Carter’s, Inc. reported net sales increase of 231.5 million dollars or 45 percent to 746.4 million dollars, reflecting strong growth in all business segments. The company’s U.S. retail, U.S. wholesale and International segments grew 34 percent, 53 percent and 93 percent, respectively.
The company said in a release that the second quarter results were adversely affected by store closures in North America, particularly in the months of April and May, and reduced wholesale customer shipments as a result of the Covid-19 pandemic. Favourable changes in foreign currency exchange rates improved consolidated net sales by 8 million dollars.
“Carter’s achieved record levels of sales and earnings in the second quarter,” said Michael D. Casey, the company’s chairman and chief executive officer, adding, “Given our strong performance in the first half, we are raising our sales and earnings forecasts for the year. Our revised forecasts reflect an increase in second half spending to expedite shipments from Asia to mitigate pandemic-related delays in production.”
Highlights of Carter’s Q2 performance
The company’s operating income increased 86.6 million dollars to 107.6 million dollars, compared to 21 million dollars in the second quarter of fiscal 2020, while operating margin improved to 14.4 percent compared to 4.1 percent in the prior year period.
Adjusted operating income increased 69.3 million dollars to 110.4 million dollars compared to 41.1 million dollars and adjusted operating margin increased to 14.8 percent compared to 8 percent in the prior year period.
The company added that net income for the quarter was 71.6 million dollars or 1.62 dollars per diluted share compared to 8.2 million dollars or 19 cents per diluted share, in the second quarter of fiscal 2020. Adjusted net income was 73.7 million dollars compared to 23.6 million dollars, while adjusted earnings per diluted share was 1.67 dollars compared to 54 cents in the second quarter of fiscal 2020.
Review of Carter’s H1 financial results
Carter’s net sales for the first half period increased 364.4 million dollars or 31.2 percent to 1,533.8 million dollars. U.S. retail, U.S. wholesale and international segment net sales grew 31 percent, 28 percent and 46 percent, respectively.
Operating income for the period was 235.1 million dollars compared to an operating loss of 57.5 million dollars in the first half of fiscal 2020. Adjusted operating income increased 224.2 million dollars to 239 million dollars compared to 14.8 million dollars in the first half of fiscal 2020. Adjusted operating margin increased to 15.6 percent compared to 1.3 percent in the prior year period.
Net income was 157.8 million dollars or 3.58 dollars per diluted share compared to net loss of 70.5 million dollars or 1.64 dollars per diluted share, in the first half of fiscal 2020. Adjusted net income was 160.7 million dollars compared to an adjusted net loss of 11.2 million dollars in the first half of fiscal 2020. Adjusted earnings per diluted share was 3.64 dollars compared to adjusted loss per diluted share of 26 cents in the first half of fiscal 2020.
In the second quarter of fiscal 2021, the company paid a cash dividend of 40 cents per share totaling 17.6 million dollars.
Carter’s reveals 2021 business outlook
The company said that its revised outlook for fiscal year 2021 reflects stronger than expected performance in the first half, and improved second half sales and adjusted earnings compared to those contemplated in its previous guidance.
For the third quarter, the company projects net sales will be approximately 960 million dollars, adjusted operating income will be approximately 110 million dollars and adjusted diluted earnings per share will be approximately 1.60 dollars compared to adjusted diluted earnings per share of 1.96 dollars in the third quarter of fiscal 2020.
For fiscal 2021, the company projects net sales will increase approximately 15 percent, adjusted operating income will be approximately 475 million dollars and adjusted diluted earnings per share will increase approximately 75 percent compared to adjusted diluted earnings per share of 4.16 dollars in fiscal 2020.