Carter's Q4 sales rise but profit declines

For its further quarter, Carter’s, Inc. reported consolidated net sales increase of 14.1 million dollars or 1.3 percent to 1.1 billion dollars, driven by growth in the company’s US retail and international segments. The company said in a statement that favourable changes in foreign currency exchange rates improved consolidated net sales by 0.3 million dollars. Net income in the quarter decreased 5.4 million dollars or 4.1 percent to 125.1 million dollars or 2.82 dollars per diluted share compared to 130.6 million dollars or 2.83 dollars per diluted share, in the fourth quarter of fiscal 2018, while adjusted net income decreased 6.2 million dollars or 4.7 percent to 124.7 million dollars compared to 130.9 million dollars in the fourth quarter of fiscal 2018. Adjusted earnings per diluted share decreased 1.1 percent to 2.81 dollars.

“For the year, Carter’s is reporting a record level of sales, earnings and cash flow, and its 31st consecutive year of sales growth,” said Michael D. Casey, the company’s Chairman and Chief Executive Officer, adding, “During the November and December holiday period, we saw good demand for our brands with comparable retail sales up over 2 percent. Profitability in the quarter was lower than last year, and reflects continued investments in our business and higher inventory-related costs.”

Carter’s full year net sales improve by 1.6 percent

Consolidated net sales increased 57 million dollars or 1.6 percent to 3.5 billion dollars, driven by growth in the company’s US retail and US wholesale segments. The company added that changes in foreign currency exchange rates adversely affected consolidated net sales in fiscal 2019 by 6.1 million dollars, while on a constant currency basis consolidated net sales increased 1.8 percent in fiscal 2019. Net income in fiscal 2019 decreased 18.3 million dollars or 6.5 percent to 263.8 million dollars or 5.85 dollars per diluted share compared to 282.1 million dollars or 6 dollars per diluted share, in fiscal 2018. Adjusted net income decreased 3.8 million dollars or 1.3 percent to 291.7 million dollars compared to 295.4 million dollars in fiscal 2018. The company further said, adjusted earnings per diluted share increased 2.7 percent to 6.46 dollars compared to 6.29 dollars in fiscal 2018.

In the fourth quarter, US retail segment sales increased 13.5 million dollars or 2.2 percent to 619.9 million dollars, while US retail comparable sales increased 1.6 percent, driven by growth in ecommerce sales. In the fourth quarter of fiscal 2019, the company opened 20 stores and closed three stores in the United States. For the full year US retail segment sales increased 33 million dollars or 1.8 percent to 1.9 billion dollars, while US retail comparable sales increased 0.4 percent, driven by growth in ecommerce sales. In fiscal 2019, the company opened 43 stores and closed 25 stores in the United States. As of the end of the fourth quarter of fiscal 2019, the company operated 862 retail stores in the United States.

US wholesale segment sales in the fourth quarter decreased 2.5 million dollars or 0.7 percent to 348.9 million dollars reflecting an 8.8 million dollars decrease in off-price channel sales and increased demand for the company’s exclusive Carter’s brands. For the full year, US wholesale segment sales increased 25 million dollars or 2.1 percent to 1.2 billion dollars.

Fourth quarter international segment sales increased 3.1 million dollars or 2.4 percent to 131.7 million dollars, reflecting growth in Canada and markets outside of North America, partially offset by the change in the company’s business model in China. Favourable changes in foreign currency exchange rates improved international segment net sales by 0.3 million dollars and on a constant currency basis, international segment net sales increased 2.2 percent. For the full year, international segment sales decreased 0.9 million dollars or 0.2 percent to 429.5 million dollars. Changes in foreign currency exchange rates adversely affected international segment net sales by 6.1 million dollars, while on a constant currency basis, international segment net sales increased 1.2 percent. As of the end of fiscal 2019, the company operated 201 retail stores in Canada and 46 retail stores in Mexico.

Carter’s reveals 2020 business outlook

For fiscal 2020, the company projects net sales will increase approximately 2 percent to 3 percent and adjusted diluted earnings per share will increase approximately 4 percent to 6 percent compared to adjusted diluted earnings per share of 6.46 dollars in fiscal 2019. For the first quarter of fiscal 2020, the company projects net sales will be comparable to the first quarter of fiscal 2019 and adjusted diluted earnings per share will be approximately 60 cents compared to 87 cents in the first quarter of fiscal 2019.

The company said that it is closely monitoring the situation in China. Carter’s plans to source approximately 15 percent of its products from China in 2020. Additionally, Carter’s added, the company’s suppliers throughout Asia are yet to determine the impact of production delays, so the financial impact of any delayed receipts from China is not known at this time. The company’s guidance for fiscal year 2020 and the first quarter of fiscal 2020 does not include any adjustments for potential effects of the coronavirus situation.

During the fourth quarter of fiscal 2019, the company paid a cash dividend of 50 cents per share totalling 22.1 million dollars and in fiscal 2019, the company paid quarterly cash dividends of 50 cents per share each quarter totalling 89.6 million dollars.

Picture:Facebook/Carter's