8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

450 Fifth Street NW
Washington, D.C. 29549

Form 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):           November 14, 2006          

THE CATO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-31340	56-0484485
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification Number)

8100 Denmark Road, Charlotte, North Carolina	28273-5975
(Address of Principal Executive Offices)	(Zip Code)

(704) 554-8510

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name or Former Address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1

THE CATO CORPORATION

Item 2.02. Results of Operations and Financial Condition.

On November 14, 2006, The Cato Corporation issued a press release regarding its financial results for the third quarter ending October 28, 2006. A copy of this press release is furnished as Exhibit 99.1 hereto.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits

     Exhibit 99.1 — Press Release issued November 14, 2006.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE CATO CORPORATION
November 16, 2006	/s/ John P. D. Cato
Date	John P. D. Cato Chairman, President and Chief Executive Officer
November 16, 2006	/s/ Robert M. Sandler
Date	Robert M. Sandler Senior Vice President Controller Principal Financial Officer

3

Exhibit Index

Exhibit	Exhibit No.
Press Release issued November 14, 2006		99.1

4

EX-99.1

Exhibit 99.1

The CATO Corporation

NEWS RELEASE

FOR IMMEDIATE RELEASE

CEO Approval ________

For Further Information Contact:
     Stuart L. Uselton
     Executive Vice President
     Chief Administrative Officer
     704-940-7832

CATO REPORTS RECORD 3Q EARNINGS
Provides 4Q and Full Year Guidance

Charlotte, NC (November 14, 2006) — The Cato Corporation (NYSE: CTR) today reported record net income of $5.9 million for the third quarter ended October 28, 2006, compared to net income of $4.1 million for the third quarter ended October 29, 2005, an increase of 44%. Earnings per diluted share for the third quarter were $0.18, compared to $0.13 last year, an increase of 38%. Sales for the third quarter were $187.7 million, a 6% increase over sales of $177.8 million last year. Comparable store sales for the quarter were flat to the prior year.

For the nine months ended October 28, 2006, the Company earned net income of $38.8 million compared to net income of $33.2 million for the nine months ended October 29, 2005, a 17% increase. Earnings per diluted share were $1.22 compared to $1.04 last year, a 17% increase. Sales were $632.1 million for the first nine months of 2006, a 5% increase from sales of $601.1 million last year. Year-to-date comparable store sales were flat to the prior year.

For the quarter, the gross margin rate decreased to 32.2% versus 32.6% last year. The decrease is primarily due to higher freight and occupancy costs offset by an increase in merchandise contribution. The SG&A rate decreased to 27.4% from 28.8% last year

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

5

primarily due to lower incentive compensation and lower write-offs related to the Company’s proprietary credit card.

“Third quarter results were in line with expectations as we continued to experience better sell-throughs of regular-priced merchandise,” commented John Cato, Chairman, President, and Chief Executive Officer. “We estimate fourth quarter earnings per diluted share will be in the range of $.40 to $.43 versus $.37 last year, an increase of 8% to 16%. This estimate is based on comparable store sales in the range of down 2% to up 2%. For the year, earnings per diluted share are estimated to be in the range of $1.62 to $1.65 versus $1.41 last year, an increase of 15% to 17%.”

The Company’s fourth quarter includes 14 weeks compared to 13 weeks in 2005 and the fiscal year includes 53 weeks compared to 52 weeks in 2005. The additional week is expected to have a positive earnings effect of approximately $.05 per diluted share. Earnings guidance both for the fourth quarter and year reflects this impact. The guidance does not reflect proceeds from currently unresolved insurance claims related to last year’s hurricanes.

Year-to-date, the Company has opened 38 new stores, relocated 15 stores, and closed 12 stores. As of October 28, 2006, the Company operated 1,270 stores in 31 states, compared to 1,222 stores in 31 states as of October 29, 2005.

The Company now expects to open 22 stores in the fourth quarter, which would bring the total number of new stores opened for the year to 60.

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 offers exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices, every day. Additional information on The Cato Corporation is available at www.catocorp.com.

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

6

Statements in this press release not historical in nature including, without limitation, statements regarding the Company’s expected financial results for the fourth quarter and full year and projected 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; inventory risks due to shifts in market demand and other such factors as are contained in the Company’s Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. 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.

# # #

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

7

THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED OCTOBER 28, 2006 AND OCTOBER 29, 2005
(Dollars in thousands, except per share data)

	Quarter Ended												Nine Months Ended
	October 28,			%			October 29			%			October 28,			%			October 29,			%
	2006			Sales			2005			Sales			2006			Sales			2005			Sales
REVENUES
Retail sales	$	187,727			100.0	%	$	177,762			100.0	%	$	632,101			100.0	%	$	601,142			100.0	%
Other income (principally finance, late fees and layaway charges)		3,155			1.7	%		3,592			2.0	%		9,686			1.5	%		11,103			1.9	%
Total revenues		190,882			101.7	%		181,354			102.0	%		641,787			101.5	%		612,245			101.9	%
GROSS MARGIN (Memo)		60,498			32.2	%		57,893			32.6	%		219,014			34.7	%		204,413			34.0	%
COSTS AND EXPENSES, NET
Cost of goods sold		127,229			67.8	%		119,869			67.4	%		413,087			65.3	%		396,729			66.0	%
Selling, general and administrative		51,472			27.4	%		51,231			28.8	%		157,801			25.0	%		151,328			25.2	%
Depreciation		5,169			2.7	%		5,094			2.9	%		15,561			2.5	%		15,158			2.5	%
Interest expense		10			0.0	%		10			0.0	%		30			0.0	%		172			0.0	%
Interest and other income		(2,131	)		-1.1	%		(1,235	)		-0.7	%		(5,624	)		-0.9	%		(3,247	)		-0.5	%
Cost and expenses, net		181,749			96.8	%		174,969			98.4	%		580,855			91.9	%		560,140			93.2	%
Income Before Income Taxes		9,133			4.9	%		6,385			3.6	%		60,932			9.6	%		52,105			8.7	%
Income Tax Expense		3,272			1.8	%		2,318			1.3	%		22,179			3.5	%		18,914			3.2	%
Net Income	$	5,861			3.1	%	$	4,067			2.3	%	$	38,753			6.1	%	$	33,191			5.5	%
Basic Earnings Per Share	$	0.19					$	0.13					$	1.24					$	1.07
Basic Weighted Average Shares		31,298,253						31,126,752						31,270,347						31,139,741
Diluted Earnings Per Share	$	0.18					$	0.13					$	1.22					$	1.04
Diluted Weighted Average Shares		31,846,241						31,771,535						31,795,150						31,798,500

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

	October 28,		October 29,		January 28,
	2006		2005		2006
	(Unaudited)		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	21,428	$	18,288	$	21,734
Short-term investments		86,229		75,107		86,085
Accounts receivable — net		45,229		47,638		49,644
Merchandise inventories		110,078		103,435		103,370
Other current assets		10,900		8,694		10,844
Total Current Assets		273,864		253,162		271,677
Property and Equipment — net		130,255		122,034		124,104
Other Assets		11,150		10,941		10,855
TOTAL	$	415,269	$	386,137	$	406,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities	$	115,190	$	120,138	$	132,563
Noncurrent Liabilities		32,448		34,478		34,125
Stockholders’ Equity		267,631		231,521		239,948
TOTAL	$	415,269	$	386,137	$	406,636

8