventory risks due to shifts in market demand. The Company does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized. The Company is not responsible for any changes made to this press release by wire or Internet services.

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Dollars in thousands, except per share data)


	Quarter Ended												Six Months Ended
	July 31,			%			August 2,			%			July 31,			%			August 2,			%
	2004			Sales			2003			Sales			2004			Sales			2003			Sales
REVENUES
Retail sales	$	197,068			100.0	%	$	188,218			100.0	%	$	402,261			100.0	%	$	385,522			100.0	%
Other income (principally finance, late fees and layaway charges)		3,816			1.9	%		3,775			2.0	%		7,824			1.9	%		7,681			1.9	%

Total revenues		200,884			101.9	%		191,993			102.0	%		410,085			101.9	%		393,203			101.9	%

GROSS MARGIN (Memo)		61,017			31.0	%		55,602			29.5	%		133,866			33.3	%		125,908			32.6	%
COSTS AND EXPENSES, NET
Cost of goods sold		136,051			69.0	%		132,616			70.5	%		268,395			66.7	%		259,614			67.4	%
Selling, general and administrative		47,387			24.0	%		44,565			23.7	%		93,210			23.2	%		88,010			22.8	%
Depreciation		5,091			2.6	%		4,562			2.4	%		10,070			2.5	%		9,013			2.3	%
Interest expense		167			0.1	%		1			0.0	%		329			0.1	%		4			0.0	%
Interest and other income		(656	)		-0.3	%		(1,888	)		-1.0	%		(1,162	)		-0.3	%		(3,018	)		-0.8	%

Cost and expenses, net		188,040			95.4	%		179,856			95.6	%		370,842			92.2	%		353,623			91.7	%


Income Before Income Taxes		12,844			6.5	%		12,137			6.4	%		39,243			9.7	%		39,580			10.2	%

Income Tax Expense		4,662			2.4	%		4,406			2.3	%		14,245			3.5	%		14,368			3.7	%


Net Income	$	8,182			4.1	%	$	7,731			4.1	%	$	24,998			6.2	%	$	25,212			6.5	%


Basic Earnings Per Share	$	0.40					$	0.30					$	1.22					$	0.99

Basic Weighted Average Shares		20,515,017						25,478,008						20,527,831						25,458,696

Diluted Earnings Per Share	$	0.39					$	0.30					$	1.20					$	0.98

Diluted Weighted Average Shares		20,880,031						25,888,333						20,890,832						25,850,621

THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)


	July 31,		August 2,
	2004		2003		January 31,
	(Unaudited)		(Unaudited)		2004
ASSETS
Current Assets
Cash and cash equivalents	$	29,439	$	59,836	$	23,857
Short-term investments		76,494		66,255		47,545
Accounts receivable — net		50,260		53,092		52,714
Merchandise inventories		86,355		79,998		97,292
Other current assets		6,047		7,181		5,992


Total Current Assets		248,595		266,362		227,400

Property and Equipment — net		114,783		113,131		114,367

Other Assets		10,194		9,617		9,806


TOTAL	$	373,572	$	389,110	$	351,573

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities	$	119,052	$	88,014	$	114,492
Noncurrent Liabilities		21,912		15,010		21,470
Long Term Debt		18,500		0		21,500
Stockholders’ Equity		214,108		286,086		194,111


TOTAL	$	373,572	$	389,110	$	351,573


		NEWS RELEASE

FOR IMMEDIATE RELEASE
		CEO Approval ____________
For Further Information Contact:
Michael O. Moore
Executive Vice President
Chief Financial Officer
704-551-7201