Carter's Q1 Profit Down, But Results Top Estimates; Backs 2014 Outlook

(RTTNews) - Carter's Inc. (CRI) said that net income for the first quarter of fiscal 2014 decreased to $34.3 million or $0.63 per share, from $41.4 million or $0.69 per share, in the first quarter of fiscal 2013.

Excluding the expenses, adjusted net income in the first quarter decreased to $39.9 million, compared to $47.7 million last year. Adjusted earnings per share decreased 7.5% to $0.73, compared to $0.79 per share in the prior year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.71 per share for the quarter. Analysts' estimates typically exclude special items.

Operating income in the first quarter of fiscal 2014 decreased $5.4 million, or 8.1%, to $61.5 million, compared to $66.9 million in the first quarter of fiscal 2013.

First quarter fiscal 2014 operating income includes net expenses totaling $8.6 million related to the following: the amortization associated with the acquisition of tradenames; the office consolidation; the revaluation of contingent consideration associated with the acquisition of Bonnie Togs in 2011; the Hogansville, Georgia distribution center closure; and the Japan retail operations exit. First quarter fiscal 2013 operating income included expenses totaling $9.5 million related to the office consolidation, the revaluation of the Bonnie Togs contingent consideration, and the Hogansville distribution center closure.

Consolidated net sales increased 10.3% year-over-year to $651.6 million. Wall Street expected revenues of $649.57 million.

"Our sales growth in the first quarter was driven by our Carter's brand with strong performance in both our wholesale and retail businesses. As expected, earnings were affected by higher product costs and investments to support our growth strategies. We're forecasting good growth in sales and earnings, and expect to achieve our growth objectives this year," said Michael Casey, Chairman and Chief Executive Officer.

For the second quarter of fiscal 2014, the company projects net sales to increase approximately 8% to 10% over the second quarter of fiscal 2013 and adjusted diluted earnings per share to be approximately comparable to adjusted earnings per share of $0.46 in the second quarter of fiscal 2013. Analysts expect the company to report earnings of $0.49 per share and revenues of $574.14 million for the second-quarter.

For fiscal 2014, the company still projects net sales to increase approximately 8% to 10% over fiscal 2013 and adjusted earnings per share to increase approximately 12% to 15% compared to adjusted earnings per share of $3.37 in fiscal 2013. Street currently is looking for fiscal year 2014 earnings of $3.87 per share on annual revenues of $2.89 billion.