Image source: Carter's, Inc.

Carter's (CRI 0.48%) announced its 10th consecutive quarterly earnings beat Wednesday morning. And with shares of the children's clothing retailer up nearly 13% when all was said and done today, it's evident that investors are more than pleased. Let's dig in to see what Carter's achieved in its latest quarter.

The headline numbers
Quarterly revenue fell 0.3% year over year, to $866.5 million, due to a combination of an extra week in last year's fourth quarter, and declines in Carter's domestic wholesale segments. Excluding that extra week, however, Carter's revenue would have climbed 5% year over year.

On the bottom line, that translated to 6% growth in adjusted diluted earnings, to $1.39 per share, helped by Carter's move to repurchase and retire 1.2 million shares in 2015 for $110.3 million (an average price of $95.55 per share). During the fourth quarter, Carter's repurchased 359,263 shares of stock, for $32 million. By contrast, Carter's guidance called for lower revenue of $852 million, and adjusted earnings per share of $1.22 to $1.30.

"Our focus on providing the best value and experience in young children's apparel enabled us to achieve our 27th consecutive year of sales growth, gain market share, and deliver a record level of sales and profitability in 2015," added Carter's CEO Michael Casey. "We are planning good growth in sales and earnings in 2016 and plan to grow our business to over $4 billion in sales by 2020 by extending the reach of our iconic brands through our global and multi-channel distribution capabilities."

Consequently, Carter's also revealed today that its board has authorized a new $500 million share repurchase program -- representing more than 10% of the company's total float -- and approved a 50% increase to its quarterly dividend, to $0.33 per share. For perspective, Carter's has already returned more than $760 million to shareholders through dividends and repurchases over the past three years, making its latest authorizations a massive extension of its existing efforts to reward long-term shareholders through ambitious capital returns.

Digging deeper
Carter's has two primary reporting brands, including both its namesake locations, and the OshKosh chain of stores. Regarding the former, Carter's retail segment sales rose 2.9% year over year, to $351.6 million, including 5.7% growth in Carter's direct-to-consumer (DTC) comparable sales. DTC comparable-sales growth was comprised of a 34.4% increase in eCommerce comps, and a 1.7% decline at Carter's retail store locations, as the strong dollar continued to deter international tourists from shopping in U.S. stores and websites. Meanwhile, Carter's wholesale segment revenue fell 5.8%, to $283.1 million, primarily due to the extra week in last year's fourth quarter.

Next, the OskKosh retail segment revenue rose 5% year over year in Q4, to $118.3 million. OshKosh DTC comparable sales rose 2.4%, including 245% growth in eCommerce revenue, and a 2.5% decline in comparable retail store sales. Here again, its seeming weakness in comps can be chalked up to both the extra week in the quarter, and the strong dollar. Finally, OshKosh wholesale revenue declined 21.1% year over year, to $16.5 million, due to the extra week last year, lower seasonal bookings, and a drop in sales to the off-price channel.

Zooming out on a global scale, international revenue climbed 3.7% year over year, to $97 million, as the negative impact of foreign currency exchange and Target Canada's bankruptcy last year were more than offset by both higher wholesale demand, and growth in eCommerce sales in Canada and China. On a constant-currency basis, international segment revenue would have risen 15.7%.

On guidance
For the current quarter, Carter's expects net sales to rise 4% year over year, to roughly $712.2 million, which should result in roughly flat adjusted earnings at $0.97 per diluted share. For the full year 2015, Carter's anticipates net sales to increase 6% to 7% over fiscal 2015, good for a new range of $3.18 billion to $3.21 billion, which should translate to an 8% to 10% increase in full-year earnings per share to a range of $4.98 to $5.07. By comparison -- although we don't lend much credence to Wall Street's short-term expectations -- analysts' consensus estimates called for higher earnings of $5.11 per share on revenue near the low-end of Carter's guidance range.

In the end, though, Carter's investors should by now be accustomed to analysts' ratcheting up expectations given its history of under promising and over delivering. And this particular quarterly beat was nicely punctuated by continued market-share gains, and a massively increased capital-returns program. It should be no surprise that the market was willing to drive shares of Carter's higher as a result.