Carter's Shares Fall on Weakened Outlook
July 27 2016 - 12:30PM
Dow Jones News
Carter's Inc. lowered its 2016 guidance for its wholesale and
international businesses.
Shares fell 8.4% to $102.14 in recent trading, retreating from
an all-time high Tuesday, as the company also issued a mostly
disappointing outlook for the third quarter.
For the year, the company expects per-share earnings growth at
the low end of its previous projection for an increase between 10%
and 12% and reduced its net sales view by a percentage point to
between 5% and 6%.
For the current quarter, Carter's forecast a per-share earnings
increase of 6% to 10% and net sales growth of 6% to 7%. Analysts
polled by Thomson Reuters expected per-share profit to rise 17% and
revenue to improve by 7%.
The Atlanta company's brands include its namesake brand and
OshKosh. The company said Wednesday its second-quarter comparable
retail sales were hurt by lower demand from international customers
shopping in its U.S. stores and on its website.
For the period ended July 2, comparable retail sales grew 4.4%
at its Carter's brand, driven by a 17% increase in e-commerce sales
and 1.4% rise in sales at established retail stores. Overall retail
sales grew 11% to $273.8 million. Carter's brand wholesale segment
sales fell 2.8% to $205.7 million on weaker demand, partly the
result of the timing of orders.
At its OshKosh brand, comparable sales declined 1.3%, including
a 5.8% drop at comparable retail stores. OshKosh wholesale segment
sales slumped 34%, reflecting lower seasonal bookings.
Over all, Carter's reported a profit of $36.2 million, or 71
cents a share, down from $36.1 million, or 68 cents a share, a year
earlier. Excluding certain items, adjusted per-share earnings fell
to 72 cents from 73 cents.
Revenue increased 4.4% to $639.5 million on stronger retail
sales and international sales that were partly offset by weaker
wholesale revenue. Currency fluctuations had a negative effect of
0.4 percentage point.
Analysts polled by Thomson Reuters expected per-share profit of
66 cents and revenue of $636.86 million.
Gross margin rose to 44.1% from 42.9%.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
July 27, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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