Carter's, Inc. (CRI) posted fourth quarter and fiscal 2013 results, wherein its adjusted earnings per share surged 14% year over year to $1.02, coming in line with the Zacks Consensus Estimate. However, on a reported basis, the company’s earnings for the quarter slipped 4% to 78 cents a share.
Carter’s, one of the leading providers of clothing and related products for kids, reported net sales of $769.7 million that soared 11.7%. Net sales also handily surpassed the Zacks Consensus Estimate of $768.0 million.
Carter’s gross profit for the quarter escalated 11.2% to $322.4 million, whereas gross margin contracted to 20 basis points (bps) from the prior-year quarter to 41.9%. Adjusted operating income rose 10% to $94.4 million, while the margin shriveled 20 bps to 12.3% during the quarter. Operating income excludes the effects of amortizations, office consolidation, revaluations and expenses related to exits.
Full Year 2013
During fiscal 2013, the company’s adjusted earnings came in at $3.37 a share, up 18.2% year over year and meeting the Zacks Consensus Estimate. On a reported basis, earnings climbed 2% to $2.75 per share.
Net sales for the full year advanced 10.8% to $2,638.7 million, surpassing the Zacks Consensus Estimate of $2,636.0 million. The company delivered positive sales growth for the 25th consecutive year, reflecting its commitment to add value to its consumers, enhance access to its brands and improve profits.
Segment Details
Sales at Carter’s retail segment went up by 15.8% to $295.3 million, on the back of additional sales from new stores and the company’s ecommerce channels, partly offset by loss of sales from store closures and a fall in retail comparable store sales (comps). Sales at Carter’s direct to consumer sales, comprising both retail and ecommerce comps jumped 7.3%. Wholesale sales witnessed an increase of 3.8% to $271.9 million, benefitting from Carter’s brand’s growth.
OshKosh B’gosh retail sales reached $95.6 million, reflecting a rise of 7.5%. Sales were augmented by store openings and increased ecommerce revenues, partly hindered by sales lost due to store closures and decline in retail comps. The direct-to-consumer sales, constituting retail comps and ecommerce comps, rose 5.5%. Sales at the wholesale segment advanced 11.3% to $20.5 million.
The company’s international segment sales surged 33% to $86.3 million, primarily benefitted by Carter’s retail and wholesale Canadian operations. Japan also had a significant contribution to the segment sales. However, sales were negatively affected by foreign currency translations. Moreover, during the quarter, the company ceased those businesses whose investment returns were not up to the mark.
Store Count
During the fourth quarter, the company opened 21 Carter’s outlets, 11 OshKosh outlets in the U.S., taking their respective store counts in the country to 476 and 181 by the year end. Also, the company introduced 6 new outlets in Canada, taking its Canadian store count to 102 in fiscal 2013.
Financial Updates
The leading American marketers of babies’ and kids’ apparel, ended the year with cash and cash equivalents of $286.5 million, long-term debt of $586.0 million and total shareholders equity of $700.7 million.
Dividend Update
During the second, third and fourth quarters of fiscal 2013, Carter’s paid its shareholders a quarterly cash dividend of 16 cents a share, amounting to $27.7 million. However, in Feb 2014, the company announced a 19% hike in the quarterly cash dividend to 19 cents per share, payable to stockholders of record as on Mar 10, 2014, to be paid on Mar 20, 2014.
Share Repurchases
During the first three quarters of fiscal 2013, the company bought back $816.4 shares worth $54.1 million, via open market transactions. However, during the fourth quarter, Carter’s did not repurchase any shares in the open market, owing to the Accelerated Stock Repurchase (ASR) agreement, authorized in Aug 2013. This leaves shares worth $267.2 million remaining under authorization as of Feb 25, 2014.
Going Forward
For the first quarter of fiscal 2014, Carter’s envisions adjusted earnings per share to slump by 10–15% from the first-quarter fiscal 2013 earnings, reflecting greater investments and higher product expenses. However, the current Zacks Consensus Estimate for the quarter stands at 89 cents a share. Net sales for the quarter are expected to rise by 8–10% from the prior-year period.
For fiscal 2014, Carter’s forecasts a 12–15% year-over-year increase in adjusted earnings per share. The current Zacks Consensus Estimate for earnings in fiscal 2014 stands at $3.91 per share. Net sales are anticipated to soar 8–10% on a year-over-year basis, banking on strong direct to consumer expectations from the company’s American and Canadian operations.
Other Stocks to Consider
Carter’s Inc. carries a Zacks Rank #4 (Sell). Other better-ranked stocks in the shoes and apparel space include Iconix Brand Group, Inc. (ICON) with a Zacks Rank #1 (Strong Buy), and Deckers Outdoor Corp. (DECK) and Skechers USA Inc. (SKX) sporting a Zacks Rank #2 (Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment