Carter's Inc (CRI) Q3 2023 Earnings: A Detailed Review
Carter's Inc (NYSE:CRI) reports Q3 2023 net sales of $792 million, a decrease from $819 million in Q3 2022.
Operating margin improved to 11.8% in Q3 2023, up from 11.2% in Q3 2022.
The company returned $152 million to shareholders year-to-date through share repurchases and dividends.
Full year fiscal 2023 outlook anticipates net sales of $2.950 billion to $2.965 billion.
On October 27, 2023, Carter's Inc (NYSE:CRI), the largest branded marketer in North America of apparel exclusively for babies and young children, released its third quarter fiscal 2023 results. Despite a decrease in net sales, the company saw an improvement in its operating margin and continued to return capital to its shareholders.
Financial Performance and Challenges
Carter's Inc (NYSE:CRI) reported net sales of $792 million for Q3 2023, a decrease from $819 million in Q3 2022. The company attributed this decline to macroeconomic factors, including inflation, higher interest rates, higher consumer debt levels, and the risk of recession, which negatively affected demand from consumers and wholesale customers. Additionally, unseasonably warm weather in September adversely affected demand for the company's fall and holiday product offerings.
Despite the decrease in net sales, the company's operating margin improved to 11.8% in Q3 2023, up from 11.2% in Q3 2022. This improvement was attributed to favorable ocean freight rates, lower inventory provisions, and decreased distribution and freight costs.
Financial Achievements and Shareholder Returns
Year-to-date, Carter's Inc (NYSE:CRI) has returned $152 million to shareholders through share repurchases and dividends. In Q3 2023 alone, the company returned $55.4 million to shareholders. The company also reported year-to-date operating cash flow of $206 million.
Income Statement and Balance Sheet Highlights
The company's diluted EPS for Q3 2023 was $1.78, an increase from $1.67 in Q3 2022. Adjusted diluted EPS was $1.84, also up from $1.67 in Q3 2022. The company's net income for Q3 2023 was $66.1 million, slightly higher than the $65.0 million reported in Q3 2022.
As of the end of Q3 2023, the company's total liquidity was $945 million, comprised of cash and cash equivalents of $169 million and $776 million in unused borrowing capacity on the company's $850 million secured revolving credit facility.
Outlook for Fiscal 2023
For the full fiscal year 2023, Carter's Inc (NYSE:CRI) expects net sales of $2.950 billion to $2.965 billion, adjusted operating income of $325 million to $335 million, and adjusted diluted EPS of $5.95 to $6.15. The company also anticipates operating cash flow of over $350 million.
Despite the challenges faced in Q3 2023, Carter's Inc (NYSE:CRI) remains optimistic about its performance for the remainder of the fiscal year, expecting improved consumer demand and cautious inventory commitments by wholesale customers.
Explore the complete 8-K earnings release (here) from Carter's Inc for further details.
This article first appeared on GuruFocus.
