Carter's, Inc. has reported its third-quarter fiscal 2024 results, showing a decrease in net sales to $758 million compared to $792 million in Q3 2023. The operating margin also decreased to 10.2% from 11.8% in the same quarter last year. Diluted earnings per share dropped to $1.62 from $1.78 in Q3 2023, and adjusted diluted EPS decreased to $1.64 from $1.84 in the same period last year.
The company returned $138 million to shareholders through dividends and share repurchases in the first three quarters of fiscal 2024. Carter's, Inc. is reaffirming its fiscal year 2024 outlook, with net sales projected to be $2.785 billion to $2.825 billion and adjusted operating income estimated at $240 million to $260 million. The adjusted diluted EPS outlook has been raised to $4.70 to $5.15.
Looking at the consolidated results, net sales decreased by 4.2% to $758.5 million, operating income decreased by 17.5% to $77.0 million, and net income was $58.3 million, or $1.62 per diluted share. Adjusted net income was $59.0 million, and adjusted earnings per diluted share were $1.64.
For the first three quarters of fiscal 2024, net sales decreased by 4.9% to $1.98 billion, operating income decreased by 8.4% to $171.5 million, and net income was $124.0 million, or $3.41 per diluted share. Adjusted net income was $124.7 million, and adjusted earnings per diluted share were $3.43.
The company's total liquidity at the end of the third quarter of fiscal 2024 was $1.02 billion, comprised of cash and cash equivalents of $176 million and $844 million in unused borrowing capacity on the company’s $850 million secured revolving credit facility.
In terms of return of capital, Carter’s, Inc. returned a total of $45.6 million and $137.9 million to shareholders through cash dividend and share repurchases in the third quarter and first three quarters of fiscal 2024, respectively.
The company paused share repurchases during the third quarter of fiscal 2024, and it anticipates the cumulative distribution of capital through share repurchases and dividends to represent somewhat more than 100% of its projected fiscal year 2024 free cash flow.
Regarding the 2024 business outlook, the company is reaffirming its previously provided guidance for net sales and adjusted operating income and is increasing its outlook for adjusted diluted earnings per share, based on its revised expectations for lower borrowing costs and a lower effective tax rate. The company now projects approximately $2.785 billion to $2.825 billion in net sales, $240 million to $260 million in adjusted operating income, and $4.70 to $5.15 in adjusted diluted earnings per share for fiscal year 2024.
These results reflect the challenges Carter's, Inc. is facing due to macroeconomic factors, including inflation and higher interest rates, which have impacted demand for its brands. However, the company remains focused on its growth strategies to navigate through this period and return to growth when market conditions improve. The market has reacted to these announcements by moving the company's shares -4.9% to a price of $62.49. For the full picture, make sure to review Carter's's 8-K report.
