Carter’s, Inc. Reports Second Quarter 2011 Results

Carter’s, Inc. (NYSE:CRI), the largest branded marketer in the United States of apparel exclusively for babies and young children, today reported its second quarter 2011 results.

“In the second quarter, we achieved sales growth in every segment of our business, led by the strength of our Carter’s brand. As expected, earnings have been affected by higher cotton prices, but our outlook for product costs is improving,” said Michael D. Casey, Chairman and Chief Executive Officer. “We recently completed the acquisition of Bonnie Togs, a Toronto-based children’s apparel retailer. We believe the Canadian marketplace represents a meaningful opportunity for growth and this acquisition supports our strategy to extend the reach of our brands outside the United States.”

Second Quarter of Fiscal 2011 compared to Second Quarter of Fiscal 2010

Consolidated net sales increased $67.5 million, or 20.6%, to $394.5 million. Net sales of the Company’s Carter’s brands increased $58.0 million, or 22.0%, to $321.7 million. Net sales of the Company’s OshKosh B’gosh brand increased $9.5 million, or 15.0%, to $72.8 million.

In connection with the Company’s acquisition of Bonnie Togs, the Company recorded pre-tax charges in the second quarter of fiscal 2011 of approximately $1.2 million principally related to professional service fees.

Operating income in the second quarter of fiscal 2011 was $22.0 million, a decrease of $11.4 million, or 34.1%, from $33.4 million in the second quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses in the second quarter of fiscal 2011, adjusted operating income in the second quarter of fiscal 2011 was $23.2 million, a decrease of $10.2 million, or 30.6%, from the second quarter of fiscal 2010. The decrease primarily reflects higher product costs.

Net income decreased $6.4 million, or 33.7%, to $12.7 million, or $0.22 per diluted share, compared to $19.1 million, or $0.32 per diluted share, in the second quarter of fiscal 2010. Excluding the effect of the acquisition-related expenses in the second quarter of fiscal 2011, adjusted net income in the second quarter of fiscal 2011 decreased $5.7 million, or 29.8%, to $13.4 million, or $0.23 per adjusted diluted share.

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