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Carter's Q3 Earnings Miss Estimates; Cuts FY22 Forecast

  • Carter's Inc (NYSE: CRI) reported a third-quarter FY22 sales decline of 8.1% year-on-year to $818.6 million, missing the consensus of $853.58 million.

  • Lower sales were driven by declines in the U.S. Retail, International, and U.S. Wholesale sales of 12.3%, 6.7%, and 1.9%, respectively. U.S. Retail comparable net sales declined by 11%.

  • The gross profit decreased 9.4% Y/Y to $370.5 million, with a profit margin of 45.3%.

  • The adjusted operating margin decreased 270 basis points to 11.2%, and adjusted operating income for the quarter fell 26.1% to $91.6 million.

  • The company held $121.65 million in cash and equivalents as of October 1, 2022.

  • Adjusted EPS of $1.67 missed the analyst consensus of $1.70.

  • "Historic and persistent inflation has continued to weigh on demand for our brands, and is adversely affecting many families raising young children," said Chairman and CEO Michael D. Casey.

  • Outlook: Carter sees FY22 sales of $3.145 billion - $3.185 billion (prior view $3.25 billion - $3.30 billion), below the consensus of $3.29 billion.

  • The company expects FY22 adjusted EPS of $6.05 - $6.65 (previous view $7.10 - $7.60) versus the consensus of $7.18.

  • For Q4, it expects sales of $845 million - $885 million, below the Street view of $963.82 million. Adjusted EPS of $1.40 - $2.00, against the consensus of $2.56.

  • Price Action: CRI shares are trading lower by 6.53% at $68.76 on the last check Friday.

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