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Things You Need to Know Ahead of Carter's (CRI) Q2 Earnings
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Carter's, Inc. (CRI - Free Report) is scheduled to report second-quarter 2019 numbers on Jul 25, before the opening bell. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 17.8%. It delivered a positive earnings surprise of 24.3% in the last reported quarter. Let’s see how things are shaping up prior to this announcement.
Estimates Look Bright
The Zacks Consensus Estimate for second-quarter earnings is pegged at 81 cents, indicating rise of 2.5% from 79 cents reported in the year-ago quarter. Notably, the consensus mark has moved north by a penny in the past 30 days.
For revenues, the consensus estimate stands at $730.9 million, up approximately 5% from the year-ago quarter.
Carter’s Retail strategy remains focused on improving store productivity, strengthening e-commerce business and enhancing product offerings by introducing extended sizes for the Carter’s brand and expanding Skip Hop brand offerings. Also, it is witnessing a positive response for its co-branded stores, which is a one-stop shop for families with children. These stores have been the most productive lately, receiving the maximum return on investment. Continued strength in this format and the company’s Retail Strategy is likely to boost sales in the second quarter.
Additionally, the company is seeking opportunities to strengthen e-commerce capabilities through investments to speed up deliveries. It has been making efforts to enhance omni-channel capabilities. In this regard, the company tested the “Buy Online and Pick Up in Stores” capability and received favorable response. This facility will now offer customers the option to pick up online orders from stores on the same day of purchase. Moreover, management intends to rollout the new same-date pickup service for online orders, which should improve convenience and drive more traffic to stores. These actions are likely to aid the impending results.
The company has been experiencing decent growth in its International business. It projects increased sales growth in this segment during 2019, with Canada being the highest contributor. Further, growth in this region is anticipated to be driven primarily by the retail segment.
Apart from Canada, the segment is also projected to record sturdy growth in Mexico in 2019 on efforts like launching of new co-branded stores and enhancing e-commerce capabilities in the second half of 2019. The company recently initiated e-commerce operations in Brazil, which is witnessing strong traffic.
For the second quarter, Carter's anticipates top-line growth of roughly 4-6%. Adjusted earnings are expected to be flat year over year.
However, the company is witnessing sluggishness across its U.S. Wholesale business due to the bankruptcy of Toys “R” Us. Higher cost of investments toward technology, brand marketing and expedited shipping have been denting operating margin for the past few quarters.
Moreover, the company’s high inventory levels remain a worry. Moving ahead, management forecasts inventory growth in a mid-single digit for each of the remaining quarters in 2019.
What Our Model Says
Our proven model shows that Carter's is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Rent-A-Center, Inc. currently has an Earnings ESP of +3.88% and a Zacks Rank #2.
Columbia Sportswear Company (COLM - Free Report) has an Earnings ESP of +40.00% and a Zacks Rank #2 at present.
Weight Watchers International, Inc. (WW - Free Report) currently has an Earnings ESP of +3.68% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Things You Need to Know Ahead of Carter's (CRI) Q2 Earnings
Carter's, Inc. (CRI - Free Report) is scheduled to report second-quarter 2019 numbers on Jul 25, before the opening bell. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 17.8%. It delivered a positive earnings surprise of 24.3% in the last reported quarter. Let’s see how things are shaping up prior to this announcement.
Estimates Look Bright
The Zacks Consensus Estimate for second-quarter earnings is pegged at 81 cents, indicating rise of 2.5% from 79 cents reported in the year-ago quarter. Notably, the consensus mark has moved north by a penny in the past 30 days.
For revenues, the consensus estimate stands at $730.9 million, up approximately 5% from the year-ago quarter.
Carter's, Inc. Price, Consensus and EPS Surprise
Carter's, Inc. price-consensus-eps-surprise-chart | Carter's, Inc. Quote
Factors to Consider
Carter’s Retail strategy remains focused on improving store productivity, strengthening e-commerce business and enhancing product offerings by introducing extended sizes for the Carter’s brand and expanding Skip Hop brand offerings. Also, it is witnessing a positive response for its co-branded stores, which is a one-stop shop for families with children. These stores have been the most productive lately, receiving the maximum return on investment. Continued strength in this format and the company’s Retail Strategy is likely to boost sales in the second quarter.
Additionally, the company is seeking opportunities to strengthen e-commerce capabilities through investments to speed up deliveries. It has been making efforts to enhance omni-channel capabilities. In this regard, the company tested the “Buy Online and Pick Up in Stores” capability and received favorable response. This facility will now offer customers the option to pick up online orders from stores on the same day of purchase. Moreover, management intends to rollout the new same-date pickup service for online orders, which should improve convenience and drive more traffic to stores. These actions are likely to aid the impending results.
The company has been experiencing decent growth in its International business. It projects increased sales growth in this segment during 2019, with Canada being the highest contributor. Further, growth in this region is anticipated to be driven primarily by the retail segment.
Apart from Canada, the segment is also projected to record sturdy growth in Mexico in 2019 on efforts like launching of new co-branded stores and enhancing e-commerce capabilities in the second half of 2019. The company recently initiated e-commerce operations in Brazil, which is witnessing strong traffic.
For the second quarter, Carter's anticipates top-line growth of roughly 4-6%. Adjusted earnings are expected to be flat year over year.
However, the company is witnessing sluggishness across its U.S. Wholesale business due to the bankruptcy of Toys “R” Us. Higher cost of investments toward technology, brand marketing and expedited shipping have been denting operating margin for the past few quarters.
Moreover, the company’s high inventory levels remain a worry. Moving ahead, management forecasts inventory growth in a mid-single digit for each of the remaining quarters in 2019.
What Our Model Says
Our proven model shows that Carter's is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Carter's currently carries a Zacks Rank #3, which along with an Earnings ESP of +0.50% makes us reasonably confident of a beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Rent-A-Center, Inc. currently has an Earnings ESP of +3.88% and a Zacks Rank #2.
Columbia Sportswear Company (COLM - Free Report) has an Earnings ESP of +40.00% and a Zacks Rank #2 at present.
Weight Watchers International, Inc. (WW - Free Report) currently has an Earnings ESP of +3.68% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>