Loading...
01/11 11:29
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals declining sales, lower operating income, and a reduced EPS compared to last year. The company faces significant tariff risks, supply chain challenges, and competitive pressures, with no clear guidance provided. Despite a modest share repurchase and dividend payout, the financial outlook remains uncertain. The market cap indicates moderate sensitivity, and the lack of guidance, along with declining margins, suggests a negative stock reaction.
Net Sales $630 million, down 5% from last year. Sales in each of our business segments were also down about 5% versus 2024.
Adjusted Operating Income $35 million, compared to $55 million last year, primarily due to lower sales and pricing investments in U.S. retail.
Adjusted Operating Margin 5.6%, a decline driven by pricing investments and expense deleverage from lower sales.
Gross Margin 46.2%, a decline of 140 basis points versus last year, largely due to pricing investments in U.S. retail and negative FX impact on product costs.
SG&A Expenses $261 million, down 2% from last year, with lower spending across several areas offsetting incremental costs related to new stores and retail technology.
Effective Tax Rate Approximately 27%, up from about 24% last year, largely due to the vesting of restricted stock.
Adjusted Diluted EPS $0.66, compared to $1.04 in the first quarter of last year.
CapEx $10 million, down $2 million from last year, primarily related to new stores and distribution network improvements.
Total Liquidity Over $1 billion, with over $300 million of cash on hand.
Operating and Free Cash Flow Declined year-over-year, tracking to the lower level of earnings.
Product Performance: Strong sell-through of seasonal spring and summer products, particularly in the core newborn to 24-month baby business.
Market Positioning: Carter's is facing challenges due to proposed record tariffs on imports, which have led to inflation concerns and market volatility.
International Sales: International segment sales declined 5%, but there were strong comparable sales in Canada and Mexico, with April month-to-date comps up 9% in Canada and 25% in Mexico.
Operational Efficiency: Focus on improving product and brand development processes to be faster and better able to respond to changing consumer preferences.
Supply Chain Management: Carter's has diversified its production base, reducing reliance on China to less than 2% of apparel and accessories.
Leadership Transition: New CEO Doug Palladini aims to return Carter's to sustainable growth without relying on discounting strategies.
Suspension of Guidance: Forward-looking guidance has been suspended due to leadership transition and economic uncertainty related to tariffs.
Tariff Risks: The current tariff situation has introduced substantial uncertainty, complicating the ability to accurately predict Carter's financial outlook. Proposed higher tariffs could lead to meaningful increases in product costs, potentially raising prices on essential items for families with young children.
Supply Chain Challenges: Supply chain issues have returned as a key concern, with complexities arising from the company's diversified production base and reliance on multiple countries. The company has reduced its reliance on China, but the production of baby apparel is still heavily concentrated in Asia.
Economic Factors: The tumultuous market backdrop includes renewed concerns about inflation, significant declines in consumer confidence, and dramatic market volatility, particularly affecting retail and consumer companies like Carter's.
Competitive Pressures: Carter's is facing competitive pressures in the retail market, with a need to balance financial efficiency with strategic investments to drive growth and maintain profitability.
Leadership Transition: Carter's has undergone a leadership transition with the appointment of Doug Palladini as CEO, who aims to return the company to sustainable growth.
Strategic Focus: The leadership team is working on a clear, simplified strategy with focused priorities and investments to achieve accretive growth.
Product Development: Carter's is improving product and brand development processes to respond better to changing consumer preferences.
Supply Chain Management: Carter's is diversifying its production base to reduce reliance on China and is actively evaluating nearshore production alternatives.
Tariff Response: The company is engaging in lobbying efforts regarding proposed tariffs and evaluating potential price increases to mitigate cost impacts.
Forward Guidance: Carter's is suspending forward-looking guidance due to leadership transition and economic uncertainty related to tariffs.
Financial Outlook: The current tariff situation has introduced substantial uncertainty, complicating the ability to predict financial outcomes.
CapEx: CapEx for Q1 was $10 million, primarily for new stores and distribution improvements.
Effective Tax Rate: The effective tax rate for the full year is forecasted to be approximately 23%.
Sales Performance: First quarter net sales were $630 million, down 5% from last year, with adjusted EPS at $0.66.
Quarterly Dividend Payment: $29 million distributed as quarterly dividend.
Share Repurchase: Share count down modestly compared to last year, driven by share repurchases in 2024.
The earnings call reveals a mix of positive and cautious elements. The company is experiencing strong U.S. retail and international growth, and consumer acceptance of price increases is healthy. While gross margins are pressured, strategic initiatives like store closures are expected to improve profitability. The Q&A section highlights confidence in earnings growth and operational efficiency. Despite some uncertainties in pricing and SG&A details, the overall sentiment is positive, with market expansion and strategic brand initiatives supporting a favorable outlook.
The earnings call summary and Q&A reveal several concerns: sales decline, suspended guidance, and tariff-related uncertainties. Despite some positive elements like product development and strategic focus, the lack of guidance and continued market challenges overshadow these. The market cap suggests a moderate reaction, leading to a negative sentiment prediction.
The earnings call presents a challenging outlook: declining EPS and net sales, reduced guidance, and economic uncertainties due to tariffs. Despite a modest share repurchase and dividend payment, the lack of clarity in management's responses, especially regarding tariffs and inventory, adds to investor concerns. The suspension of guidance is particularly negative, and the company's small-cap nature suggests a stronger reaction. Therefore, a negative stock price movement between -2% to -8% is expected over the next two weeks.
The earnings call reveals declining sales, lower operating income, and a reduced EPS compared to last year. The company faces significant tariff risks, supply chain challenges, and competitive pressures, with no clear guidance provided. Despite a modest share repurchase and dividend payout, the financial outlook remains uncertain. The market cap indicates moderate sensitivity, and the lack of guidance, along with declining margins, suggests a negative stock reaction.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
