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Carter's Is Bawling as Its Stock Drops 12%

By Rich Duprey - Updated Feb 26, 2021 at 12:31PM

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The infant and children's apparel company delivered an underwhelming earnings report.

What happened

Shares of Carter's (CRI 1.60%) were down 12% at noon EST on Friday after the infant and children's apparel maker reported fourth-quarter results that missed analyst estimates along with first-quarter and full-year 2021 guidance that wildly undershot the consensus view.

So what

Although exclusive-brand sales to Amazon, Target, and Walmart grew 13% from the year-ago period, net sales were down 10% to $990 million even though there was an extra selling week in the quarter. That missed forecasts of $1.06 billion.

Adjusted per-share profits also declined 12% to $2.46, missing the consensus estimate of $2.73 per share. The outlook for the coming quarter and year wasn't any better.

Crying baby

Carter's investors were not happy with its latest results. Image source: Getty Images.

Now what

Carter's expects first-quarter net sales to be flat with adjusted earnings of $0.25 per share, but that's far below the $0.75 per share Wall Street was looking for. Similarly, full-year net sales are expected to grow 5% to about $3.18 billion, but analysts had forecast $3.38 billion.

Profits are also forecast to underperform. Where Carter's guided toward a 10% increase to about $4.58 per share, Wall Street was again expecting better as it posited growth to $6.36 per share.

Although analysts had been looking for Carter's to have tailwinds from the pandemic, the COVID-19 outbreak is causing much more consumer turbulence than forecast, and the children's apparel maker sees its business being disrupted more than usual because of it.

 

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Stocks Mentioned

Carter's, Inc. Stock Quote
Carter's, Inc.
CRI
$71.93 (1.60%) $1.13
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$123.90 (1.04%) $1.27
Target Corporation Stock Quote
Target Corporation
TGT
$145.03 (1.86%) $2.65
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$113.59 (3.68%) $4.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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