Yahoo Finanza Carter's Inc (CRI) Surpasses EPS Estimates in Q1 Fiscal 2024, Despite Revenue Dip
Net Sales: Reported at $661 million, down 4.9% year-over-year, falling short of estimates of $640.5 million.
Earnings Per Share (EPS): Achieved $1.04, surpassing the estimated $0.77.
Net Income: Totaled $38 million, exceeding the estimated $27.90 million.
Dividends and Share Repurchases: Returned $38 million to shareholders through dividends and share repurchases.
Operating Income: Recorded at $55 million, reflecting a slight decrease from the previous year's $56.4 million.
U.S. Retail Segment: Experienced a 6.8% decline in comparable net sales.
Full Year Outlook: Projects net sales between $2.95 billion and $3.0 billion, with low to mid-single-digit growth in adjusted diluted EPS.
Carter's Inc (NYSE:CRI) released its first quarter fiscal 2024 results on April 26, 2024, revealing a mixed financial performance with a notable earnings per share (EPS) surpassing analyst expectations but a slight dip in revenue. The detailed financial outcomes were disclosed in the company's 8-K filing.
Company Overview
Carter's Inc, a leading North American brand exclusively marketing apparel for babies and young children, operates under renowned brands such as Carter's and OshKosh B'gosh. The company's multi-channel business model spans retail stores, eCommerce, and wholesale channels, with a significant presence in the U.S. and Canada. Carter's sources its products primarily through contract manufacturers in Asia and has a robust distribution network across the U.S., Canada, and Asia to cater to a global consumer base.
First Quarter Financial Performance
For Q1 2024, Carter's reported net sales of $661 million, a decrease from $696 million in the same quarter the previous year, reflecting a 4.9% decline. This drop was attributed to the ongoing inflationary pressures affecting families with young children and the delayed onset of spring weather, which dampened demand. Despite the lower sales, Carter's achieved a diluted EPS of $1.04, up from $0.95 in Q1 2023, exceeding the estimated EPS of $0.77.
The company's operating income slightly decreased to $55 million from $56.4 million year-over-year, while the operating margin saw a minor improvement to 8.3% from 8.1%. This was primarily due to reduced inbound freight and product costs, which helped mitigate the impact of fixed cost deleverage on lower sales and expenses related to new store openings.
Challenges and Strategic Responses
Carter's faced several challenges during the quarter, including cooler weather impacting demand for spring products and inflationary pressures. However, the company benefited from higher and earlier demand from major wholesale customers, reflecting leaner inventory positions at retailers and a need for new seasonal products. Internationally, stronger demand in Mexico offset lower sales in Canada, where cooler weather also delayed seasonal purchases.
Financial Health and Shareholder Returns
The company's balance sheet remains robust, with continued efforts to control discretionary expenses and reduce inventory. Carter's returned $38 million to shareholders through dividends and share repurchases during the quarter. The company paid a quarterly dividend of $0.80 per share and repurchased approximately 108 thousand shares.
Outlook for 2024
Looking ahead to the rest of fiscal 2024, Carter's anticipates net sales to be between $2.95 billion and $3.0 billion, with adjusted operating income and diluted EPS expected to see low to mid-single-digit growth. The company's strategy includes managing inventory levels prudently, focusing on gross margin improvement, and continuing capital return initiatives.
Carter's remains optimistic about its growth prospects, citing its strong brand portfolio, multi-channel distribution model, and strategic initiatives aimed at enhancing product offerings and customer engagement.
Conclusion
Despite the challenges posed by external economic factors, Carter's Inc's ability to exceed EPS expectations while managing costs and returning value to shareholders highlights its resilience and strategic agility. As the company navigates through 2024, its focus on operational efficiency and market responsiveness will be crucial in sustaining its growth trajectory and maintaining its leadership in the children's apparel market.
Explore the complete 8-K earnings release (here) from Carter's Inc for further details.
This article first appeared on GuruFocus.
