Carter's Inc. (CRI) earnings release for the 3rd quarter of their 2021 fiscal year
Category: Stock Market and Carter's Inc. (CRI)
Date: 2 November 2021 Stock Price of Carter's (CRI): $102.00 Market Capital of Carter's (CRI): $4.49 billion We take a look at the 3rd quarter earnings report of their 2021 fiscal year of Carter's Inc. the largest branded marketer in North America of apparel and related products for babies and young children. Net sales for the quarter came in at $891 million and net income reported came in at $84.9 million
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About Carter's Inc.
Carter’s, Inc. is the largest branded marketer in North America of apparel and related products exclusively for babies and young children. The Company owns the Carter's and OshKosh B'gosh brands, two of the most recognized brands in the marketplace. These brands are sold in leading department stores, national chains, and specialty retailers domestically and internationally. They are also sold through more than 1,000 Company-operated stores in the United States, Canada, and Mexico and on-line at www.carters.com, www.oshkosh.com, and www.cartersoshkosh.ca. The Company's Child of Mine brand is available at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon. The Company also owns Skip Hop, a global lifestyle brand for families with young children. Carter's is headquartered in Atlanta, Georgia.
Overview of Carter's Inc.'s 3rd quarter 2021 earnings
- Net sales $891 million, growth of 3%
- U.S. Retail comparable sales grew 5.9%
- Global supply chain delays affected sales
- Strong third quarter profitability
- Record gross profit margin
- Operating margin 13.9% vs. 13.1% in Q3 2020; adjusted operating margin 13.9% vs. 13.8% in Q3 2020
- Diluted EPS $1.93 vs. $1.85 in Q3 2020; adjusted diluted EPS $1.93 vs. $1.96 in Q3 2020
- Returned $128 million to shareholders through dividends and share repurchases in Q3 2021; returned $228 million year-to-date through October
- Company raising full year profit outlook; record earnings forecasted for 2021
Carter's Inc.'s management commentary on their 3rd quarter 2021 earnings
ATLANTA--(BUSINESS WIRE)--Oct. 29, 2021-- Carter’s, Inc. (NYSE:CRI), the largest branded marketer in North America of apparel exclusively for babies and young children, today reported its third quarter fiscal 2021 results.
“We meaningfully exceeded our earnings objectives for the third quarter,” said Michael D. Casey, Chairman and Chief Executive Officer. “While supply chain delays impacted our ability to support the strong demand for our brands in the quarter, our continued progress with price realization, productivity improvements, and expense management enabled us to offset higher transportation costs and improve profit margins.
“Given our strong liquidity and favorable outlook for the business, we resumed share repurchases in August which, together with our dividend, returned $128 million of capital to our shareholders in the quarter.
“Our forecast for the year reflects materially better performance than we envisioned possible earlier this year. Given the expected continued benefit of structural changes made in our business to respond to pandemic-related challenges, together with the strength of our product offerings and marketing strategies, we are raising our earnings objectives for the year and forecasting record profitability for 2021.”
2021 Business Outlook
“We are raising our previous sales outlook for the fourth quarter and flowing through the stronger third quarter earnings to the full year,” said Michael D. Casey. “This improved outlook reflects the benefit of wholesale customer shipments shifting from the third quarter to the fourth quarter, favorable trends in international demand, and expected continued progress in improving price realization.”
For the fourth quarter of fiscal 2021 (a 13 week fiscal quarter), the Company projects net sales will be approximately $1,025 million, adjusted operating income will be approximately $127 million (compared to adjusted operating income of $145.5 million in the fourth quarter of fiscal 2020), and adjusted diluted earnings per share will be approximately $2.00 (compared to adjusted diluted earnings per share of $2.46 in the prior year period). Factors affecting the comparability to the fourth quarter of fiscal 2020 include a 14 week fiscal quarter in 2020, higher transportation costs, and the benefit of the release of inventory reserves in the prior year period. The forecast for adjusted operating income and adjusted diluted earnings per share excludes approximately $0.2 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, and a benefit of approximately $0.1 million related to a gain on modifications of previously-impaired leases.
For fiscal 2021 (a 52 week fiscal year), the Company projects net sales will be approximately $3.45 billion, adjusted operating income will be approximately $490 million (compared to adjusted operating income of $279.8 million in fiscal 2020), and adjusted diluted earnings per share will be approximately $7.57 (compared to adjusted diluted earnings per share of $4.16 in fiscal 2020). The forecast for adjusted operating income and adjusted diluted earnings per share excludes approximately $3.7 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, approximately $2.5 million of restructuring costs, and a benefit of approximately $2.3 million related to a gain on modifications of previously-impaired leases.
