Cato Reports June Comp Store Sales Up 4%

Raises Previous Guidance

CHARLOTTE, N.C., July 10 /PRNewswire-FirstCall/ -- The Cato Corporation today reported sales of $88.3 million for the five weeks ended July 5, 2008, a 7% increase over sales of $82.3 million for the five weeks ended July 7, 2007. Comparable store sales for the five-week period increased 4%.

Sales for the twenty-two weeks ended July 5, 2008 were $394.6 million, a 3% increase over sales of $382.4 million for the twenty-two weeks ended July 7, 2007. The Company's year-to-date comparable store sales were flat to the prior year.

"June sales were better than expected, however, we continue to believe the retail environment will remain difficult," commented John Cato, Chairman, President, and Chief Executive Officer. "We continue to manage inventory tightly and have experienced better sell-throughs of regular price and markdown merchandise. We now expect second quarter earnings per diluted share to be in the range of $.42 to $.44 versus our previous guidance of $.28 to $.33 and $.39 last year."

During the month of June, the Company opened two new stores and closed one store. New stores opened in Guthrie, OK and El Paso, TX. The closed store was extensively damaged by a tornado and will not be reopened. As of July 5, 2008, The Cato Corporation operated 1,330 stores in 32 states, compared to 1,301 stores in 31 states as of July 7, 2007.

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 http://www.catocorp.com/ .

Statements in this press release not historical in nature including, without limitation, statements regarding the Company's expected financial results for the second quarter 2008 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 and inventory risks due to shifts in market demand. Additional information concerning these and other important factors can be found in Item 1A. "Risk Factors" of the Company's most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. 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.

CONTACT: Stuart L. Uselton, Executive Vice President, Chief Administrative Officer of The Cato Corporation, +1-704-940-7832

Web site: http://www.catocorp.com/

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