Carter's (CRI) Q4 2009 earnings summary

Executive summary

• Fiscal 2009 net sales rose 6.4% to $1.590B and net income increased 48.4% to $115.6M; operating cash flow was $188.2M and year-end cash was $335.0M.

• Market share increased to 12.5% from 11.7% as the U.S. newborn-to-seven apparel market contracted 4% to $23B.

• Results followed cost actions and continued investment in retail, technology, product presentation, and a new eCommerce channel launched in March 2010.

Financial highlights

• Net sales were $1,589.7M vs. $1,494.5M; gross profit was $604.4M vs. $518.5M; operating income was $195.6M vs. $140.0M.

• GAAP net income was $115.6M vs. $77.9M; diluted EPS was $1.97 vs. $1.33. Adjusted net income was $126.6M and adjusted diluted EPS was $2.15.

• Net cash from operations was $188.2M vs. $183.6M; capital expenditures were $33.0M vs. $37.5M.

• Fiscal 2009 included $5.7M of investigation expenses and $10.8M of workforce reduction, facility write-down, and closure costs.

Outlook and guidance

• Fiscal 2010 capital expenditures planned at ~$45M, primarily for retail openings and remodelings and wholesale customer fixtures.

• Planned fiscal 2010 openings/closures: Carter's retail, ~25 opens and five closes; OshKosh retail, ~13 opens and three closes.

• Cash, operating cash flow, and available revolver capacity were expected to cover working capital and capital spending for the foreseeable future, subject to risks.

• Fiscal 2010 priorities included extending brand reach through retail, eCommerce, and international channels, improving OshKosh product performance, and lifting profitability through productivity and supply-chain efficiency.