Carter's Reports Decline in Net Sales and Profitability in Third Quarter and Nine Months Ended September 28, 2024

Carter's, Inc. reported its financial results for the fiscal quarter and three quarters ended September 28, 2024, revealing a decline in net sales and profitability compared to the previous fiscal period. For the third quarter, net sales totaled $758.5 million, a decrease of $33.2 million (4.2%) from $791.7 million in the same quarter of 2023. This decline was primarily attributed to lower U.S. Retail sales, which saw a comparable net sales decrease of 7.1%, impacted by macroeconomic factors such as inflation and increased interest rates.

Gross profit for the quarter was $356.0 million, down $20.4 million (5.4%) from the prior year, resulting in a gross margin of 46.9%, a decrease of 60 basis points. Operating income also fell to $77.0 million, down $16.4 million (17.5%), with an operating margin of 10.2%, reflecting a 160 basis point decline. Net income for the quarter was $58.3 million, a decrease of $7.8 million (11.8%), with diluted net income per share at $1.62, down from $1.78 in the previous year.

For the three fiscal quarters ended September 28, 2024, total revenue was $1.98 billion, a decrease of $103.3 million (4.9%) compared to $2.09 billion in the same period of 2023. Gross profit for this period was $954.1 million, down $23.6 million (2.4%), while operating income decreased by $15.8 million (8.4%) to $171.5 million. Net income for the three quarters was $124.0 million, a slight decrease of $2.0 million (1.6%).

Carter's has also made strategic investments to enhance its direct-to-consumer offerings, planning to invest $50 million in the second half of fiscal 2024, with $40 million allocated for competitive pricing and $10 million for brand marketing. The company has faced additional costs due to shipping disruptions and increased transportation expenses, amounting to approximately $10 million for the first three quarters of fiscal 2024.

In terms of balance sheet performance, total current assets decreased to $1.07 billion as of September 28, 2024, from $1.10 billion at the end of December 2023. Total liabilities increased slightly to $1.55 billion, while long-term debt remained stable at approximately $498 million. Shareholders' equity decreased to $829.3 million, down from $845.3 million at the end of December 2023.

Carter's declared a cash dividend of $0.80 per common share for the third quarter, an increase from $0.75 in the previous year, reflecting the company's commitment to returning value to shareholders despite the challenges faced in the current fiscal environment.