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Carter's (CRI) to Report Q1 Earnings: What's in the Cards?

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Carter's, Inc. (CRI - Free Report) is likely to witness declines in the top and bottom lines when it reports first-quarter 2021 numbers on Apr 30. The Zacks Consensus Estimate for earnings is pegged at 27 cents per share, indicating growth of 133.3% from the figure reported in the prior-year period. The consensus mark has moved up by a penny in the past 30 days.

The Zacks Consensus Estimate for revenues is pegged at $656.9 million, suggesting an increase of 0.4% from the prior-year quarter’s reported figure.

The company, which designs, markets and sources branded childrenswear, delivered a negative earnings surprise of 15.8% in the last reported quarter. It has delivered a negative earnings surprise of 31.6%, on average, in the trailing four quarters.

Key Factors to Note

Carter’s has been bearing the brunt of the pandemic-led declines in wholesale sales, soft store traffic and muted demand from international customers. The resurgence in the number of coronavirus cases in several areas of the country has made consumers more cautious, which led to reduced store traffic. Further, stores, which would usually gain from tourism activities, have been facing huge traffic declines. Sales at the U.S. Retail, U.S. Wholesale and International segments have been witnessing declines, owing to sluggish store traffic.

Also, COVID-19 costs related to additional protective equipment and cleaning supplies are likely to have affected first-quarter 2021 results. The company has been witnessing direct costs, including health and safety-related expenses, stemming from the COVID-19 crisis.

Carters, Inc. Price and EPS Surprise


Carters, Inc. Price and EPS Surprise

Carters, Inc. price-eps-surprise | Carters, Inc. Quote

On the last reported quarter’s earnings call, management expected costs related to additional protective equipment and cleaning supplies of $3 million for first-quarter 2021.

Additionally, compensation-related costs, promotional activities, increased investment in marketing, digital media and omni-channel capabilities have been partly hurting margins for the past few quarters. Investments in digital mainly include the launch of a mobile app, website improvement and accelerating the speed and efficiency of its distribution centers.

However, the company’s e-commerce business has been performing well. Consequently, Carter’s is seeking opportunities to strengthen e-commerce capabilities through investments to speed up deliveries. Also, the company has been witnessing sturdy e-commerce demand in the wholesale channel. These factors are likely to have aided Carter’s performance in the to-be-reported quarter.

On the last reported quarter’s earnings call, management predicted net sales growth of 5% and a bottom-line increase of 10% for 2021, with the majority of growth anticipated to be weighted toward the first half of 2021. Consequently, we expect gains to be witnessed in the first half to get reflected in the first-quarter results.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Carter's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carter's currently has a Zacks Rank #5 and an Earnings ESP of +5.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Gildan Activewear, Inc. (GIL - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DISH Network Corporation DISH has an Earnings ESP of +3.64% and a Zacks Rank #2.

The Walt Disney Company DIS has an Earnings ESP of +51.61% and a Zacks Rank #3.

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