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Carter's (CRI) to Report Q1 Earnings: What's in the Offing?

Carter's, Inc. CRI is scheduled to release first-quarter 2023 earnings on Apr 28, before the opening bell. The branded marketer of apparel, exclusively for babies and children in North America, is likely to have witnessed a decline in the top and the bottom lines when it reports first-quarter results.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $648 million, indicating a decrease of 17.1% from the figure reported in the year-ago quarter. However, the consensus estimate for quarterly earnings which has increased a couple of cents to 52 in the past seven days, suggests a plunge of about 69% from the year-ago quarter’s reported figure.

We expect revenues to be down 17% from the year-ago fiscal quarter’s actuals to $648.7 million and adjusted earnings to decrease 67.7% to 54 cents per share.

The company has a trailing four-quarter earnings surprise of 9.1%, on average. In the last reported quarter, CRI’s bottom line beat the Zacks Consensus Estimate by 31.6%.

Factors to Note

Carter’s first-quarter 2023 results might have been hurt by tough year-over-year comparisons, along with drab demands from retail and wholesale customers due to inflation. The company has been witnessing weak sales across the U.S. Retail, U.S. Wholesale and International divisions. Inflationary pressures and slowed demand for the brands have been hurting its performance. Also, increased ocean freight rates and other expenses are likely to have hurt margins in the first quarter.

On its last quarter's earnings call, the company projected net sales of $630-$650 million for first-quarter 2023. Management envisioned adjusted earnings of 35-55 cents, down from $1.66 reported in the prior-year quarter. It had anticipated an adjusted operating income of $30-$40 million, suggesting a decline from $102.6 million reported in the year-ago quarter.

The first-quarter outlook reflects continued inflationary pressure on consumer demand and cautious inventory commitments by wholesale customers. We expect first-quarter 2023 sales to decline 7.7%, 28.7% and 15.2%, respectively, for the U.S. Retail, U.S. Wholesale and International divisions.

However, Carter’s efforts to strengthen e-commerce capabilities to speed up deliveries, through investments, appear encouraging. Expanded omnichannel facilities, including curbside pickup, same-day pickup, buy online and pickup at store, and ship from store, along with easy access to a broad array of online products when shopping in stores, are likely to have been tailwinds. Its mobile app has also been performing well.

Management had expected improved gross margins reflecting better price realization and channel mix. It had anticipated reduced interest expenses and a lower average number of shares outstanding for the first quarter of 2023.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Carter's this time around. The combination of a positive Earnings ESPESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as elaborated below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Carter's, Inc. Price and EPS Surprise

 

Carter's, Inc. Price and EPS Surprise
Carter's, Inc. Price and EPS Surprise

Carter's, Inc. price-eps-surprise | Carter's, Inc. Quote

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Carter's currently has an Earnings ESP of -9.62% and a Zacks Rank #4 (Sell).

Stocks With Favorable Combination

Here are some companies, which according to our model, have the right combination of elements to beat on earnings this season:

BJ's Wholesale BJ currently has an Earnings ESP of +1.42% and a Zacks Rank of 2.

BJ is likely to register top-line growth from the year-ago fiscal quarter’s reported figure when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $4.8 billion, suggesting 6.8% growth from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for BJ's Wholesale’s earnings for the fiscal first quarter is pegged at 84 cents, suggesting a 3.5% decline from 87 cents reported in the year-ago fiscal quarter.

Marriott International MAR currently has an Earnings ESP of +3.04% and a Zacks Rank of 2.

MAR is likely to register top and bottom-line growth when it reports first-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $5.3 billion, suggesting 25.7% growth from the figure reported in the prior-year quarter.

The consensus mark for Marriott’s first-quarter earnings is pegged at $1.85, suggesting year-over-year growth of 48%. The consensus mark has remained unchanged in the past 30 days. MAR has a trailing four-quarter earnings surprise of 12.8%, on average.

lululemon athletica LULU currently has an Earnings ESP of +2.07% and a Zacks Rank of 3. LULU is likely to register top-line improvement when it reports first-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for lululemon athletica’s quarterly revenues is pegged at $1.9 billion, calling for growth of 19.5% from the prior-year quarter’s reported figure. The consensus mark for the quarterly EPS of $1.93 suggests a 30.4% increase from the figure reported in the year-ago fiscal quarter. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Marriott International, Inc. (MAR) : Free Stock Analysis Report

BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

Carter's, Inc. (CRI) : Free Stock Analysis Report

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