Carter's (CRI) Q4 2013 earnings summary

Executive summary

• Largest U.S. branded marketer of baby and young children’s apparel; Carter’s held 13.6% share of the $18.9B U.S. market and OshKosh held 2.5%.

• Multi-channel reach included ~17,000 wholesale locations, 657 U.S. stores, 102 Canadian stores, and online and international licensing channels at FY2013 year-end.

Financial highlights

• FY2013 net sales rose 10.8% to $2.639B; gross profit increased 16.8% to $1.095B.

• Operating income increased 0.8% to $264.2M; net income declined 0.5% to $160.4M.

• Basic EPS was $2.78 vs. $2.73 YoY; diluted EPS was $2.75 vs. $2.69.

• Operating cash flow was $209.7M vs. $278.6M; capital expenditures rose to $182.5M from $83.4M.

Outlook and guidance

• FY2014 capital expenditures planned at ~$100M, primarily for store openings and remodels, IT, and further Braselton distribution capacity.

• Planned FY2014 openings/closures: Carter’s ~60/4 U.S. stores; OshKosh ~24/4 U.S. stores; Canada ~20 openings with no closures planned.

• Higher foreign-manufacturer labor costs were expected to raise 2014 product costs; further price deflation or inability to offset costs could pressure profitability.

• Additional FY2014 costs expected: ~$6.0M for Japan exit, ~$5.0M for office consolidation, and ~$100M total capital expenditures.