Budget Fashion Giant to Shutter 120 Stores Amid Inflation and Rising Costs
Cato Corporation announces closure of 120 stores as inflation strains consumer spending. CEO cites economic pressures.
POLICY WIRE — New York, United States — A well-known budget fashion brand is preparing to shut down 120 retail locations across multiple states due to ongoing economic challenges, including rising inflation and fuel costs.
The Cato Corporation, which owns Cato Fashions, has announced that over 10% of its total store count will be closed by the end of the current fiscal year. The company operates more than 1,000 clothing outlets in 31 U.S. states.
In a statement, CEO John Cato explained that the company regularly evaluates one-third of its stores for lease renewals or extensions based on performance metrics. He noted that with customers facing financial strain, these underperforming locations are unlikely to improve significantly. As a result, the firm has increased its planned store closures from 50 to 120, with associated costs estimated between $1 million and $1.3 million.
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Cato said the closures are expected to have a positive long-term effect on the company’s financial results, particularly in fiscal 2027 and beyond. This decision comes after the company reported declining sales, with revenue dropping from $174.7 million in Q2 2025 to $163.9 million in Q2 2026. Net income also fell sharply, from $6.8 million to just $1.1 million during the same period.
John Cato attributed the financial struggles to sustained inflation, higher fuel prices, and elevated interest rates, all of which are reducing consumer spending power. Other major retailers, such as Wendy’s, have also announced store closures in response to similar economic pressures.
The Cato Corporation will continue to operate its extensive network of stores, with 1,057 locations still active across 31 states as of August. Cato Fashions is part of a broader value-priced retail chain that includes Versona and It’s Fashion.
Reporting by Policy-Wire (PW)
