News Flash

Sales of Child of Mine brand up at Carter's

25 Feb '09

6 min read

Fiscal 2008 Highlights:
Consolidated net sales increased 5.5% to $1.5 billion. Net sales of the Company's Carter's brands increased 6.8% to $1.2 billion. Net sales of the Company's OshKosh brand increased 1.0% to $323.4 million.

Consolidated retail store sales increased 11.9% to $671.6 million. Carter's retail store sales increased 15.3% to $422.4 million. Comparable store sales in Carter's stores increased 9.0% in fiscal 2008. OshKosh retail store sales increased 6.6% to $249.1 million with comparable store sales in fiscal 2008 increasing 3.2%. In fiscal 2008, the Company opened 25 Carter's and three OshKosh retail stores and closed one OshKosh retail store.

The Company's mass channel sales increased 4.6% to $254.4 million. Sales of the Just One Year brand increased 15.5% to $111.2 million, driven primarily by new door growth and additional floor space. Sales of the Child of Mine brand decreased 2.5% to $143.3 million, as a result of product performance in certain categories.

Carter's wholesale sales increased 1.5% to $489.7 million due to higher demand, partially offset by the impact of customer bankruptcies.

OshKosh wholesale sales decreased 14.2% to $74.3 million due to lower demand, which we attribute to poor over-the-counter selling in fiscal 2007 and a reduction in wholesale prices. The Company lowered prices beginning in fiscal 2008 to reposition the OshKosh brand to appeal to a broader consumer population. The new pricing strategy led to improved over-the-counter performance, particularly in the second half of fiscal 2008.

In connection with the retirement of an executive officer, the Company recorded charges during the second quarter of fiscal 2008 of $5.3 million, $3.1 million of which related to severance and benefit obligations, and $2.2 million of which related to the vesting of stock options.

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 the softening of the commercial real estate market.

Reported consolidated operating income for fiscal 2008 was $135.5 million compared to a reported operating loss of $6.0 million in fiscal 2007. Excluding the impact of certain items in both years, which are detailed on page 12, adjusted operating income decreased $10.2 million, or 6.6%. The decrease in operating income resulted primarily from lower profitability in the wholesale and mass channel segments and provisions for incentive compensation, partially offset by higher earnings in the retail segments. ,br.
In fiscal 2008, reported net income was $75.1 million, or $1.29 per diluted share, compared to a reported net loss of $70.6 million, or $1.22 per diluted share, in fiscal 2007. Excluding the impact of certain items in both years, which are detailed on page 12, adjusted net income decreased $2.8 million, or 3.4%. Adjusted diluted earnings per share was comparable to last year at $1.37 per diluted share.

In connection with the Company's $100 million share repurchase program, during fiscal 2008, the Company repurchased 2.1 million shares of its common stock for approximately $33.6 million at an average price of $15.82 per share. To date, under the program, the Company has repurchased 4.6 million shares for approximately $91.1 million at an average price of $19.81 per share.

Fiscal 2008 net cash provided by operating activities increased $131.6 million over fiscal 2007, driven primarily by improved working capital management.

Carter's Inc

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