U.S. markets open in 7 hours
  • S&P Futures

    4,540.75
    -30.50 (-0.67%)
     
  • Dow Futures

    35,057.00
    -202.00 (-0.57%)
     
  • Nasdaq Futures

    15,080.50
    -125.50 (-0.83%)
     
  • Russell 2000 Futures

    2,074.70
    -17.40 (-0.83%)
     
  • Crude Oil

    86.01
    +0.58 (+0.68%)
     
  • Gold

    1,812.30
    -0.10 (-0.01%)
     
  • Silver

    23.61
    +0.12 (+0.52%)
     
  • EUR/USD

    1.1342
    +0.0012 (+0.10%)
     
  • 10-Yr Bond

    1.8650
    0.0000 (0.00%)
     
  • Vix

    22.79
    +3.60 (+18.76%)
     
  • GBP/USD

    1.3600
    +0.0001 (+0.01%)
     
  • USD/JPY

    114.3600
    -0.2250 (-0.20%)
     
  • BTC-USD

    41,358.16
    -724.35 (-1.72%)
     
  • CMC Crypto 200

    1,173.18
    +163.79 (+16.23%)
     
  • FTSE 100

    7,563.55
    -47.68 (-0.63%)
     
  • Nikkei 225

    27,467.23
    -790.02 (-2.80%)
     

Solid Demand, Online Show to Aid Carter's (CRI) Amid High Cost

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Carter’s CRI looks well poised on the back of favorable demand for products and services. The company has been leveraging cost-management initiatives, price realization and productivity-improvement efforts. In addition, fewer promotions led to the sixth consecutive quarter of gross margin expansion in third-quarter 2021. The top line was aided by growth across retail and international segments. Going ahead, management expects robust demand across all channels.

CRI remains focused on strengthening e-commerce capabilities through investments to speed up deliveries. The e-commerce business has been performing well, driven by expanded omnichannel facilities, including curbside pickup, same-day pickup, buy online and pickup at store and ship from store along with easy access to a broad array of online products when shopping in stores. As a result, Carter’s e-commerce penetration in the United States is anticipated to grow 40% in 2021, suggesting a rise from less than 32% in 2019. International e-commerce sales are expected to exceed $100 million in 2021.

Driven by solid international demand and improved price realization, management raised its 2021 guidance. The company now anticipates yearly sales of $3.45 billion, which is expected to represent 98% of the pre-pandemic levels. Adjusted earnings are envisioned to be $7.57, suggesting a rise from the last year’s reported figure of $4.16 million.

Carter’s issued an upbeat fourth-quarter view, with sales expected to be $1,025 million. Adjusted earnings are envisioned to be $2.00 per share, with an adjusted operating income of $127 million. It also noted that it has kickstarted the fourth quarter on a solid note.

Consequently, shares of this Zacks Rank #3 (Hold) company have gained 1.5% in the past three months compared with the industry’s 2.9% growth.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Yet, Carter’s has been witnessing elevated costs stemming from higher spending on compensation provisions, brand marketing and technology initiatives. Management also noted that higher freight charges, particularly air freight, are likely to remain deterrents. It projects adverse COVID-19 impacts, including supply-chain headwinds, inflation, and production and transportation delays, in the times ahead.

Direct costs, including health and safety-related expenses stemming from the COVID-19 crisis, remain a concern. Management anticipates incurring costs related to additional protective equipment and cleaning supplies of $3.7 million in 2021. The company is likely to incur $0.2 million of pandemic-related costs in the fourth quarter, which includes expenses such as additional protective equipment and cleaning supplies. The company expects $2.5 million of restructuring costs for 2021.

Bottom Line

We believe that strategic initiatives, solid online show and high demand are likely to drive growth further. Also, a VGM Score of B and a long-term earnings growth rate of 31.3% drive optimism on the stock.

Stocks to Consider

We have highlighted some better-ranked stocks from the broader Consumer Discretionary space such as Steven Madden SHOO, Crocs CROX and Whirlpool Corporation WHR.

Steven Madden currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 41.9%, on average. Shares of SHOO have rallied 21.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Steven Madden’s sales and earnings for the current financial year suggests growth of 50% and 170.4% from the year-ago period, respectively. The Zacks Consensus Estimate for 2021 earnings is pegged at $2.35 per share, indicating an increase of 11.9% in the past 30 days.

Crocs currently carries a Zacks Rank #3. The company has a trailing four-quarter earnings surprise of 41.6%, on average. Shares of CROX have gained 22.8% in the past three months.

The Zacks Consensus Estimate for Crocs’ sales and earnings per share for the current financial year suggests growth of 34.6% and 30.2%, respectively, from the year-ago period. The Zacks Consensus Estimate for 2021 earnings is pegged at $7.59 per share, indicating an increase of 9.7% in the past 30 days.

Whirlpool Corporation, a Zacks Rank #3 stock, has a trailing four-quarter earnings surprise of 14.8%, on average. The WHR stock has gained 5.4% in the past three months.

The Zacks Consensus Estimate for Whirlpool’s sales and earnings per share for the current financial year suggests growth of 0.9% and 12.5%, respectively, from the year-ago period. The Zacks Consensus Estimate for 2021 earnings is pegged at $26.38 per share, indicating an increase of 0.9% in the past 30 days.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Whirlpool Corporation (WHR) : Free Stock Analysis Report

Crocs, Inc. (CROX) : Free Stock Analysis Report

Carter's, Inc. (CRI) : Free Stock Analysis Report

Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research