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Why Is Carter's (CRI) Up 1.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Carter's (CRI - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carter's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Carter's has reported mixed fourth-quarter 2023 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed. The bottom line rose year over year. However, the top line fell year over year, hurt by the impacts of inflation, which led to reduced spending.
Q4 in Detail
Carter’s reported fourth-quarter 2023 adjusted earnings of $2.76 per share, beating the Zacks Consensus Estimate of $2.52. This figure rose 20.5% from earnings of $2.29 per share posted in the year-ago quarter.
The company reported net sales of $857.9 million, which missed the Zacks Consensus Estimate of $865 million. Also, the metric declined 5.9% from the $912 million posted in the year-ago period. The downside can be attributed to inflation, rising interest rates, higher consumer debt levels and recession risks, which affected the demand from consumers and wholesale customers.
Segmental Sales
Sales in the U.S. Retail segment decreased 8.9% to $479.8 million year over year and U.S. Retail Comparable net sales fell 10.8% in the fourth quarter of 2023.
The U.S. Wholesale segment’s sales dropped 5.1% year over year to $247.4 million.
The International segment witnessed a 4.6% year-over-year drop in revenues to $130.7 million from $124.9 million in the fourth quarter.
Margins
Gross profit increased 0.6% year over year to $418.2 million and beat our estimate of $291.9 million. Meanwhile, the gross margin expanded 220 basis points to 48.7%.
Further, adjusted operating income increased 14.8% year over year to $136 million in the reported quarter and beat our estimate of $37.9 million. The adjusted operating margin increased 290 basis points to 15.9% in the quarter under review.
Balance Sheet & Shareholder-Friendly Moves
It ended the quarter with cash and cash equivalents of $351.2 million, net long-term debt of $497.4 million and shareholders’ equity of $845.3 million.
The company’s total liquidity at the end of 2023 was $1.2 billion, with $846 million in unused borrowing capacity out of an $850-million secured revolving credit facility.
In 2023, the company repurchased and retired about 1.4 million shares for $100 million. As of Dec 30, 2023, CRI had a $649.5-million remaining capacity under its previously announced repurchase authorization.
In addition, it paid out a dividend of 75 cents per common share for a total of $112 million in year. On Feb 26, 2024, the company’s board declared a 7% hike (5 cents per share) to its quarterly cash dividend, to 80 cents per share.
Outlook
For the first quarter of 2024, net sales are expected to be $620-$645 million, indicating a decline from the $696 million recorded in the year-ago quarter. Adjusted earnings are likely to be 60-70 cents, suggesting a decline from 98 cents reported in the year-ago quarter. Adjusted operating income is expected to be $35-$40 million, implying a drop from the $58 million recorded in the year-ago quarter.
For 2024, Carter’s expects low single digit increase in net sales to $3 billion compared with $2.95 billion reported last year. It envisions mid-single digit growth year over year in adjusted operating income and adjusted earnings per share (EPS) for the year. Notably, it reported an adjusted operating income of $328 million and adjusted EPS of $6.19 in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -40.68% due to these changes.
VGM Scores
At this time, Carter's has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carter's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Carter's is part of the Zacks Shoes and Retail Apparel industry. Over the past month, Wolverine World Wide (WWW - Free Report) , a stock from the same industry, has gained 14.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Wolverine reported revenues of $526.7 million in the last reported quarter, representing a year-over-year change of -20.8%. EPS of -$0.30 for the same period compares with -$0.15 a year ago.
Wolverine is expected to post earnings of $0.04 per share for the current quarter, representing a year-over-year change of -55.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Wolverine. Also, the stock has a VGM Score of A.
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Why Is Carter's (CRI) Up 1.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Carter's (CRI - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carter's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Carter's Q4 Earnings Surpass Estimates, Sales Decline Y/Y
Carter's has reported mixed fourth-quarter 2023 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed. The bottom line rose year over year. However, the top line fell year over year, hurt by the impacts of inflation, which led to reduced spending.
Q4 in Detail
Carter’s reported fourth-quarter 2023 adjusted earnings of $2.76 per share, beating the Zacks Consensus Estimate of $2.52. This figure rose 20.5% from earnings of $2.29 per share posted in the year-ago quarter.
The company reported net sales of $857.9 million, which missed the Zacks Consensus Estimate of $865 million. Also, the metric declined 5.9% from the $912 million posted in the year-ago period. The downside can be attributed to inflation, rising interest rates, higher consumer debt levels and recession risks, which affected the demand from consumers and wholesale customers.
Segmental Sales
Sales in the U.S. Retail segment decreased 8.9% to $479.8 million year over year and U.S. Retail Comparable net sales fell 10.8% in the fourth quarter of 2023.
The U.S. Wholesale segment’s sales dropped 5.1% year over year to $247.4 million.
The International segment witnessed a 4.6% year-over-year drop in revenues to $130.7 million from $124.9 million in the fourth quarter.
Margins
Gross profit increased 0.6% year over year to $418.2 million and beat our estimate of $291.9 million. Meanwhile, the gross margin expanded 220 basis points to 48.7%.
Further, adjusted operating income increased 14.8% year over year to $136 million in the reported quarter and beat our estimate of $37.9 million. The adjusted operating margin increased 290 basis points to 15.9% in the quarter under review.
Balance Sheet & Shareholder-Friendly Moves
It ended the quarter with cash and cash equivalents of $351.2 million, net long-term debt of $497.4 million and shareholders’ equity of $845.3 million.
The company’s total liquidity at the end of 2023 was $1.2 billion, with $846 million in unused borrowing capacity out of an $850-million secured revolving credit facility.
In 2023, the company repurchased and retired about 1.4 million shares for $100 million. As of Dec 30, 2023, CRI had a $649.5-million remaining capacity under its previously announced repurchase authorization.
In addition, it paid out a dividend of 75 cents per common share for a total of $112 million in year. On Feb 26, 2024, the company’s board declared a 7% hike (5 cents per share) to its quarterly cash dividend, to 80 cents per share.
Outlook
For the first quarter of 2024, net sales are expected to be $620-$645 million, indicating a decline from the $696 million recorded in the year-ago quarter. Adjusted earnings are likely to be 60-70 cents, suggesting a decline from 98 cents reported in the year-ago quarter. Adjusted operating income is expected to be $35-$40 million, implying a drop from the $58 million recorded in the year-ago quarter.
For 2024, Carter’s expects low single digit increase in net sales to $3 billion compared with $2.95 billion reported last year. It envisions mid-single digit growth year over year in adjusted operating income and adjusted earnings per share (EPS) for the year. Notably, it reported an adjusted operating income of $328 million and adjusted EPS of $6.19 in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -40.68% due to these changes.
VGM Scores
At this time, Carter's has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carter's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Carter's is part of the Zacks Shoes and Retail Apparel industry. Over the past month, Wolverine World Wide (WWW - Free Report) , a stock from the same industry, has gained 14.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Wolverine reported revenues of $526.7 million in the last reported quarter, representing a year-over-year change of -20.8%. EPS of -$0.30 for the same period compares with -$0.15 a year ago.
Wolverine is expected to post earnings of $0.04 per share for the current quarter, representing a year-over-year change of -55.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Wolverine. Also, the stock has a VGM Score of A.