Carter’s sales soar in Q2
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Carter’s credits its U.S. retail and international segments, and its new acquisition for a jump in its second quarter sales.
Net income for the quarter ended July 1, increased $1.7 million, or 4.8%, to $37.9 million, compared to $36.2 million, in the second quarter of fiscal 2016. Earnings per diluted share was or $0.78, which beat analyst expectations of $0.71 per share, according to Zacks Investment Research.
The company’s net sales increased $52.6 million, or 8.2%, to $692.1 million. This was driven by growth in Carter’s U.S. retail segment, and the benefit of Skip Hop, a global lifestyle brand for families with young children. Carter’s acquired the company in February 2017. Specifically, Ship Hop contributed $25.0 million to consolidated net sales in the second quarter of fiscal 2017.
Changes in foreign currency exchange rates in the second quarter of fiscal 2017 compared to the second quarter of fiscal 2016 adversely affected consolidated net sales in the second quarter of fiscal 2017 by $2.6 million, or 0.4%. On a constant currency basis (a non-GAAP measure), consolidated net sales increased 8.6% in the second quarter of fiscal 2017.
For the U.S. retail segment specifically, sales increased $39.0 million, or 11.1%, to $391.8 million. U.S. retail comparable sales increased 6.0%, comprised of comparable stores sales growth of 0.4% and comparable e-commerce sales growth of 27.6%. Ski Hop contributed $0.9 million to segment net sales in the second quarter of fiscal 2017.
In the second quarter of fiscal 2017, the division opened 11 stores and closed three stores.
“We achieved good growth in sales and earnings in our second quarter,” said Michael Casey, chairman and CEO.
“Our growth was driven by our retail and international businesses, and the contribution from our Skip Hop brand which was acquired earlier this year,” he added. “Given the strength of our fall and holiday product offerings, we’re forecasting good growth in the second half and expect to achieve our growth objectives this year.”
For the remainder of fiscal 2017, the company projects net sales to increase approximately 4% to 6% compared to fiscal 2016, and adjusted earnings per diluted share to increase approximately 8% to 10%. This is compared to $5.14 in fiscal 2016. This forecast for fiscal 2017 adjusted earnings per diluted share excludes anticipated expenses of approximately $2.5 million related to acquisitions, and approximately $0.3 million related to the company's direct sourcing initiative, which includes severance and relocation costs.