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Why Carter's Stock Popped Today

By Howard Smith - Apr 30, 2021 at 10:48AM

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The childrens clothing retailer had good news for investors even beyond its financial results.

What happened

Shares of baby and childrens apparel retailer Carter's (CRI -1.35%) jumped as much as 14% Friday morning, before settling back to a gain of 6.7% as of 10:30 a.m. EDT. The company announced first-quarter 2021 earnings this morning, and there were several items for investors to be happy about. 

So what

Carter's said it earned an adjusted $1.98 per share, compared to the prior-year period when it lost $0.81 at the onset of the pandemic. Carter's chairman and CEO Michael D. Casey said in a statement the company realized growth in each of its retail, wholesale, and international business segments, resulting in "meaningfully" exceeding its own expectations. For investors, another highlight was the company announcing it was reinstating a dividend that it suspended a year ago. 

woman and child shopping for childrens clothes

Image source: Getty Images.

Now what

Carter's reported record gross profit margin and the best operating profit margin in more than 10 years. Based on the strong results, management said it is raising its full-year 2021 outlook to year-over-year sales growth of 10% and earnings-per-share growth of about 40%. It also was able to amend its credit facility to allow for capital distributions to shareholders.

In February 2020, Carter's announced it was boosting its quarterly dividend by 20% to $0.60 per share. But after the onset of the pandemic, the dividend was suspended as management sought to preserve liquidity. Today, the company's board of directors approved the resumption of a $0.40-per-share quarterly dividend, which represents an annual yield of about 1.5% at the current share price. 

Investors are adding to year-to-date gains today, with the stock now 17% higher since the start of 2021. 

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