Carter's Stock Slides As Q3 Sales Lags Consensus Hit By Supply Chain Delays

Carter's Inc CRI reported third-quarter FY21 sales growth of 2.9% year-on-year, to $890.59 million, missing the analyst consensus of $960.93 million.
Net sales from U.S. Retail segment grew 4% to $465.71 million, and the International segment grew 15% to $130.69 million. U.S. Wholesale declined 3% to $294.18 million, affected by late-arriving products due to supply chain disruptions.
The gross margin expanded 150 basis points to 45.9% of net sales.
Selling, general and administrative expenses rose 4.9% Y/Y to $293.2 million.
The operating margin was 13.9%, and operating income for the quarter rose 9.2% to $124 million.
The company held $943 million in cash and equivalents as of October 2, 2021. Net cash provided by operating activities totaled $7.3 million for three quarters versus $318.73 million last year.
Adjusted EPS of $1.93 beat the analyst consensus of $1.73.
"While supply chain delays impacted our ability to support the strong demand for our brands in the quarter, our continued progress with price realization, productivity improvements, and expense management enabled us to offset higher transportation costs and improve profit margins," said CEO Michael D. Casey.
Outlook: Carter's sees Q4 sales of ~$1.025 billion, above the consensus of $1.01 billion. The company sees Q4 adjusted EPS of about $2, below the estimate of $2.15.
Carter anticipates FY21 sales of about $3.45 billion, below the consensus of $3.52 billion. The company sees an FY21 adjusted EPS of $7.57, above the estimate of $7.52.
Price Action: CRI shares are trading lower by 4.90% at $95.97 on the last check Friday.

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