Carter's (NYSE: CRI) reported Q2 EPS of $1.67, $0.88 better than the analyst estimate of $0.79. Revenue for the quarter came in at $746 million versus the consensus estimate of $713.84 million.

2021 Business Outlook:

The Company’s revised outlook for fiscal year 2021 reflects stronger than expected performance in the first half, and improved second half sales and adjusted earnings compared to those contemplated in its previous guidance. Factors expected to benefit the Company’s performance in the second half of fiscal 2021 include its market-leading product assortments, structural changes made during the pandemic, such as improved assortment productivity, inventory management and marketing effectiveness, and the benefit of government stimulus. Marketplace risks that could adversely affect financial results in the second half of 2021 include supply chain disruptions, higher transportation costs, COVID-19 case trends, consumer traffic, international consumer demand, and pandemic-related birth count declines.

Factors forecasted to adversely affect the comparability of second half 2021 results to the prior year period include: changes in the timing of wholesale shipments, permanent retail store closures, higher transportation costs, investments in marketing, increased compensation provisions, and a 53 week fiscal year in 2020.

For the third quarter of fiscal 2021, the Company projects net sales will be approximately $960 million, adjusted operating income will be approximately $110 million (compared to adjusted operating income of $119.5 million in the third quarter of fiscal 2020), and adjusted diluted earnings per share will be approximately $1.60 (compared to adjusted diluted earnings per share of $1.96 in the third quarter of fiscal 2020). Relative to the third quarter of fiscal 2020, this outlook contemplates higher transportation costs, the absence of the release of inventory reserves in the prior year period, investments in marketing and omnichannel capabilities, and higher compensation provisions. The forecast for adjusted operating income and adjusted diluted earnings per share excludes approximately $1 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, and a benefit of approximately $0.5 million related to a gain on modifications of previously-impaired leases.

For fiscal 2021 (a 52 week fiscal year), the Company projects net sales will increase approximately 15%, adjusted operating income will be approximately $475 million (compared to adjusted operating income of $279.8 million in fiscal 2020), and adjusted diluted earnings per share will increase approximately 75% (compared to adjusted diluted earnings per share of $4.16 in fiscal 2020). The forecast for adjusted operating income and adjusted diluted earnings per share excludes: 1) approximately $5 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, 2) approximately $3 million of restructuring costs, and 3) a benefit of approximately $3 million related to a gain on modifications of previously-impaired leases.

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