The adjusted operating margin of the company decreased to 10.2 per cent vs. 12.2 per cent in Q3 2023. The diluted earnings per share (EPS) was $1.62 vs. $1.78 in Q3 2023, and adjusted diluted EPS remained at $1.64 vs. $1.84 in Q3 2023, as per a press release by Carter’s, Inc.
Carter’s, Inc. reported a 4.2 per cent YoY decline in Q3 FY24 net sales, reaching $758 million.
Adjusted operating margin dropped to 10.2 per cent, and diluted EPS was $1.62, down from $1.78 in Q3 FY23.
For FY24, the company projects net sales of $2.785-$2.825 billion and $240-$260 million in adjusted operating income, citing strong product and pricing strategies.
The US retail, international, and US wholesale segment net sales declined 5.8 per cent, 8.6 per cent, 0.5 per cent, respectively and US retail comparable net sales declined 7.1 per cent. Operating income in Q3 FY24 decreased $16.4 million, or 17.5 per cent to $77.0 million, compared to $93.4 million in the third quarter of fiscal 2023. Operating margin decreased to 10.2 per cent, compared to 11.8 per cent in the prior-year period.
Adjusted operating income (a non-GAAP measure) decreased $19.3 million, or 20.0 per cent to $77.0 million, compared to $96.3 million in the third quarter of fiscal 2023. Adjusted operating margin decreased to 10.2 per cent, compared to 12.2 per cent in the prior year period, stated the press release.
The net income of the company was $58.3 million, or $1.62 per diluted share, compared to $66.1 million, or $1.78 per diluted share, in the third quarter of FY23.
Adjusted net income (a non-GAAP measure) was $59.0 million in Q3 FY24, compared to $68.4 million in the third quarter of fiscal 2023. Adjusted earnings per diluted share (a non-GAAP measure) was $1.64, compared to $1.84 in the prior-year quarter.
First three quarters of FY24 compared to first three quarters of FY23
The company’s net sales decreased $103.3 million, or 4.9 per cent, to $1.98 billion in the first three quarter of FY24, compared to $2.09 billion in the first three quarters of fiscal 2023. The US retail, international, and US wholesale segment net sales declined 7.0 per cent, 7.1 per cent, and 1.5 per cent, respectively. US retail comparable net sales declined 8.5 per cent.
The operating income decreased $15.8 million, or 8.4 per cent to $171.5 million in this period compared to $187.3 million in the first three quarters of FY23. Operating margin declined to 8.6 per cent, compared to 9.0 per cent in the prior year period.
The adjusted operating income (a non-GAAP measure) decreased $20.2 million, or 10.6 per cent to $171.5 million, compared to $191.8 million in the first three quarters of fiscal 2023. Adjusted operating margin declined to 8.6 per cent, compared to 9.2 per cent in the prior year period.
The net income of the company in this period was $124.0 million, or $3.41 per diluted share, compared to $126.0 million, or $3.36 per diluted share, in the first three quarters of FY23. Meanwhile adjusted net income (a non-GAAP measure) was $124.7 million, compared to $129.4 million in the first three quarters of FY23. Adjusted earnings per diluted share (a non-GAAP measure) was $3.43, compared to adjusted earnings per diluted share of $3.45 in the first three quarters of fiscal 2023.
Net cash provided by operations in the first three quarters of FY24 was $11.3 million, compared to net cash provided by operations of $205.8 million in the first three quarters of FY23.
2024 business outlook
For fiscal year 2024 the company projects $2.785 billion to $2.825 billion in net sales ($2.95 billion in FY23); $240 million to $260 million in adjusted operating income ($328 million in FY23); $4.70 to $5.15 in adjusted diluted earnings per share, excluding a non-cash, pre-tax partial pension plan settlement charge of $0.9 million (previous guidance $4.60 to $5.05; $6.19 in fiscal 2023).
It also expects operating cash flow to be more than $200 million ($529 million in FY23); and capital expenditures of $65 million (previous guidance $75 million; $60 million in FY23), added the release.
For the fourth quarter (Q4) of FY24, the company projects approximately: $800 million to $840 million in net sales ($858 million in Q4 FY23); $70 million to $90 million in adjusted operating income ($136 million in Q4 FY23); and $1.32 to $1.72 in adjusted diluted earnings per share ($2.76 in Q4 FY23).
Michael D. Casey, chairman and chief executive officer (CEO) said, “We exceeded our third quarter sales and earnings objectives. Our US retail sales were better than planned and driven by the strength of our product offerings, and effectiveness of our pricing and brand marketing strategies.”
“In July, we initiated a plan to invest $40 million in more competitive pricing and $10 million in additional brand marketing in the second half of this year. We believe these investments, together with better in-store and online shopping experiences, improved the trend in our US retail sales in the third quarter. Compared to the first half of this year, we saw improving trends in conversion rates, transactions, unit volume, and new customer acquisition,” added Casey.
Fibre2Fashion News Desk (SG)
