Carter's 2Q Profit Quadruples; Results Top Estimates

   DOW JONES NEWSWIRES 
 

Carter's Inc. (CRI) said Tuesday its second-quarter profit quadrupled as the company said it cut back on inventory and costs while seeing sales and margins rise again.

Shares rose 6.6% to $28.70 in after-hours trading as the children's apparel maker blew away expectations and delivered confidence on the rest of the year.

"Our outlook for the year has improved based on our first-half performance and the growth we anticipate in the second half of the year," said Chief Executive Michael Casey.

Carter's expects third-quarter adjusted earnings per share to grow by mid- to high-single digits and for revenue to increase in the low-single digits. Analysts estimated earnings will rise 2% to 61 cents a share and revenue would climb 1% to $441 million.

The company's sales have held up better than most retailers as parents - and grandparents - continue to buy baby clothes while they cut back on their own. Demand also has natural support because babies grow quickly.

To help shoppers on a budget, Carter's has introduced more mix-and-match products that can be worn for different occasions and matched with other outfits. The company also has laid off 10% of its corporate work force, closed facilities and made other cuts.

In the latest quarter, the company reported a profit of $11.3 million, or 19 cents a share, up from $2.8 million, or 5 cents a share, a year earlier. Excluding restructuring and other charges, earnings rose to 23 cents a share from 10 cents.

Revenue rose 5.4% to $317.9 million as same-store sales climbed 8.1%.

In April, Carter's predicted a second-quarter profit of as much as 3 cents with revenue flat to down slightly.

Gross margin rose to 36.6% from 33%.

The company's once high-flying OshKosh B'Gosh line, for toddlers, which sustained losses in 2007 and early 2008, saw sales rise 8.1%. Mass-channel sales, composed of sales of the Child of Mine brand to Wal-Mart Stores Inc. (WMT) and Just One Year brand to Target Corp. (TGT), decreased 13.4%, while wholesale sales climbed 6.1%.

-By David Benoit and Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]