Carter's Q3 revenues up 2.1 percent
Carter’s, Inc., for its third quarter reported net sales increase of 19.4 million dollars or 2.1 percent to 943.3 million dollars, driven by growth in the company’s U.S. wholesale and U.S. retail segments. The company said, changes in foreign currency exchange rates adversely affected consolidated net sales in the third quarter by 1.3 million dollars or 0.1 percent. On a constant currency basis, consolidated net sales increased 2.2 percent in the third quarter of fiscal 2019.
“Our third quarter results include a non-cash charge to recognize the impairment of our Skip Hop tradename,” said Michael D. Casey, Chairman and Chief Executive Officer of Carter’s, adding, “Since its acquisition in 2017, Skip Hop has achieved good growth in sales, but the carrying value of its tradename has been impaired by the loss of its largest customer, Toys “R” Us, which closed last year, lower international demand, and higher product costs driven by tariffs imposed on China imports this year. Excluding the impairment charge, we exceeded our sales and earnings growth objectives in the third quarter.”
Review of Carter’s Q3 and nine months performance
Operating income decreased 19.7 million dollars or 19 percent to 83.9 million dollars, while adjusted operating income increased 7.6 million dollars or 7.1 percent to 114.7 million dollars and adjusted operating margin increased 60 basis points to 12.2 percent compared to 11.6 percent in the third quarter of fiscal 2018. Net income in the third quarter decreased 11.5 million dollars or 16 percent to 60.3 million dollars or 1.34 dollars per diluted share. Adjusted net income increased 8.6 million dollars or 11.5 percent to 83.9 million dollars and adjusted earnings per diluted share increased 16.2 percent to 1.87 dollars.
Net sales for the first nine months increased 42.9 million dollars or 1.8 percent to 2.4 billion dollars, driven by growth in the company’s U.S. wholesale and U.S. retail segments, partially offset by a net sales decline in the international segment. Changes in foreign currency exchange rates in the first three quarters adversely affected consolidated net sales by 6.4 million dollars or 0.3 percent. On a constant currency basis, consolidated net sales increased 2.1 percent in the first three quarters of fiscal 2019.
Operating income in the first three quarters decreased 11.7 million dollars or 5.3 percent to 209.1 million dollars, while operating margin decreased 70 basis points to 8.6 percent compared to 9.3 percent in the first three quarters of fiscal 2018. Adjusted operating income increased 2 million dollars or 0.8 percent to 238.7 million dollars, and adjusted operating margin decreased 10 basis points to 9.9 percent compared to 10 percent in the first three quarters of fiscal 2018. Net income decreased 12.9 million dollars or 8.5 percent to 138.7 million dollars or 3.06 dollars per diluted share, while adjusted net income increased 2.4 million dollars or 1.5 percent to 166.9 million dollars and adjusted earnings per diluted share increased 5.7 percent to 3.68 dollars.