US wholesale, US retail, and international segment net sales declined 5.3 per cent, 4.3 per cent, and 4.9 per cent, respectively. US retail comparable net sales declined 5.2 per cent, with e-commerce outperforming stores.
Carter’s has reported Q1 FY25 net sales of $630 million, down 4.8 per cent YoY, impacted by inflation, interest rates, and weak consumer confidence.
Operating income fell 52.6 per cent, and net income dropped to $15.5 million.
Carter’s suspended forward guidance due to leadership changes and tariff uncertainties.
CEO expressed confidence in the brand’s long-term growth potential.
Changes in foreign currency exchange rates used for translation in Q1 FY25, as compared to Q1 FY24, had an unfavourable effect on consolidated net sales of approximately $6.4 million, or 1.0 per cent, Carter’s said in a press release.
The operating income of the company decreased $28.9 million, or 52.6 per cent YoY, to $26.1 million. Operating margin decreased to 4.1 per cent, compared to 8.3 per cent in the same period last fiscal, reflecting investments in pricing, fixed cost deleverages, and costs related to leadership transition and operating model improvement initiatives.
The adjusted operating income decreased 19.6 million, or 35.7 per cent, to $35.4 million and adjusted operating margin decreased to 5.6 per cent, compared to 8.3 per cent in the prior year period, principally due to pricing investments and fixed cost deleverage, partially offset by lower product costs.
The net income of the company decreased $22.5 million to $15.5 million, or $0.43 per diluted share, and adjusted net income decreased $14.3 million to $23.8 million. Meanwhile, adjusted earnings per diluted share was $0.66.
Net cash used in operations in the first quarter of fiscal 2025 was $48.6 million, compared to $25.6 million in the prior year period. The change in net cash from operating activities was primarily driven by lower earnings.
“Our teams delivered a good Q1. Our US retail business achieved its sales and earnings plans in the quarter. Trends in March, the most significant month of the quarter, improved meaningfully from performance in January and February driven by the effectiveness of our product and promotional strategies,” said Douglas C Palladini, newly appointed chief executive officer (CEO) & president at Carter’s. “In March, we saw improved traffic, conversion, and comparable sales trends while continuing to add new customers and improve customer retention. Sales in our US Wholesale business exceeded our forecasts due to higher demand from several customers. Demand outside the United States was also strong in the first quarter, particularly in our Canada and Mexico retail businesses.”
Due to the recent leadership transition and heightened uncertainty regarding proposed new tariffs and their potential impact on the business, Carter’s has decided to suspend its forward guidance, added the release.
“I strongly believe in the tenet that we ‘do what we say’ and I intend to spend the time required to be able to meet that commitment. In addition, the current tariff situation has introduced substantial uncertainty, greatly complicating our ability to accurately predict Carter’s financial outlook,” added Palladini.
Fibre2Fashion News Desk (SG)
