Carter's Reports Q4 Earnings Above Street View; Warns On Continued Inflationary Pressure

  • Carter's Inc CRI reported a fourth-quarter FY22 sales decline of 14.1% year-on-year to $912.13 million, beating the consensus of $864.31 million.
  • Lower sales were driven by declines in the U.S. Retail, International, and U.S. Wholesale segments of 12.7%, 12%, and 17.8%, respectively. U.S. Retail comparable net sales declined by 12.9%.
  • The company noted the declines reflect the significant impact inflation has had on demand from consumers and wholesale customers.
  • Gross profit decreased 15.7% Y/Y to $415.5 million, with a profit margin of 45.6%.
  • Adjusted operating margin remained flat at 13%, and adjusted operating income for the quarter fell 14% to $118.5 million.
  • The company held $211.7 million in cash and equivalents as of Dec. 31, 2022. Cash provided by operations for FY22 fell sharply to $88.4 million from $268.3 million in FY21, primarily reflecting lower earnings, growth in inventory, and the timing of vendor payments.
  • Adjusted EPS of $2.29 beat the analyst consensus of $1.73.
  • As of Dec. 31, 2022, the total remaining capacity under the company's previously announced repurchase authorizations was approximately $749.5 million.
  • Dividend: The company's Board of Directors approved a quarterly cash dividend of $0.75 per share, for payment on Mar. 17, 2023, to shareholders of record at the close of business on Mar. 7, 2023.
  • "Given the slowdown in consumer demand in 2022, most of our wholesale customers are planning inventory commitments very conservatively in the first half this year, and we plan to do so as well," said Chairman and CEO Michael D. Casey.
  • Outlook: Carter's sees FY23 sales of $3 billion (consensus $3.18 billion) and adjusted EPS of $6.15 (consensus $6.45).
  • For Q1, CRI expects net sales of $630 million - $650 million (consensus $705.68 million) and adjusted EPS of $0.35 -$0.55 (Street view $1.23).
  • Price Action: CRI shares are trading higher by 3.28% at $76.14 on the last check Friday.
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