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Carter’s reports 4.1 percent increase in FY15 net sales

By Prachi Singh

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Management |REPORT

Carter’s, retailer of apparel for babies and young children in the United States and Canada said that consolidated net sales increased 120 million dollars, or 4.1 percent to 3 billion dollars reflecting growth in all segments except OshKosh wholesale. Consolidated sales decreased 2.7 million dollars or 0.3 percent to 866.5 million dollars in the fourth quarter.

“We exceeded our sales and earnings objectives in the fourth quarter,” said Michael D. Casey, Chairman and Chief Executive Officer, adding, “Our focus on providing the best value and experience in young children’s apparel enabled us to achieve our 27th consecutive year of sales growth, gain market share, and deliver a record level of sales and profitability in 2015. We are planning good growth in sales and earnings in 2016 and plan to grow our business to over 4 billion dollars in sales by 2020 by extending the reach of our iconic brands through our global and multi-channel distribution capabilities.”

Foreign currency impacts on Q4 and FY15

Changes in foreign currency exchange rates in fiscal 2015 compared to fiscal 2014 negatively affected consolidated net sales in fiscal 2015 by 35.1 million dollars. On a constant currency basis, consolidated net sales increased 5.4 percent. Net income increased 43.2 million dollars, or 22.2 percent to 237.8 million dollars, or 4.50 dollars per diluted share. Adjusted net income increased 32.1 million dollars, or 15.2 percent and adjusted earnings per diluted share increased 17.4 percent to 4.61 dollars.

Net sales decrease during the fourth quarter, the company said reflects declines in the company's domestic wholesale segments, partially offset by growth in its domestic retail segments and international segment. The 14th week of the fourth quarter contributed sales of approximately 44.1 million dollars.

The company added that changes in foreign currency exchange rates in the fourth quarter compared to the fourth quarter of fiscal 2014 negatively affected consolidated net sales by 11.3 million dollars. On a constant currency basis, consolidated net sales increased 1 percent.

Net income in the fourth quarter increased 4 million dollars, or 5.8 percent to 72.6 million dollars, or 1.39 dollars per diluted share. Adjusted net income increased 2.6 million dollars, or 3.7 percent to 73.2 million dollars and adjusted earnings per diluted share increased 5.5 percent to 1.40 dollars.

Carter’s retail results

Carter’s retail segment sales increased 9.9 million dollars, or 2.9 percent in the fourth quarter to 351.6 million dollars and Carter’s DTC comparable sales increased 5.7 percent, comprised of eCommerce comparable sales growth of 34.4 percent and a comparable retail store sales decline of 1.7 percent. The 14th week of the fourth quarter of fiscal 2014 contributed sales of approximately 13.7 million dollars.

For the whole year, sales increased 64.1 million dollars, or 5.9 percent to 1.2 billion dollars. Carter’s DTC comparable sales increased 1.2 percent, comprised of eCommerce comparable sales growth of 18.9 percent and a comparable retail store sales decline of 3.1 percent. The 53rd week of fiscal 2014 contributed sales of 13.7 million dollars. As of the end of the fourth quarter, the company operated 594 Carter’s retail stores in the United States.

Carter’s wholesale segment sales decreased 17.3 million dollars, or 5.8 percent, to 283.1 million dollars and for FY15, sales increased 25.8 million dollars, or 2.4 percent to 1.1 billion dollars.

OshKosh retail segment sales increased 5.7 million dollars, or 5 percent to 118.3 million dollars for the fourth quarter. OshKosh DTC comparable sales increased 4 percent, comprised of eCommerce comparable sales growth of 27.6 percent and a comparable retail stores decrease of 2.5 percent. OshKosh retail segment sales for the whole year increased 27.9 million dollars, or 8.3 percent, to 363.1 million dollars. OshKosh DTC comparable sales increased 2.4 percent, comprised of eCommerce comparable sales growth of 24 percent and a comparable retail store sales decline of 2.5 percent. As of the end of the fourth quarter, the company operated 241 OshKosh retail stores in the United States.

OshKosh wholesale segment sales in the fourth quarter decreased 4.4 million dollars, or 21.1 percent and for the whole year, wholesale segment sales decreased 7.6 million dollars or 10.4 percent reflecting lower seasonal bookings and a decline in sales to the off-price channel.

International segment sales summary

International segment sales increased 3.4 million dollars, or 3.7 percent, to 97 million dollars, principally driven by increased wholesale demand, growth in the Company’s eCommerce business in Canada, and new eCommerce sales in China, partially offset by unfavorable foreign currency exchange rates and the impact of the Target Canada bankruptcy in early 2015.

Changes in foreign currency exchange rates in the fourth quarter negatively affected international segment net sales in the fourth quarter by 11.3 million dollars. On a constant currency basis, international segment net sales increased 15.7 percent. Canadian comparable retail store sales increased 11.9 percent.

For the whole year, international segment sales increased 9.7 million dollars, or 3.1 percent to 326.2 million dollars. This growth was partially offset by unfavorable foreign currency exchange rates, the impact of the Target Canada bankruptcy, and the company’s exit from retail operations in Japan in fiscal 2014. Changes in foreign currency exchange rates in fiscal 2015 negatively affected international net sales by 35.1 million dollars. On a constant currency basis, international segment net sales increased 14.2 percent. Canadian comparable retail store sales increased 6.4 percent in fiscal 2015. As of the end of the fourth quarter, the company operated 147 retail stores in Canada.

2016 business outlook reflects positivity

For fiscal 2016, the company projects net sales to increase approximately 6 percent to 7 percent and adjusted diluted earnings per share to increase approximately 8 percent to 10 percent. For the first quarter of fiscal 2016, the company projects net sales to increase approximately 4 percent and adjusted diluted earnings per share to be comparable to adjusted diluted earnings per share of 0.97 dollar in the first quarter of fiscal 2015.

Carter's