“We meaningfully exceeded our earnings objectives for the third quarter,” said Michael D. Casey, Chairman and Chief Executive Officer. “While supply chain delays impacted our ability to support the strong demand for our brands in the quarter, our continued progress with price realization, productivity improvements, and expense management enabled us to offset higher transportation costs and improve profit margins.
“Given our strong liquidity and favorable outlook for the business, we resumed share repurchases in August which, together with our dividend, returned $128 million of capital to our shareholders in the quarter.
“Our forecast for the year reflects materially better performance than we envisioned possible earlier this year. Given the expected continued benefit of structural changes made in our business to respond to pandemic-related challenges, together with the strength of our product offerings and marketing strategies, we are raising our earnings objectives for the year and forecasting record profitability for 2021.”
2021 Business Outlook
“We are raising our previous sales outlook for the fourth quarter and flowing through the stronger third quarter earnings to the full year,” said Michael D. Casey. “This improved outlook reflects the benefit of wholesale customer shipments shifting from the third quarter to the fourth quarter, favorable trends in international demand, and expected continued progress in improving price realization.”
For the fourth quarter of fiscal 2021 (a 13 week fiscal quarter), the Company projects net sales will be approximately $1,025 million, adjusted operating income will be approximately $127 million (compared to adjusted operating income of $145.5 million in the fourth quarter of fiscal 2020), and adjusted diluted earnings per share will be approximately $2.00 (compared to adjusted diluted earnings per share of $2.46 in the prior year period). Factors affecting the comparability to the fourth quarter of fiscal 2020 include a 14 week fiscal quarter in 2020, higher transportation costs, and the benefit of the release of inventory reserves in the prior year period. The forecast for adjusted operating income and adjusted diluted earnings per share excludes approximately $0.2 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, and a benefit of approximately $0.1 million related to a gain on modifications of previously-impaired leases.
For fiscal 2021 (a 52 week fiscal year), the Company projects net sales will be approximately $3.45 billion, adjusted operating income will be approximately $490 million (compared to adjusted operating income of $279.8 million in fiscal 2020), and adjusted diluted earnings per share will be approximately $7.57 (compared to adjusted diluted earnings per share of $4.16 in fiscal 2020). The forecast for adjusted operating income and adjusted diluted earnings per share excludes approximately $3.7 million of expenses related to the COVID-19 pandemic, including costs associated with additional protective equipment and cleaning supplies, approximately $2.5 million of restructuring costs, and a benefit of approximately $2.3 million related to a gain on modifications of previously-impaired leases.
Carter's Inc. (CRI) stock price history over the last 5 years
The image below shows the stock price history of Carter's Inc. over the last 5 years. And it's been a very volatile but overall positive time for Carter's Inc. stockholders. Over the last 5 years the stock of Carter's has provided a very modest 10.4% to stockholders over the last 5 years.
The stock of Carter's Inc. is trading at closer to its 52 week high than it is to its 52 week low which to us is a indication that the short term momentum and sentiment of Carter's Inc. stock is positive at this point in time.
The stock of Carter's Inc. is trading at closer to its 52 week high than it is to its 52 week low which to us is a indication that the short term momentum and sentiment of Carter's Inc. stock is positive at this point in time.
Carter's Inc. (NYSE: CRI) latest stock valuation
So what is Carter's Inc. stock worth based on the release of their latest earnings report and their outlook for the rest of their 2021 fiscal year? Based on Carter's Inc. latest earnings report and their outlook our valuation models provide a target (full value) price for Carter's Inc. stock at $107.20 a stock We therefore believe that the stock of Carter's Inc. is slightly undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $107.20. Therefore we believe a good entry point into Carter's Inc. stock is at $96.50 or below. We expect the stock price of Carter's Inc. to tick upwards slightly to levels closer to our target (full value) price in coming weeks and months.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $107.20. Therefore we believe a good entry point into Carter's Inc. stock is at $96.50 or below. We expect the stock price of Carter's Inc. to tick upwards slightly to levels closer to our target (full value) price in coming weeks and months.
Next earnings release date for Carter's Inc.
It is expected that Carter's Inc. (CRI) 4th quarter and full fiscal 2021 earnings report will be released in late January 2022.