Carter’s(US:CRI)2020-02-24 19:06Financial Data and Key Metrics Changes - The company reported fourth quarter sales of $1.1 billion, marking the strongest quarterly sales ever [6] - Full year net sales were just over $3.5 billion, with adjusted EPS of $6.46, representing a growth of 3% over 2018 [52][53] - Adjusted gross margin was 42.5%, down 70 basis points from last year due to higher inventory provisions and tariffs [54] - Fourth quarter adjusted operating income was $162 million, with an adjusted operating margin of 14.7% [55] Business Line Data and Key Metrics Changes - U.S. retail segment sales grew 2% in the fourth quarter, with comparable sales increasing by 1.6% driven by strong e-commerce growth [60] - U.S. wholesale segment net sales were $349 million, down 1% compared to the prior year, with lower sales to the off-price channel [73] - International sales increased over last year in the fourth quarter, driven by strong performance in Canada with nearly 8% increase in comparable retail sales [79] Market Data and Key Metrics Changes - The young children's apparel market in the U.S. declined by 6% last year, impacting overall sales [52] - The company gained market share in the U.S., increasing its share by 40 basis points to 13.8% [52] - E-commerce sales grew to 36% of total retail sales in the quarter, up from 32% last year [8] Company Strategy and Development Direction - The company plans to grow sales by over $400 million by 2024, with more than half of that growth expected from U.S. e-commerce [15] - The growth strategy focuses on four key areas: winning in baby, aging up brands, leading in e-commerce, and expanding globally [19] - The company aims to improve operating margin to about 12.5% by 2024 through various productivity initiatives [43][96] Management's Comments on Operating Environment and Future Outlook - Management noted that the retail environment remains challenging, but the outlook for the business is good [48] - The company expects sales growth in the 2% to 3% range for 2020, with stronger growth anticipated in the second half of the year [103] - There are concerns regarding potential supply chain disruptions due to the coronavirus situation, which may impact growth plans [107] Other Important Information - The Board of Directors declared a 20% increase in the quarterly dividend and authorized an additional $500 million in share repurchase [12][102] - The company has made significant investments in technology to enhance the online shopping experience and improve inventory management [44][28] Q&A Session Summary Question: Can you provide more detail on the gross margin pressure in the fourth quarter? - Management indicated that gross margin was below expectations due to additional inventory provisions and changes in customer mix affecting wholesale margins [110] Question: What is the outlook for the kids market and the age up initiative? - The market for ages 0 to 10 declined 6%, with the age up initiative generating about $100 million in new sales in 2019, particularly in the 5 to 10-year-old segment [112][114] Question: How should we think about the contribution from retail and wholesale in the sales growth guidance? - The company is planning low single-digit growth in both retail and wholesale, with expectations for stronger performance in the second half of the year [116]