Catherines Stores Corporation reports third quarter results.

MEMPHIS, Tenn.--(BUSINESS WIRE)--Nov. 21, 1996--Catherines Stores Corporation (NASDAQ: CATH) reported Thursday that net income for the third quarter of fiscal 1996 was $40,000 or $0.01 per common share.

In the previous fiscal year the Company earned $674,000 or $0.09 per common share. For the first nine months of fiscal 1996, net income was $3.9 million or $0.51 per common share compared to $5.6 million or $0.71 per common share for the first three quarters of fiscal 1995.

Sales for the third quarter were $65.6 million, a 5.6% decrease from the third quarter 1995 sales of $69.5 million. Sales year to date decreased to $204.9 million from $206.3 million. Comparable stores' sales decreased 9.1% and 5.2% for the third quarter and first nine months of 1996.

During the quarter, the Company opened nine new stores and closed one unprofitable store. An additional store opened in early November. The Company also repurchased 509,500 shares of its common stock during the third quarter for approximately $3.7 million.

Bernard J. Wein, President and Chief Executive Officer, commenting on the results of operations, stated, "We continue to find it difficult to achieve sales gains in this very competitive environment and even with strong promotional programs were unable to increase store traffic. We did, however, improve our merchandise margins both in the quarter and year to date by over 100 basis points and are now selling more units per salescheck as a result of our training efforts. Selling, general and administrative costs, on a per store basis, have declined by 4.1% and 2.0% in the third quarter and year to date, respectively. The improvement is a result of our continued focus on expense control. Going into the fourth quarter our per store inventories are less than last year as we react to the trends in our business. This inventory control will aid us in continued improvement of our merchandise margins as we move forward."

Catherines Stores Corporation is a Memphis based specialty retailer selling large-size women's apparel in 461 stores in 40 states operating under the names Catherine's; PS...Plus Sizes, Plus Savings; Added Dimensions; and The Answer. -0-

            Catherines Stores Corporation and Subsidiaries
                  Consolidated Statements of Income
            (amounts in thousands except per share data)
                            Unaudited

                                      Thirteen Weeks Ended
                             November 2, 1996     October 28, 1995

Net sales                    $ 65,642   100.0%    $ 69,605   $100.0%
Cost of sales, including
 buying and occupancy
 costs                         46,423    70.7%      49,245     70.9%
Gross margin                   19,219    29.3%      20,260     29.1%
Selling, general and
 administrative expenses       18,553    28.3%      18,576     26.7%
Amortization of
 intangible assets                291     0.4%         301      0.4%
Operating income                  375     0.6%       1,383      2.0%
Interest and other, net           305     0.5%         261      0.4%
Income before income taxes         70     0.1%       1,122      1.6%
Provision for income taxes
 (as a percentage of income
  before taxes)                    30    42.9%         448     39.9%
Net income                   $     40     0.1%     $   674      1.0%
Net income per common share  $   0.01              $  0.09
Weighted average number of
 common shares outstanding      7,504                7,921


                                     Thirty-nine weeks Ended
                              November 2, 1996     October 28, 1995

Net sales                    $204,939   100.0%    $206,326   $100.0%
Cost of sales, including
 buying and occupancy
 costs                        141,093    68.8%     141,353     68.5%
Gross margin                   63,846    31.2%      64,973     31.5%
Selling, general and
 administrative expenses       55,429    27.0%      54,016     26.2%
Amortization of
 intangible assets                892     0.4%         904      0.4%
Operating income                7,525     3.7%      10,053      4.9%
Interest and other, net           862     0.4%         688      0.3%
Income before income taxes      6,663     3.3%       9,365      4.5%
Provision for income taxes
 (as a percentage of income
  before taxes)                 2,732    41.0%       3,745     40.0%
Net income                   $  3,931     1.9%     $ 5,620      2.7%
Net income per common share  $   0.51              $  0.71
Weighted average number of
 common shares outstanding      7,736                7,866

               Catherines Stores Corporation and Subsidiaries
                        Consolidated Balance Sheets
                           (amounts in thousands)
                                 Unaudited

                                         Nov. 2,   Feb. 3,  Oct. 28,
                                          1996      1996      1995
Assets
 Cash and cash equivalents              $  2,806  $  3,955  $  2,698
 Receivables                               3,886     3,781     5,492
 Merchandise inventory                    53,678    50,078    55,561
 Other current assets                      4,717     4,499     4,269
 Property and equipment, net              36,354    31,397    32,994
 Other assets and deferred charges, net    2,940     3,300     3,218
 Goodwill, net                            23,913    24,450    24,905
 Total assets                           $128,294  $121,460  $129,137

Liabilities and stockholders' equity
 Accounts payable and other
  current liabilities                   $ 37,840  $ 41,101  $ 40,770
 Long-term bank debt                      15,187     6,000    10,250
 Other long-term liabilities               2,749     2,127     3,467
 Stockholders' equity                     72,518    72,232    74,650
 Total liabilities and
  stockholders' equity                  $128,294  $121,460  $129,137

CONTACT: Catherines Stores Corporation, Memphis

David C. Forell, 901/363-3900 ext. 1271