Growth in retail and wholesales segments boost Carter's Q2

Carter’s, Inc. said for its second quarter net sales increased 38.2 million dollars or 5.5 percent to 734.4 million dollars, driven by growth in the company’s U.S. Retail and U.S. Wholesale segments, partially offset by a decline in net sales in the international segment. The company added that changes in foreign currency exchange rates adversely affected net sales by 2.1 million dollars or 0.3 percent, while on a constant currency basis, consolidated net sales increased 5.8 percent during the quarter.

“Our growth was driven by our retail and wholesale businesses, and reflects good demand for our spring and summer product offerings. Given the strength of our product offerings and related marketing strategies, we are expecting good growth in the second half and reaffirming our sales and earnings growth objectives for 2019,” said Michael D. Casey, the company’s Chairman and CEO in a statement.

Consolidated result highlights of Carter’s Q2 performance

The company said that operating income increased 7.5 million dollars or 13.2 percent to 64.5 million dollars, while operating margin increased 60 basis points to 8.8 percent, compared to 8.2 percent in the second quarter of fiscal 2018. Adjusted operating income increased 6.8 million dollars or 11.9 percent to 63.8 million dollars and adjusted operating margin increased 50 basis points to 8.7 percent, compared to 8.2 percent in the second quarter of fiscal 2018.

Net income in the second quarter increased 6.7 million dollars or 17.9 percent to 43.9 million dollars or 97 cents per diluted share compared to 37.3 million dollars or 79 cents per diluted share, in the second quarter of fiscal 2018. Adjusted net income increased 6.1 million dollars or 16.4 percent to 43.4 million dollars compared to 37.3 million dollars in the second quarter of fiscal 2018, while adjusted earnings per diluted share increased 21.1 percent to 95 cents, compared to 79 cents in the second quarter of fiscal 2018.

Review of Carter’s first half results

The company added that net sales in the first half increased 23.5 million dollars or 1.6 percent to 1.5 billion dollars and that the changes in foreign currency exchange rates adversely affected consolidated net sales by 5.1 million dollars or 0.4 percent. On a constant currency basis, consolidated net sales increased 2 percent in the first half of fiscal 2019.

Operating income increased 8 million dollars or 6.8 percent to 125.2 million dollars compared to 117.3 million dollars, while operating margin increased 40 basis points to 8.5 percent compared to 8.1 percent in the first half of fiscal 2018. Adjusted operating income decreased 5.6 million dollars or 4.3 percent to 124.1 million dollars compared to 129.7 million dollars in the first half of fiscal 2018, while adjusted operating margin decreased 50 basis points to 8.4 percent.

Net income decreased 1.3 million dollars or 1.7 percent to 78.4 million dollars or 1.72 dollars per diluted share compared to 79.7 million dollars or 1.68 dollars per diluted share, in the first half of fiscal 2018. Adjusted net income decreased 6.2 million dollars or 7 percent to 83 million dollars compared to 89.2 million dollars in the first half of fiscal 2018, while adjusted earnings per diluted share decreased 3 percent to 1.82 dollars compared to 1.88 dollars in the first half of fiscal 2018.

Carter’s posts sales rise in retail and wholesale segments

U.S. Retail segment sales increased 21.1 million dollars or 5.3 percent to 423.1 million dollars in the second quarter, while comparable sales increased 3.8 percent. The company opened five stores and closed six stores in the United States during the quarter.

During the first half, U.S. Retail segment sales increased 14.4 million dollars or 1.8 percent to 800.2 million dollars, while comparable sales increased 0.1 percent. In the first half of fiscal 2019, the company opened nine stores and closed 20 stores in the United States. As of the end of the second quarter, the company operated 833 retail stores in the United States.

U.S. Wholesale segment net sales during the second quarter increased 19.6 million dollars or 9.4 percent to 229.1 million dollars, first half U.S. Wholesale segment net sales increased 14.1 million dollars or 2.9 percent to 504.5 million dollars, reflecting increased demand for the company’s exclusive brands, partially offset by discontinued sales to Toys “R” Us, Bon-Ton, and Sears.

Second quarter international segment net sales decreased 2.5 million dollars or 3 percent to 82.2 million dollars, while on a constant currency basis net sales declined 0.5 percent. First half international segment net sales decreased 5.1 million dollars or 2.9 percent to 170.8 million dollars, while on a constant currency basis net sales were comparable to 2018. As of the end of the second quarter of fiscal 2019, the company operated 189 retail stores in Canada and 42 retail stores in Mexico.

Carter’s reveals 2019 business outlook,/h2>

For the third quarter of fiscal 2019, the company projects net sales will increase approximately 1 percent and adjusted diluted earnings per share will increase approximately 3 percent to 4 percent compared to adjusted diluted earnings per share of 1.61 dollars in the third quarter of fiscal 2018.

For fiscal 2019, consistent with its previously-issued outlook, the company projects net sales will increase approximately 1 percent to 2 percent and adjusted diluted earnings per share will increase approximately 4 percent to 6 percent compared to adjusted diluted earnings per share of 6.29 dollars in fiscal 2018.

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