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Weather, promotions hurt Cato Q4 net income; 64 new stores planned

BY Dan Berthiaume

Charlotte, N.C. – The Cato Corporation cited weather, holiday promotions and a 53rd week in fiscal 2012 as impacting its net income during the fourth quarter of fiscal 2013. The retailer also said it plans to open 64 new stores and close 17 existing stores during fiscal 2014.

Net income fell 52% to $3.8 million from $7.9 million in the same period the prior year, within previously announced guidance range, while sales dropped 7% to $215.2 million from $232 million.

Full year fiscal 2013 net income was $54.3 million, down 12% from $61.7 million for 2012. For the year, the company’s sales decreased 2% to $910.5 million from 2012 sales of $933.8 million. Same-store sales declined 3%.

The company believes that 2014 could be another tough year, saying the sales environment may be difficult due to continuing slow job growth and higher costs which reduce customers’ discretionary income. For 2014, the company estimates same-store sales will be in a range of down 2% to flat and net income in a range of $43.1 million to $48.5 million, a decrease of 21% to 11% compared to $54.3 million in 2013. Cato estimates first quarter 2014 net income to be in a range of $26 million to $27.7 million, based on same-store sales of down 2% to flat.

"Results for 2013 were negatively impacted by the continuing difficult economic situation our customers have faced for some time now," said John Cato, chairman, president and CEO. "Even with the very challenging environment, we have continued to grow our store base, manage our inventory, control costs and, most importantly, remain profitable. We have also continued to invest in our business by renovating and expanding facilities, upgrading systems and launching an e-commerce website in November. In regard to the fourth quarter, earnings were impacted by a very promotional holiday sales season as well as a number of winter storms in December and January. Also, the comparison of fourth quarter results to the prior year is negatively impacted by the fact this year had one less week than the prior year period."

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MARKETING/SOCIAL MEDIA

Report: Chick-fil-A, Sonic earn top fast food customer rankings

BY Dan Berthiaume

Waban, Mass. — Chick-fil-A and Sonic Drive-In deliver the best customer experience in the fast food industry, according to the 2014 Temkin Experience Ratings, an annual ranking of companies based on a study of 10,000 U.S. consumers.

Chick-fil-A led the food chains for the third year in a row, landing it in third place overall out of 268 companies across 19 industries. Sonic Drive-In came in a very close second with an overall ranking of fifth. Five other fast food chains earned an "excellent" rating: Dairy Queen, Starbucks, Little Caesar’s, Subway, and Burger King. The food chains with the lowest rated customer experience are McDonalds, Baskin Robins, and Orange Julius.

Here are some additional findings from the fast food industry:

• The ratings of all fast food chains in the 2014 Temkin Experience Ratings are as follows: Chick-fil-A (83%); Sonic Drive-In (82%); Dairy Queen (81%); Starbucks (81%); Little Caesar’s (80%); Subway (80%); Burger King (80%); Pizza Hut (79%); Domino’s (79%); Wendy’s (79%); Arby’s (77%); Taco Bell (77%);, Dunkin’ Donuts (76%); Jack in the Box (76%); Hardees (76%); KFC (76%); Quiznos (75%); McDonalds (75%); Baskin Robbins (73%); and Orange Julius (71%).

• KFC (+9 points); Burger King (+5 points); Wendy’s (+5 points); and Taco Bell (+5 points) improved their ratings the most between 2013 and 2014.

• Dunkin’ Donuts (-4 points), Arby’s (-2 points), and Jack in the Box (-2 points) were the only fast food chains whose ratings declined between 2013 and 2014.

• Overall, the fast food industry averaged a 78% rating in the 2014 Temkin Experience Ratings and placed 2nd out of 19 industries. It was also one of the 15 industries to improve its rating over the past year, increasing its average by 2.2 percentage points.

"Chick-fil-A continues to stand out amid an industry that receives overall strong marks for customer experience," said Bruce Temkin, managing partner of Temkin Group.

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MARKETING/SOCIAL MEDIA

Duane Reade pilots weather-based promotions

BY Dan Berthiaume

New York — Duane Reade and Poncho, a personalized weather-forecasting service that sends users relevant weather updates tailored to their preferences via text or email, are teaming up in a pilot program targeted to the New York Metropolitan area consumer. Poncho users will receive their regular weather updates with select alerts featuring coupons for Duane Reade products that will help them battle the elements and their allergies.

Poncho’s tailored weather alerts include messages for sufferers of seasonal allergies with special notifications on days when the pollen count is particularly high. On these days, Poncho users will receive exclusive discounts that can be used for specified allergy relief products available in Duane Reade stores.

"At Duane Reade, we constantly strive to offer our customers what they need now, with one-stop-shop convenience and localized relevance to their everyday lives," said Calvin Peters, PR & digital communications manager for Duane Reade. "Weather is a perfect example of something that impacts people’s daily decisions, which is why collaborating with a personalized tool like Poncho affords us another way to provide our customers with products and services that are intrinsic to their individual lifestyle."

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