Carter's (CRI) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 4.2% year-over-year to $758.5 million, with operating income at $77 million and adjusted EPS at $1.64, driven by strong U.S. retail performance and effective pricing and marketing investments despite macroeconomic headwinds.

• U.S. Retail sales outperformed internal plans but declined 5.8% year-over-year; U.S. Wholesale was flat or down 0.5%, and International sales dropped 8.6–9%.

• Investments in lower prices and brand marketing improved conversion rates, transactions, and new customer acquisition, with $60 million allocated in H2 2024.

• Returned $138 million to shareholders via dividends and share repurchases through Q3 2024.

• Cash flow through September exceeded expectations, with over $1 billion in liquidity and no seasonal borrowings.

Financial highlights

• Q3 2024 net sales were $758.5 million (down 4.2% year-over-year); operating income was $77 million (down 17.5%); adjusted EPS was $1.64 (down 10.9%).

• Gross margin was 46.9%, down 60 basis points, impacted by price investments, higher wholesale mix, and increased freight costs.

• Q3 adjusted EBITDA was $91 million (down 19%); year-to-date adjusted EBITDA was $214 million (down 11%).

• Inventory at quarter-end was $607.4 million, down 2.1% year-over-year; cash at quarter-end was $175.5 million.

• Year-to-date net sales declined 4.9–5%, with operating income down 11%.

Outlook and guidance

• Full-year 2024 net sales expected between $2.785–$2.825 billion; adjusted operating income forecasted at $240–$260 million.

• Adjusted EPS guidance raised to $4.70–$5.15 due to lower tax rate and interest expense.

• Q4 2024 net sales projected at $800–$840 million; adjusted operating income $70–$90 million; adjusted EPS $1.32–$1.72.

• Guidance assumes continued macroeconomic pressure, higher SG&A, lower interest expense, and lower share count.

• Over 100% of projected 2024 free cash flow expected to be returned to shareholders via dividends and repurchases.