Carter's Q4 Earnings on the Horizon: Key Factors to Note

Core Viewpoint - Carter's, Inc. is expected to report a decline in both revenue and earnings for the fourth quarter of 2024, influenced by various economic factors and increased operational costs [1][4][6]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for fourth-quarter revenues is $828.5 million, reflecting a 3.4$1.72 per share, indicating a significant drop of 37.7% compared to the same quarter last year [2]. Performance Factors - The anticipated decline in performance is attributed to inflation, high interest rates, and the cessation of pandemic-related stimulus payments, leading to reduced demand for products [4]. - Increased selling, general and administrative expenses (SG&A) are expected to further strain operating margins, driven by fixed cost deleverage from lower sales and rising distribution and transportation costs [4][5]. Sales Projections - Management projected net sales between $800 million and$840 million for the fourth quarter, down from $858 million in the previous year [6]. - Comparable sales in the U.S. Retail business are expected to decline by 9-12%, with a predicted overall sales drop of 9.3% in the U.S. Retail segment and 5.5% in the International segment [7]. Strategic Initiatives - To counteract these challenges, Carter's is focusing on improved pricing strategies, optimized inventory management, and enhancing e-commerce capabilities [8]. Valuation Perspective - Carter's is currently trading at a forward 12-month price-to-earnings ratio of 10.76x, which is below its five-year high of 21.14x and the industry average of 28.1x, presenting a potentially attractive investment opportunity [12]. Market Performance - Over the past three months, Carter's shares have increased by 0.5%, while the industry has seen a growth of 4% [13].