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Carter’s (NYSE: CRI) reported second-quarter sales fell 6.0% year-on-year to US$564.4 million, US$4.2 million lower than market expectations. Macroeconomic factors, including inflation, rising interest rates, rising consumer debt levels and declining consumer confidence, negatively impacted demand during the quarter. U.S. retail comparable net sales Sales fell 11.7% in the quarter.
The retailer said the April quarter got off to a slow start due to an early Easter holiday and late warmer weather. “Over the next few months, sales trends improved. Despite strong marketing promotions, we achieved record gross margins, reflecting the strength of our product offerings and lower inbound freight and product costs ,” CEO Michael Casey noted. He noted that Carter’s (CRI) has responded well to the company’s new summer products, including an American-themed line.
Adjusted operating income increased $1.5 million to $39.5 million. Adjusted operating margin was 7.0%, compared with 6.3% in the same period last year. Earnings per share were $0.76, compared with $0.50 expectations and $0.64 a year ago.
On the balance sheet, the company ended the quarter with total liquidity of $1.2 billion, which included $317 million in cash and cash equivalents and $844 million in unused borrowing capacity on the company’s $850 million secured revolving credit facility.
Looking ahead, Carter’s (CRI) expects third-quarter revenue of $735 million to $755 million and earnings per share of $1.10 to $1.35, compared with consensus expectations of $1.88.
Carter’s (CRI) shares fell 10.55% It hit a new 52-week low of $53.50 in pre-market trading.
