Carter's Q1 Earnings Beat Estimates, Stock Down on Paused Guidance

Core Insights - Carter's, Inc. reported first-quarter 2025 results that exceeded Zacks Consensus Estimates for both sales and earnings, but showed a year-over-year decline in both metrics [1][4] - The company's shares fell over 10% following the weak results and the suspension of financial guidance, attributed to a recent CEO transition [2][3] Financial Performance - Adjusted earnings per share (EPS) were 66 cents, surpassing the Zacks Consensus Estimate of 53 cents, but down 36.5% from $1.04 in the prior-year quarter [4] - Consolidated net sales reached $629.8 million, beating the Zacks Consensus Estimate of $621 million, but declined 4.8% from $661.5 million in the same period last year [4] - The U.S. Retail segment sales decreased 4.3% year over year to $294.4 million, while the U.S. Wholesale segment sales fell 5.3% to $250.1 million [8] - The International segment saw a 4.9% drop in sales to $85.3 million [9] Margin Analysis - Gross profit decreased 7.6% year over year to $291.1 million, with gross margin contracting 140 basis points to 46.2% [10] - Adjusted operating income fell 35.7% year over year to $35.4 million, and adjusted operating margin decreased 270 basis points to 5.6% [11] Financial Position - As of the end of the first quarter 2025, the company had cash and cash equivalents of $320.9 million, long-term debt of $498.3 million, and shareholders' equity of $847.3 million [12] - The company returned $29 million to shareholders through cash dividends, paying 80 cents per common share [12]