Stocks of Carter’s Inc. take a plunge by 12%

Carter’s Inc. (NYSE: CRI), a major American designer & marketer of children’s apparel reported earnings on Monday.

The apparel company reported adjusted diluted earnings per share of $2.81 on Net Sales of $1.1 billion for the fourth quarter. The market though was expecting an EPS of $2.89.

CRI shares were down by 12% as the company also reported a weak forecast for the year 2020. This has happened amidst a broader market meltdown triggered by fears of a coronavirus pandemic. Both the major indices, S&P 500 as well as the Dow Jones Industrial Average plunged by over 3.5% on Monday, the biggest one-day drop in two years!

Other key highlights from Carter’s earnings release are:

Fiscal Q4-2019 results:

– Net sales $1.1 billion, growth of 1.3%

– Diluted EPS $2.82; adjusted diluted EPS $2.81

Full-year fiscal 2019 results:

– Net sales $3.5 billion, growth of 1.6%

– Diluted EPS $5.85; adjusted diluted EPS $6.46

Over the year 2019, the company returned $287 million to shareholders through share repurchases and dividends.

For the year 2020, Carter announced a $500 million share repurchase program and a 20% increase in the quarterly dividend to $0.60 per share.

As guidance for 2020, the company expects a net sales growth of anywhere between 2% to 3% and adjusted diluted EPS growth of 4% to 6%  as compared to adjusted diluted earnings per share of $6.46 in the fiscal year 2019.

The impact of the coronavirus needs to be studied carefully as the company expects its dependence on sourcing from China to only increase. Any positive news at this time can create buying opportunities for Carter’s Inc.