Carter’s Q2 sales and earnings decline

Carter’s, Inc. net sales decreased 45.7 million dollars or 6.1 percent to 700.7 million dollars, driven by declines in the company’s U.S. retail and U.S. wholesale sales, partially offset by growth in its international sales.

The company’s U.S. retail and U.S. wholesale net sales declined by 11 percent and 3 percent, respectively. International net sales grew 7 percent. U.S. retail comparable net sales declined 8 percent.

“After a strong start to the year, our sales slowed in the second quarter,” said Michael D. Casey, the company’s chairman and CEO, adding, “We have revised our outlook for the balance of the year to reflect the trends in our business, and market risks related to inflation and related impact on consumer demand.”

Highlights of Carter's Q2 results

The company's operating income decreased 32.2 million dollars to 75.4 million dollars compared to 107.6 million dollars in the second quarter of fiscal 2021. Operating margin was 10.8 percent compared to 14.4 percent in the prior-year period. Adjusted operating income decreased 35 million dollars to 75.4 million dollars, while adjusted operating margin was 10.8 percent.

Net income was 37 million dollars or 93 cents per diluted share compared to 71.6 million dollars or 1.62 dollars per diluted share, in the second quarter of fiscal 2021. Adjusted net income was 52.1 million dollars compared to 73.7 million dollars in the second quarter of fiscal 2021 and adjusted earnings per diluted share were 1.30 dollars compared to 1.67 dollars in the prior-year quarter.

Carter’s first half performance compared to H1 2021

Net sales decreased 51.8 million dollars or 3.4 percent to 1.48 billion dollars, driven by a decline in the company’s U.S. retail segment, partially offset by growth in its international and U.S. wholesale segments.

U.S. retail net sales declined 10 percent, reflecting the comparison to the first half of 2021 which benefited from significant and unprecedented government stimulus payments made to consumers in response to the pandemic and a lower store count related to the closure of low-margin stores. U.S. retail comparable net sales declined 7 percent.

International and U.S. wholesale net sales increased by 9 percent and 3 percent, respectively.

Operating income decreased 57 million dollars to 178 million dollars, compared to 235.1 million dollars in the first half of fiscal 2021. Operating margin was 12 percent, compared to 15.3 percent in the prior year period. Adjusted operating income decreased 60.9 million dollars to 178 million dollars compared to 239 million dollars in the first half of fiscal 2021. Adjusted operating margin was 12 percent.

Net income was 104.9 million dollars or 2.59 dollars per diluted share, compared to 157.8 million dollars or 3.58 dollars per diluted share, in the first half of fiscal 2021. Adjusted net income was 120.1 million dollars compared to 160.7 million dollars in the first half of fiscal 2021. Adjusted earnings per diluted share was 2.97 dollars, compared to adjusted loss per diluted share of 3.64 dollars in the first half of fiscal 2021.

Carter’s reveals 2022 business outlook

For the third quarter of fiscal 2022, the company projects net sales of approximately 850 million dollars to 865 million dollars; adjusted operating income of approximately 90 million dollars to 100 million dollars compared to 123.9 million dollars in the third quarter of fiscal 2021; and adjusted diluted earnings per share of approximately 1.50 dollars to 1.70 dollars, compared to 1.93 dollars in the third quarter of fiscal 2021.

For fiscal year 2022, the company projects net sales of approximately 3.25 billion dollars to 3.30 billion dollars; adjusted operating income of approximately 415 million dollars to 440 million dollars, compared to 500.8 million dollars in fiscal 2021; and adjusted diluted earnings per share of approximately 7.10 dollars to 7.60 dollars, compared to 7.87 dollars in fiscal 2021.