Catherines Stores Corp. reports third quarter sales and net income.

MEMPHIS, Tenn.--(BUSINESS WIRE)--Nov. 22, 1994--Catherines Stores Corp. (NASDAQ:CATH) reported that net sales for the third quarter ended Oct. 29, 1994, increased 3.7% to a record $65.3 million from $63.0 million in the prior year.

For the first three quarters of the year, sales increased 4.1% to a record $192.5 million from $185.0 million in the same period in the prior year. Comparable stores' sales decreased 1.5% in the quarter and 1.0% during the first three quarters.

For the third quarter, net income decreased to $1.3 million from $2.1 million in the prior year, and earnings per share were $0.17 compared to $0.27 last year. For the first three quarters, net income was $5.5 million, compared to $6.8 million in the first three quarters of 1993. Earnings per share were $0.70, compared to $0.85 last year. The current year's earnings were reduced by $0.02 for the write-off of deferred financing costs related to the company's previous bank agreement.

Through November 1994, the company has opened 35 new stores and closed three, bringing the total number of stores to 407.

Commenting on the third quarter results, Bernard J. Wein, chairman and chief executive officer, said, ``Although third quarter sales increased, our gross margin was adversely affected as we increased markdowns to keep a tight control of our inventory levels. In addition, our buying and occupancy costs as a percentage of sales increased due to the large number of new stores which have not yet reached their potential. We continued to focus on expense control and were able to reduce our percentage to sales of selling, general and administrative expenses to 25.8% from 26.0%.''

Catherines Stores Corp. is a leading specialty retailer of large-size women's apparel, operating 407 stores in 37 states under the name ``Catherine's,'' ``PS..Plus Sizes, Plus Savings,'' ``Added Dimensions,'' and ``The Answer.''

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                Catherines Stores Corp. and Subsidiaries
                    Consolidated Statements of Income

                  Thirty-nine Weeks Ended     Thirteen Weeks Ended
                   10/30/93     10/29/94     10/30/93     10/29/94

Net sales        $184,996,434 $192,551,632 $ 62,977,637 $ 65,307,235
Cost of sales,
 including buying
 and occupancy
 costs            122,840,347  130,625,969   42,170,687   45,468,969
Gross margin       62,156,087   61,925,663   20,806,950   19,838,266
Selling, general
 and administrative
 expenses          48,583,784   50,167,878   16,485,561   16,847,195
Amortization of
 intangible assets  1,607,857    1,462,499      522,928      482,801
Unusual item                -      206,093            -            -
Operating income   11,964,446   10,089,193    3,798,461    2,508,270
Interest expense
 and other, net       384,277      692,327       50,750      267,718
Income before
 income taxes      11,580,169    9,396,866    3,747,711    2,240,552
Provision for
 income taxes       4,755,000    3,850,000    1,593,000      945,000
Net income       $  6,825,169 $  5,546,866 $  2,154,711 $  1,295,552
Net income per
 common share           $0.85        $0.70        $0.27        $0.17
Weighted average
 number of
 common shares
 outstanding        8,055,945    7,929,634    8,121,290    7,785,266

                          Consolidated Balance Sheets

                                           1/29/94        10/29/94
ASSETS
Current Assets:
 Cash and cash equivalents             $   4,228,967   $   3,088,073
 Receivables, less allowance for
  doubtful accounts                        4,342,114       4,494,906
 Income taxes receivable                   1,739,260         255,972
 Merchandise inventory                    37,636,230      48,251,566
 Prepaid expenses and other                2,712,319       3,018,797
 Deferred income tax asset                 1,046,000       1,046,000
  Total current assets                    51,704,890      60,155,314

Property and Equipment, at cost:
 Land                                        500,000         500,000
 Leasehold improvements                   14,336,472      16,094,340
 Fixtures and equipment                   11,009,815      13,409,315
 Equipment under capital lease             5,671,003       5,671,003
 Improvements in process                   1,427,918       4,386,295
                                       --------------  --------------
                                          32,945,208      40,060,953
 Less accumulated depreciation
  and amortization                        (9,092,099)    (12,338,187)
                                       --------------  --------------
                                          23,853,109      27,722,766

Other Assets and Deferred Charges, less
 accumulated amortization of $2,433,851
 and $2,813,415                            4,277,748       4,060,010
Goodwill, less accumulated amortization
 of $2,192,255 and $2,720,455             26,137,232      25,609,032
                                       --------------  --------------
                                       $ 105,972,979   $ 117,547,122

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                         17,211,301      22,823,126
 Accrued expenses                          9,426,504       9,809,899
 Current maturities of long-
  term bank and other debt                 6,895,050       4,337,666
  Total current liabilities               33,532,855      36,970,691

Long-Term Bank and Other Debt,
 less current portion                      4,973,916      10,361,188
Deferred Income Taxes                      1,403,000       1,403,000
Stockholders' Equity:
 Preferred stock, $.01 par value,
  1,000,000 shares authorized,
  none issued and outstanding                      -               -
Common stock, $.01 par value,
 15,000,000 and 50,000,000 shares
 authorized, 7,916,305 and
 7,919,870 shares issued                      79,163          79,199
Additional paid-in capital                52,496,633      52,548,290
Retained earnings                         13,487,412      19,034,278

Stockholders' equity prior
 to treasury stock                        66,063,208      71,661,767
 Less Treasury stock, at cost -
  284,709 shares in 1994                           -      (2,849,524)
  Total stockholders' equity              66,063,208      68,812,243
                                       --------------  --------------
                                       $ 105,972,979   $ 117,547,122

CONTACT: Catherines Stores Corp., Memphis

David C. Forell, 901/363-3900, ext. 271