Net sales of Carter's brands up by 6.6% in Q3
Carter's Inc reported its third quarter fiscal 2008 results. "Our third quarter performance was better than expected, particularly given the challenges of the current retail environment.
For the past year, we've made significant investments to strengthen our organization and product offerings, and our results reflect the benefit from these investments," noted Michael D. Casey, Chief Executive Officer. "We believe the strength of our brands and the significant value we are providing to our consumers will enable us to weather this difficult retail and economic period."
Consolidated net sales increased 6.2% to $436.4 million. Net sales of the Company's Carter's brands increased 6.6% to $341.0 million. Net sales of the Company's OshKosh brand increased 4.8% to $95.4 million.
Consolidated retail store sales increased 12.0% to $185.1 million. Carter's retail store sales increased 9.8% to $112.5 million, driven by a comparable store sales increase of 6.1%, or $6.2 million, and sales of $4.2 million from Carter's stores opened since the third quarter of fiscal 2007. OshKosh retail store sales increased 15.6% to $72.6 million, driven by a comparable store sales increase of 13.2%, or $8.2 million, and sales of $2.1 million from OshKosh stores opened since the third quarter of fiscal 2007.
In the third quarter of fiscal 2008, the Company opened three Carter's retail stores. As of September 27, 2008, the Company had 234 Carter's and 163 OshKosh stores. The Company plans to open 19 Carter's and three OshKosh stores during the fourth quarter of fiscal 2008. The Company also plans to close one Carter's store during the fourth quarter of fiscal 2008.
The Company's mass channel sales, which are comprised of sales of our Just One Year brand to Target and Child of Mine brand to Wal-Mart, increased $9.1 million, or 13.4%, to $76.7 million. Sales of our Child of Mine brand increased $7.6 million, or 17.9%, to $49.9 million due to the timing of product launches. Sales of our Just One Year brand increased $1.5 million, or 6.0%, to $26.8 million.
Carter's wholesale sales increased $1.9 million, or 1.3%, to $151.8 million due to better product performance and higher demand, partially offset by the impact of cancelled orders from high credit risk customers. OshKosh wholesale sales decreased $5.4 million, or 19.1%, to $22.8 million due to a reduction in demand resulting from past product performance. This decrease also reflects changes made to improve product performance, including reducing wholesale prices.
During the third quarter of fiscal 2008, the Company recorded a $2.6 million charge related to the write-down of the carrying value of the OshKosh distribution facility held for sale. This write-down reflects a reduction in the anticipated selling price of the property due to a deterioration in the commercial real estate market.
Consolidated operating income in the third quarter of fiscal 2008 was $57.1million as compared to $60.0 million in the third quarter of fiscal 2007. Excluding the $2.6 million charge related to the distribution facility write-down in the third quarter of fiscal 2008 and excluding the distribution facility closure costs of $0.3 million in the third quarter of fiscal 2007, the Company's adjusted operating income decreased $0.6 million, or 0.9%. An improvement in earnings from our OshKosh retail segment was offset by provisions for excess inventory and incentive compensation.