TCF POST Report
CHARLOTTE, N.C., Sept. 18, 2026 — U.S. fashion retailer The Cato Corporation plans to close approximately 70 additional underperforming stores during the third and fourth quarters of fiscal 2026, bringing its total planned store closures for the year to about 120 locations.
The retailer said the accelerated closures reflect a more challenging economic environment, particularly continued pressure on customers’ discretionary spending.
Cato reviews roughly one-third of its store portfolio annually when deciding whether to exercise lease options or negotiate extensions. Store sales trends and current and projected profitability are key factors in those decisions.
Historically, the company has sometimes renewed leases for marginal stores for another year to allow additional time for sales and profitability to improve. However, Cato said it does not expect these stores to improve appreciably under current economic conditions.
“As a result, we are closing more stores than expected this year,” said John Cato, chairman, president and chief executive officer. “We believe that closing these additional stores will have a positive impact on our operating results in fiscal 2027 and beyond.”
$1.0M–$1.3M Exit Costs
Cato expects to incur approximately $1.0 million to $1.3 million in additional costs through the end of fiscal 2026 related to the closures.
The expenses will primarily cover the removal and disposal of external signage and store fixtures, along with returning store systems to the company's corporate operations.
Importantly, the stores targeted for closure are all reaching the end of their lease terms, meaning Cato will not incur rent expenses for these locations beyond 2026.
Retail Footprint Restructuring
The additional closures represent a more aggressive approach to portfolio management as Cato responds to weaker discretionary spending and uneven store-level performance.
By exiting marginal locations at lease expiration rather than extending their leases, the retailer expects to reduce its fixed operating costs and improve the profitability of its remaining store base from fiscal 2027 onward.
The move highlights the continuing pressure on U.S. fashion retailers to balance physical-store networks with changing consumer spending patterns and store-level profitability.