“We are reporting a record level of sales and earnings in our third quarter. These results were driven by the growth of our direct-to-consumer businesses, higher sales of our Carter's and OshKosh B'gosh branded products in international markets, and an improvement in product costs,” said Michael D. Casey, Chairman and Chief Executive Officer. “We believe consumers are responding to the compelling style, value, and convenience of our product offerings. To further strengthen our business, we are funding significant investments this year to support our multi-channel growth opportunities.”
Third Quarter of Fiscal 2012 compared to Third Quarter of Fiscal 2011
Consolidated net sales increased $29.0 million, or 4.5%, to $668.7 million. Net domestic sales of the Company’s Carter’s brands increased $19.6 million, or 4.1%, to $492.9 million. Net domestic sales of the Company’s OshKosh B’gosh brand decreased $0.6 million, or 0.6%, to $106.3 million.
Net international sales to customers outside the United States increased $10.0 million, or 16.9%, to $69.4 million. Consolidated net sales in the third quarter of fiscal 2012 include $5.3 million in off-price channel sales, compared to $19.0 million in the third quarter of fiscal 2011.
Operating income in the third quarter of fiscal 2012 was $95.4 million, an increase of $38.6 million, or 68.0%, from $56.8 million in the third quarter of fiscal 2011. Third quarter fiscal 2012 pre-tax income includes expenses of approximately $1.9 million related to the revaluation of contingent consideration associated with the June 2011 acquisition of Bonnie Togs, a retailer of children's apparel in Canada, and the previously-announced closure of the Company's Hogansville, Georgia distribution center in fiscal 2013.
Third quarter fiscal 2011 pre-tax income included approximately $7.0 million of expenses related to the Bonnie Togs acquisition, including $5.9 million of purchase accounting adjustments recorded in cost of goods sold.
Excluding the facility closure-related costs and the acquisition-related expenses, adjusted operating income in the third quarter of fiscal 2012 was $97.3 million, an increase of $33.5 million, or 52.5%, from the third quarter of fiscal 2011. The adjusted operating income increase reflects lower product costs and improved pricing.
Net income increased $24.9 million, or 72.4%, to $59.4 million, or $0.99 per diluted share, compared to $34.4 million, or $0.58 per diluted share, in the third quarter of fiscal 2011. Adjusted net income in the third quarter of fiscal 2012 increased $21.2 million, or 53.2%, to $61.0 million, or $1.02 per diluted share. This compares to adjusted net income of $39.8 million, or $0.67 per diluted share, in the third quarter of fiscal 2011.
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