Carter Q4 Earnings & Sales Surpass Estimates, Stock Down

Core Insights - Carter's, Inc. reported fourth-quarter 2024 results with both revenue and earnings exceeding Zacks Consensus Estimates, although year-over-year revenue showed marginal growth while earnings declined [1][3][4] Financial Performance - The company achieved consolidated net sales of $859.7 million, surpassing the Zacks Consensus Estimate of $828 million, reflecting a 0.2% increase from $857.9 million in the prior year [4] - Adjusted earnings per share (EPS) were $2.39, exceeding the Zacks Consensus Estimate of $1.72, but down 13.4% from $2.76 in the same quarter last year [3][4] - Gross profit decreased by 1.7% year over year to $411 million, with gross margin contracting by 90 basis points to 47.8% [9] Segment Performance - U.S. Retail segment sales fell 2.8% year over year to $466.2 million, with comparable net sales down 3.4% [7] - U.S. Wholesale segment sales increased by 7.3% year over year to $265.4 million, benefiting from favorable shipment timing [7] - International segment sales dropped by 2% year over year to $128.1 million [8] Cost and Margin Analysis - Adjusted operating income decreased by 15.4% year over year to $21 million, with adjusted operating margin down 250 basis points to 13.4% [10] - Selling, general and administrative (SG&A) expenses rose by 5.3% year over year to $302.1 million, accounting for 35.1% of net sales [11] Shareholder Returns - Carter's returned $28.8 million to shareholders through cash dividends in the fourth quarter, totaling $166.7 million for the year [12][13] - The company repurchased nearly 0.7 million shares for $50.5 million at an average price of $68.61 per share [13] Future Outlook - For Q1 2025, net sales are expected to be between $615 million and $625 million, down from $661 million in the prior year, with adjusted EPS projected at 45-55 cents [14] - For the full year 2025, net sales are anticipated to be between $2.78 billion and $2.86 billion, with adjusted operating income expected to be $180-$210 million [16] - The company expects a mid-single-digit decline in U.S. Retail sales and comparable store sales, with improvements anticipated in the second half of 2025 [17][18]