Yahoo Finance Carter's (CRI) Q1 Earnings and Revenues Beat, Decline Y/Y
Carter's, Inc. CRI reported first-quarter 2023 results, wherein both the top and the bottom lines beat the Zacks Consensus Estimate. However, both metrics fell year over year. Results were hurt by inflation-hit demand from retail and wholesale customers.
Q1 in Detail
Carter’s reported first-quarter 2023 adjusted earnings of 98 cents per share, beating the Zacks Consensus Estimate of 52 cents and our estimate of 54 cents. However, the figure fell from $1.66 reported in the prior-year quarter.
The company reported net sales of $696 million, which beat the Zacks Consensus Estimate of $647.7 million and our estimate of $648.7 million. However, the metric declined 10.9% from $781.3 million reported in the year-ago period. The downside can be attributed to inflation, which resulted in lower demand from consumers and wholesale customers. Unfavorable foreign currency translations hurt sales of $2.2 million or 0.3%.
Carter's, Inc. Price, Consensus and EPS Surprise
Carter's, Inc. price-consensus-eps-surprise-chart | Carter's, Inc. Quote
Segmental Sales
Sales in the U.S. Retail segment decreased from $366.4 million year over year to $323.7 million.
The U.S. Wholesale segment’s sales dipped from $307.3 million to $280 million.
The International segment witnessed a drop in revenues from $107.6 million to $92.2 million in the first quarter.
Margins
Gross profit declined from $355 million year over year to $309.5 million, while the gross margin contracted 90 basis points to 44.5%.
Further, adjusted operating income declined 44% year over year to $57.5 million in the reported quarter. The adjusted operating margin declined 480 basis points to 8.3% in the quarter under review, reflecting high inflation and lower demands for its products.
Balance Sheet & Shareholder-Friendly Moves
This Zacks Rank #3 (Hold) player ended the quarter with cash and cash equivalents of $157.7 million, net long-term debt of $576.8 million and shareholders’ equity of $797.9 million. In first-quarter 2023, CRI had a cash flow of $42.2 million for operating activities.
During the first quarter, CRI bought back 0.14 million shares for $9.6 million. In the aforementioned period, the company paid cash dividends of $28.5 million.
As of Apr 27, 2023, the company has roughly $730 million remaining under its earlier announced repurchase authorization.
Outlook
For the second quarter of 2023, net sales are expected to be in the range of $590-$605 million. Adjusted earnings are likely to be in the range of 40 cents to 50 cents, down from $1.30 reported in the prior-year quarter. Adjusted operating income is expected in the $30-$35 million band, down from $75.4 million recorded in the year-ago quarter.
The first-quarter guidance reflects continued inflationary pressure on consumer demand. The company also expects higher interest expense. Nevertheless, it expects improved gross margins reflecting lower inventory-related costs and lower inbound freight costs. The company expects a lower average number of shares outstanding in the second quarter of 2023.
For 2023, Carter’s reaffirmed net sales of $3 billion, down from $3.2 billion in the previous year. Adjusted earnings per share (EPS) are now expected to be $6.15, down from $6.90 reported in 2022. Adjusted operating income is forecast to be $350 million, down from $388.2 million in the year-ago period. The company expects operating cash flow of more than $300 million and capital expenditures of approximately $75 million.
Shares of Carter’s have increased 1.5% in the past six months compared with the industry’s 34.2% growth. We also note that shares of CRI have declined more than 2.4% before the trading session on Apr 28, owing to its year-over-year earnings and sales decline.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely, BJ's Wholesale Club BJ, Deckers Outdoor DECK and Crocs CROX.
BJ's Wholesale Club, which is one of the preferred destinations for shoppers, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BJ’s Wholesales’ current financial year revenues and EPS suggests growth of 7.3% and 0.8%, respectively, from the corresponding year-ago reported figures. BJ has a trailing four-quarter earnings surprise of 19.6%, on average.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. DECK has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Deckers Outdoor’s current financial year sales and EPS suggests growth of 12.4% and 14%, respectively, from the year-ago corresponding figures. DECK has a trailing four-quarter earnings surprise of 31%, on average.
Crocs, one of the leading footwear brands, has a Zacks Rank of 2 at present. CROX has a trailing four-quarter earnings surprise of 21.8%, on average.
The Zacks Consensus Estimate for Crocs' current financial year sales and EPS suggests growth of 13.1% and 2.8%, respectively, from the year-ago corresponding figures.
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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
Carter's, Inc. (CRI) : Free Stock Analysis Report
