Yahoo Finance Carter's (CRI) Q4 Earnings and Revenues Beat, Decline Y/Y
Carter's, Inc. CRI reported fourth-quarter 2022 results, wherein the top line and the bottom line beat the Zacks Consensus Estimate. Although both metrics fell year over year. Results were hurt by tough year-over-year comparisons along with the impact inflation had on demands from retail and wholesale customers.
Over the past three months, shares of Carter's have increased 1.2% compared with the industry’s rise of 11.8%.
Q4 in Detail
Carter’s reported fourth-quarter 2022 adjusted earnings of $2.29 per share, beating the Zacks Consensus Estimate of $1.74. However, the figure fell 0.9% from $2.31 reported in the prior-year quarter.
The company reported net sales of $912.1 million which beat the Zacks Consensus Estimate of $869 million. However, the metric declined 14.1% from $1,062 million reported in the year-ago period. The downside can be attributed to lower sales across the U.S. Retail, U.S. Wholesale and International divisions. Unfavorable foreign currency translations hurt sales of $5.8 million or 0.5%.
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 12.7% year over year to $526.5 million due to lower comparable sales. U.S. Retail comparable net sales fell 12.9%.
The U.S. Wholesale segment’s sales dipped 17.8% to $260.7 million.
The International segment witnessed a 12% drop in revenues to $124.9 million in the fourth quarter.
Margins
Gross profit declined 15.7% year over year to $415.5 million, while the gross margin contracted 80 basis points to 45.6%.
Further, adjusted operating income declined 14% year over year to $118.5 million in the reported quarter. The adjusted operating margin remained flat year over year at 13% in the quarter under review, reflecting lower air freight expense and lower performance-based compensation provisions. This was partially offset by fixed cost deleverage on lower sales and higher ocean freight rates.
Balance Sheet & Shareholder-Friendly Moves
The Zacks Rank #3 (Hold) player ended the quarter with cash and cash equivalents of $211.7 million, net long-term debt of $616.6 million and shareholders’ equity of $796.4 million. In 2022, CRI had a cash flow of $88.4 million for operating activities. CRI returned $418 million via share repurchases and dividends in 2022.
During the fourth quarter, CRI bought back 0.8 million shares for $71.97 million. In 2022, the company repurchased 3.7 million shares for $299.7 million.
As of Dec 31, 2022, the company has roughly $749.5 million remaining under its earlier announced repurchase authorization.
Outlook
For the first quarter of 2023, net sales are expected to be in the range of $630-$650 million. Adjusted earnings are likely to be in the range of 35 cents to 55 cents, down from $1.66 reported in the prior-year quarter. Adjusted operating income is expected in the $30-$40 million band, down from $102.6 million recorded in the year-ago quarter.
The first-quarter outlook reflects continued inflationary pressure on consumer demand and cautious inventory commitments by wholesale customers. Nevertheless, the company expects improved gross margins reflecting better price realization and channel mix. The company also expects lower interest expense and a lower average number of shares outstanding in the first quarter of 2023.
For 2023, Carter’s now projects net sales of $3 billion down compared with $3.20 billion in the previous year. Adjusted earnings per share are now expected to be $6.15, down from $6.9 reported in 2022. Adjusted operating income is forecast to be $350 million down compared with $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.
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 earnings per share (EPS) suggests growth of 16.2% and 16.6%, respectively, from the corresponding year-ago reported figures. BJ has a trailing four-quarter earnings surprise of 18.21%, 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 12.2% and 13.6%, 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 12.4% and 0.9%, 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
