Carter's Inc (CRI) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...

GuruFocus News
4 min read

In This Article:

  • Net Sales: $758 million in Q3, down 4% year-over-year.

  • Operating Income: $77 million with an operating margin of 10.2%.

  • Adjusted Earnings Per Share (EPS): $1.64, down 11% from last year.

  • Gross Margin: 46.9%, a decline of 60 basis points from last year.

  • US Retail Sales: Declined 6% in Q3.

  • US Wholesale Sales: Comparable to last year.

  • International Sales: Declined 9% on a reported basis.

  • Inventory Levels: Declined 2% compared to last year.

  • Cash Flow: Year-to-date operating cash flow was $11 million.

  • Liquidity: Over $1 billion at the end of the quarter.

  • Omnichannel Sales: 12% lift in Q3.

  • Store Openings/Closures: Opening 40 high-margin stores and closing about 30 low-margin stores this year.

  • US Retail Comp Sales: Down 7% in Q3.

  • US Wholesale Operating Margin: Over 21%, down 90 basis points from last year.

  • International Segment Margin: 9.6%, down from 11.7% last year.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Carter's Inc (NYSE:CRI) exceeded its third-quarter sales and earnings guidance, driven by strong performance in the US Retail segment.

  • The company reported better-than-expected inventory levels and cash flow, ending the quarter with over $1 billion in liquidity and no seasonal borrowings.

  • Carter's Inc (NYSE:CRI) saw a 12% lift in omnichannel sales, with 38% of digital orders supported by stores, enhancing margin-accretive transactions.

  • The company experienced growth in its Baby apparel segment, which contributed over 50% of total apparel sales, and saw a lift in new and reactivated customers.

  • Carter's Inc (NYSE:CRI) maintained its position as the largest supplier of children's apparel to major retailers like Target, Walmart, and Amazon, with exclusive brands forecasted to grow to 55% of total US Wholesale sales.

Negative Points

  • Third-quarter net sales were down 4% year-over-year, with declines in the US Retail and International segments.

  • The company experienced a double-digit decrease in sales for apparel targeting 4- to 10-year-old children, contributing less than 20% of total apparel sales.

  • Carter's Inc (NYSE:CRI) faced a 60 basis point decline in gross margin due to price investments, a higher mix of lower-margin US Wholesale sales, and higher inbound freight costs.

  • US Retail sales were down 6%, with e-commerce sales declining 10% year-to-date, reflecting ongoing challenges in consumer demand.

  • The International segment saw a 9% decline in sales, with Canada experiencing a high single-digit decrease due to economic pressures and warmer weather affecting demand.

Recommended Stories