Carter's, Inc., the largest branded marketer of apparel exclusively for babies and young children, reported mixed results for the third quarter of fiscal 2024 amid ongoing macroeconomic pressures affecting consumer demand.
The company's net sales decreased by 4.2% year-over-year to $758.5 million, missing analysts' expectations slightly. However, adjusted earnings per share of $1.64 beat the consensus estimate of $1.40, thanks to effective pricing strategies and cost control measures.
Carter's cited inflation and higher interest rates as key factors weighing on families with young children, impacting demand for its brands. The U.S. Retail, International, and U.S. Wholesale segments all experienced sales declines, with U.S. Retail comparable net sales down 7.1%.
Despite the challenging environment, the company highlighted some positive trends in its U.S. Retail business during the quarter. Carter's reported better-than-expected sales driven by the strength of its product offerings, effective pricing actions, and successful brand marketing strategies. Compared to the first half of the year, the company saw improvements in conversion rates, transactions, unit volume, and new customer acquisition.
Furthermore, Carter's benefited from consumers' preference for one-stop shopping at major retailers like Target, Walmart, and Amazon, where they can purchase groceries, diapers, baby formula, and children's apparel in one location. As the largest supplier of young children's apparel to these retailers, Carter's holds a competitive advantage in this space.
From a financial perspective, Carter's maintained a strong liquidity position, with total liquidity of $1.02 billion at the end of the quarter, including $176 million in cash and cash equivalents and $844 million in unused borrowing capacity.
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