Carter’s Inc ((CRI)) has held its Q4 earnings call. Read on for the main highlights of the call.
Carter’s Inc. recently held its earnings call, revealing a mixed performance for the company. While the fourth quarter results surpassed expectations with strong growth in exclusive brand sales and market share in the baby and toddler segments, challenges such as declining profitability and a tough outlook for 2025 were also discussed. The company is actively working on modernizing its assortments and enhancing customer engagement, but profitability issues and market headwinds remain significant concerns.
Stronger Than Expected Fourth Quarter Performance
Carter’s Inc. reported a robust fourth quarter, with sales and earnings exceeding the high end of guidance. Consolidated net sales reached $860 million, marking the largest quarter of the year. This performance underscores the company’s ability to navigate a challenging retail environment and deliver solid results.
Record Sales in Exclusive Brands
The company achieved record sales of exclusive brand products in 2024, capitalizing on the consumer shift towards mass channels. This success highlights Carter’s strategic focus on exclusive offerings as a key growth driver.
Growth in Baby and Toddler Market Share
Carter’s continued to expand its market share in the US baby and toddler apparel segment. The core offerings in these categories performed consistently well, reinforcing the company’s strong position in this market.
New Brand and Product Initiatives
Carter’s introduced new personalized marketing capabilities and rebranded its loyalty program. The Little Planet brand achieved double-digit sales comps in 2024, showcasing the effectiveness of these initiatives in driving customer engagement.
Improvement in Customer Metrics
The company saw improvements in customer acquisition and retention rates, with over 90% of US retail sales occurring through the loyalty program. This indicates a strong connection with its customer base and successful loyalty strategies.
Lower Profitability and Earnings Decline
Despite strong sales, Carter’s faced a decline in profitability, with adjusted EPS down 13% from the previous year. Full-year operating income also fell by 13% to $287 million, highlighting the financial challenges the company is facing.
Impairment Charge on OshKosh B’Gosh
Carter’s incurred a $30 million non-cash pre-tax charge due to the impairment of the OshKosh B’Gosh brand trade name, reflecting challenges in maintaining brand value.
Challenges in US Retail Segment
US retail sales declined, impacted by significant pricing investments that affected profitability. Retail comps were down compared to previous periods, indicating ongoing challenges in the domestic market.
Negative Impact from Currency Exchange Rates
International sales were slightly lower due to negative impacts from currency exchange rates, with a stronger US dollar expected to be a headwind in 2025.
Challenging Outlook for 2025
Carter’s anticipates a challenging 2025, with planned operating income expected to decrease significantly due to lower gross margins and higher SG&A expenses. The company is focusing on improving product offerings and marketing strategies to drive consumer engagement and capture more market share.
Forward-Looking Guidance
During the earnings call, interim CEO Richard Westenberger highlighted that Carter’s sales and earnings exceeded expectations, with a focus on significant investments in pricing and marketing. The outlook for 2025 includes anticipated sales between $2.780 billion and $2.855 billion, with efforts to improve product offerings and marketing strategies to navigate a challenging retail environment.
In summary, Carter’s Inc. delivered a mixed performance in its latest earnings call. While the company showed strong results in certain areas, challenges in profitability and a tough outlook for 2025 remain. The company’s initiatives to modernize assortments and enhance customer engagement are promising, but market headwinds and financial hurdles persist.