What: Shares of women's apparel retailer Cato
So what: For the five weeks ended July 2, Cato posted a top-line increase of just 2%, to $90.4 million, while same-store sales were up a paltry 1% in the same period. The shares had been on fire of late, up about 30% over the past four months, so today's weak results come as a particularly big disappointment to Mr. Market.
Now what: I wouldn't be so quick to pounce on today's plunge. If anemic top-line results weren't disappointing enough, management said it expects rising raw material and freight costs to hurt its bottom line for the second half of the year. With so many headwinds working against Cato, investors would do well to wait for a single-digit P/E before even considering jumping in.
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