Carter's (CRI) Tops Q3 EPS by 39c, Revenues Miss

Carter's (NYSE: CRI) reported Q3 EPS of $1.96, $0.39 better than the analyst estimate of $1.57. Revenue for the quarter came in at $865 million versus the consensus estimate of $878.52 million.

• Third quarter results show progress recovering from market disruption
• Net sales $865 million, decline of 8%
• U.S. Retail comparable sales down 3.5%, including 17% increase in eCommerce sales
• Sales of exclusive brands to Target, Walmart and Amazon grew 10%
• Operating income $114 million, growth of 35%; adjusted operating income $120 million, growth of 4%
• Diluted EPS $1.85, growth of 38%; adjusted diluted EPS $1.96, growth of 5%
• $1.6 billion in liquidity at quarter end

“We exceeded our sales and earnings goals in the third quarter,” said Michael D. Casey, Chairman and Chief Executive Officer. “The quarter got off to a strong start with our Fourth of July holiday retail sales up 7%. We saw less robust demand in August during the back-to-school shopping period with many children beginning their school year at home and learning virtually. We had the strongest level of demand in September with our Labor Day holiday retail sales up 15%, our best performance in three years.

“Earnings in the quarter were driven by the strength of our product offerings, more effective brand marketing, fewer promotions, curtailed spending and growth in eCommerce sales. eCommerce continues to be our fastest growing and highest margin business.

“We believe our third quarter performance reflects the strength of our brands, our strong value proposition, broad market distribution and the less discretionary nature of children’s apparel.

“As we enter the final weeks of the year, consumer demand is less predictable this holiday season given the lingering effects and, in some markets, resurgence of the coronavirus. That said, we believe we are well-positioned to outperform the market in the balance of 2020 and years ahead by providing the best value and experience in young children’s apparel.”

2020 Business Outlook

Given the market disruption caused by the COVID-19 pandemic, recent spikes in confirmed cases of the coronavirus, and related uncertainty on timing and extent of the market recovery, the Company is not providing fiscal 2020 sales and earnings guidance at this time.

For earnings history and earnings-related data on Carter's (CRI) click here.

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