Carter's (CRI) Q3 Earnings call transcript Oct 25, 2024
2min read In Carter's third quarter fiscal 2024 earnings call, the company reported a better-than-forecasted performance, with sales and earnings exceeding the high end of its guidance. The call highlighted several key themes and trends, providing insights into the company's financial health and growth prospects.
Financial Performance and Guidance
The company reported consolidated net sales of $758 million for the third quarter, a 4% decrease from the previous year, with a significant improvement in earnings. Gross profit was down 5% and gross margin was 46.9%, a decline of 60 basis points. Operating income was $77 million, with a 10.2% operating margin. Adjusted earnings per share were $1.64, down 11% from the previous year.
For the full year, Carter's is forecasting sales of $2.8 billion, with an expectation of lower sales in U.S. Retail and International, and comparable sales in U.S. Wholesale. The company is planning adjusted operating income in the range of $240 million to $260 million and adjusted earnings per share in the range of $4.70 to $5.15.
Strategic Initiatives and Growth
Carter's has been focusing on several strategic initiatives to drive growth, including product innovation, brand reach, and marketing. The company has been investing in its product offerings, specifically in the Baby and Toddler age segments, where it has seen significant growth. It has also been leveraging its unparalleled market presence, with strong relationships with major retailers and a growing online presence.
In the third quarter, Carter's reported a notable improvement in U.S. Retail sales, with a down 7% comp compared to the previous year. This improvement was driven by a shift in pricing strategy, with targeted investments in opening price product and a focus on improving the customer experience in stores and online. The company also reported a significant increase in new customers and a reactivation of lapsed customers.
Market Trends and Challenges
The earnings call also highlighted several market trends and challenges facing the children's apparel industry. These include inflationary pressures, consumer shifts towards value retailers, and the impact of supply chain disruptions. Carter's has been addressing these challenges through pricing strategies, product innovation, and a focus on enhancing the customer experience.
Investor and Analyst Questions
During the Q&A session, investors and analysts asked questions about gross margin pressure, inventory management, and the company's plans for the fourth quarter and beyond. Carter's executives provided insights into their pricing strategies, inventory management, and expectations for the holiday season. They also discussed their plans for continued investment in product innovation, brand reach, and marketing to drive growth.
Conclusion
Overall, Carter's third quarter fiscal 2024 earnings call highlighted the company's resilience in the face of market challenges and its focus on strategic initiatives to drive growth. With a strong financial performance and a clear vision for the future, Carter's is well-positioned to navigate the evolving landscape of the children's apparel industry. The company's emphasis on product innovation, brand reach, and marketing, combined with its unparalleled market presence, will be key drivers of its future success.
