Carter’s Q3 net sales increase, raises full year profit forecast

Carter’s, Inc. net sales increased 25.5 million dollars or 2.9 percent to 890.6 million dollars, driven by growth in the company’s international and U.S. retail business segments. International and U.S. retail segment sales grew 15 percent and 4 percent, respectively, while U.S. wholesale sales declined 3 percent. U.S. retail comparable sales increased 5.9 percent.

“We meaningfully exceeded our earnings objectives for the third quarter,” said Michael D. Casey, the company’s chairman and chief executive officer, adding, “While supply chain delays impacted our ability to support the strong demand for our brands in the quarter, our continued progress with price realization, productivity improvements, and expense management enabled us to offset higher transportation costs and improve profit margins.”

Highlights of Carter’s third quarter results

The company’s operating income increased 10.5 million dollars to 124 million dollars and operating margin improved to 13.9 percent, compared to 13.1 percent in the prior year period. Adjusted operating income increased 4.4 million dollars to 123.9 million dollars, while adjusted operating margin increased to 13.9 percent, compared to 13.8 percent in the prior year period.

Net income for the quarter was 85 million dollars or 1.93 dollars per diluted share, compared to 81.2 million dollars or 1.85 dollars per diluted share, in the third quarter of fiscal 2020. Adjusted net income was 84.9 million dollars compared to 85.9 million dollars in the third quarter of fiscal 2020, while adjusted earnings per diluted share were 1.93 dollars, compared to 1.96 dollars in the third quarter of fiscal 2020.

Review of first three quarters of Carter’s performance

Net sales increased 389.9 million dollars or 19.2 percent to 2,424.3 million dollars, driven by growth in all segments. The company’s U.S. retail, U.S. wholesale and international segment net sales grew 19 percent, 15 percent and 31 percent, respectively.

Operating income was 359.1 million dollars compared to 56 million dollars in the first three quarters of fiscal 2020. Operating margin improved to 14.8 percent compared to 2.8 percent in the prior year period. Adjusted operating income increased 228.6 million dollars to 362.9 million dollars and adjusted operating margin increased to 15 percent compared to 6.6 percent in the prior year period.

Net income was 242.8 million dollars or 5.51 dollars per diluted share compared to 10.7 million dollars or 24 cents per diluted share, in the first three quarters of fiscal 2020. Adjusted net income was 245.6 million dollars compared to 74.7 million dollars in the first three quarters of fiscal 2020. Adjusted earnings per diluted share were 5.58 dollars compared to 1.70 dollars in the first three quarters of fiscal 2020.

Carter’s raises earnings forecast

For the fourth quarter of fiscal 2021, the company projects net sales will be approximately 1,025 million dollars, adjusted operating income will be approximately 127 million dollars and adjusted diluted earnings per share will be approximately 2 dollars. For fiscal 2021, the company projects net sales will be approximately 3.45 billion dollars, adjusted operating income will be approximately 490 million dollars and adjusted diluted earnings per share will be approximately 7.57 dollars.