Carter’s, Inc. (CRI) stock has fallen 19% in 2024 as the retailer’s earnings outlook fades amid a challenging retail environment, with customers stung by inflation. CRI shares are also down around 20% in the last 10 years compared to its industry’s 90% climb.

Carter’s Basics

Carter’s boasts that it is the largest branded marketer in North America of apparel exclusively for babies and young children. The company’s portfolio includes the Carter’s and OshKosh B’gosh brands, sold through over 1,000 company-operated stores across the U.S., Canada, and Mexico. Carter’s also operates e-commerce and wholesale businesses.

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Carter’s revenue fell roughly 8% in FY23 and FY22, following a nice 2021 jump. Carter’s lowered its outlook when it reported its Q2 2024 financial results on July 26, citing rough headwinds that might not subside in the near term.

Carter’s is projected to see its revenue fall another 5% in FY24 and post a YoY adjusted earnings decline of 13%. CRI’s FY24 EPS estimate has dropped by 15% since its recent release, with its FY25 consensus 17% lower.

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Image Source: Zacks Investment Research

The company’s most accurate/recent EPS estimate came in 10% lower for both 2024 and 2025. “To date, inflation has not moderated to the extent previously expected, the costs of living remain elevated,” CEO Michael Casey said in prepared Q2 remarks.

“Our consolidated sales have been under pressure since inflation ramped up to historic levels in 2022 because we believe those we serve, families raising young children, have been under financial pressure and have reduced their discretionary spending where possible. Carter’s is working its way through a historic and challenging inflationary period.”

Bottom Line

Carter’s downward earnings revisions help it earn a Zacks Rank #5 (Strong Sell) right now. Carter’s stock might be one to avoid at least until the company proves that a turnaround is in sight. 

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