CRI - Earnings call transcript Q3 2024

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Operator

Welcome to Carter's Third Quarter Fiscal 2024 Earnings Conference Call.

On the call are Michael Casey, Chairman and Chief Executive Officer; Richard Westenberger, Chief Financial Officer and Chief Operating Officer; Kendra Krugman, Chief Creative and Growth Officer; and Sean McHugh, Treasurer. Please note that today's call is being recorded. I'll now turn the call over to Mr. McHugh.

Sean McHugh

Thank you, and good morning, everyone. quarter release third today. our issued XXXX earlier earnings We call materials on ir.carters.com. The presentation today's are at release and website for available Relations our Investor that as items plans call on forward-looking company's are outlook and Note such statements. statements today's the about

referenced cause and of those vary and the the statements, earnings could in most our materials results please to release various For during materials, a these call. see you also non-GAAP that In financial remarks, website. recent of actual discussion measurements forward-looking factors prepared questions our from on today's contained posted take as SEC presentation this allows. find After filings will will reconciliations we time

now the turn to over will Mike. I call

Michael Casey

Good Good. joining Thank on morning, for you everyone. Thanks, the Sean. us call.

our thoughts share like Before we website, walk I'd on business you some with you. on to through our presentation the

third Our forecasted. results than better quarter were

product end Our the strength We consumers the responded of favorably in the pricing third launched guidance quarter. in we our and sales exceeded the July. and with you and marketing believe offerings earnings to strategies our new high shared of

sales segment. our were by U.S. driven Retail better-than-forecasted The

over in reflecting sales to weather Wholesale at and lower at were quarter our International third of start our U.S. Our third in our forecast, with forecast. the high upper our of the end sales the a sales were spending. guidance. apparel Canada. above slow was forecast, Earnings reflecting in line end the SG&A control quarter cooler the Gross good well were discretionary in end lower, profit of our was

costs in no seasonal quarter than and We interest the balance, a flow with higher better were levels lower billion cash liquidity. over $X cash planned. and Inventory borrowings, ended

total X% age last in continued to our XX% lower Toddler sales Baby age of apparel contributed over compared year segment. to sales. Our We our slightly quarter the sales apparel the saw Baby best-selling in product in segment. and be offering grew

last comparable our It's XX-year-old sales a year. in total apparel product of Collectively, to and playwear over apparel XX% our in a of less contributed sales were contributed Baby and and sales. children. double-digit our decrease largely sales to apparel our We X- offering XX% than Toddler apparel for had

have our the our offerings, stories, Sales and sales saw over Planet, on our offerings, were elevated in growth B'Gosh down We We sales trend see offerings XX% Retail better we this saw a saw our offered we fabrics. product quarter. best collections. over product fresh XXXX. of of we our color price our context opening including where product we strengthened XX%. in product had mid-tiered component higher our In single-digit good, continue for third offerings. product and last offering in best new believe year, bestsellers to Little over of We prints and low We from growth sales in carried barbell-shaped point the Baby multicolored and PurelySoft sales lower U.S.

year, a and Relative best parts average in volume. of volume Shopping recent for That's when X% our the holiday-related need cooler as in what's increase XXXX. apparel X% unit a our to the improved. we've has reflecting sales reduction last performance in X%, down prices since quarter achieved holiday-related in were third weeks, unit the later to year. closer only country, consumers thankfully, weather shopping more are last and needed We trended buying needed. believe apparel and turned In trend than

show a Retail our basic At you our XX% than We through July. price our sales. brand sharper examples products, basket and this prices in leggings. invest additional We'll point in $XX opening the our XX%, a in which Year-to-date U.S. we related down Retail We the the and $XX to decrease trend starters in largely lower shorts plan our million prices. of to sales U.S. July, XX% responded July, focused to million benefits believe are improve price typically consumers announced about comparable where of end were morning. we'll reductions favorably marketing of offerings, we those trending lowered like prices, on and less discuss product t-shirts, including

attract Our August down comparable were in-store transactions, X%. experience the improved We're over X%. off-price Longer and volume levels in U.S. beginning we sales benefit pleased product Retail our unit near-term mass XXXX. believe as have benefits, inflation these as our from who we in in price, we conversion retailers rates, meaningful acquisition. believe benefit shopping term, with marketing in the the Collectively, may and Retail shifted to a investments quarter-to-date, September more are and online better customer sales investments. a and reached down consumers there reengage about new comparable be channel trending Fourth about historic and trend our and

research demographic the results over experience market apparel living, grown consumers, The Target had only recent retailer. of retailers. were indicated XX%, of them X value with since grocery up XXXX, to shifted cost The other that Carter's although midyear beginning indicated apparel X% value analysis drove Z apparel to past a our is retailers our that millennials XXXX. It prices and Gen apparel prices including consistent years. value

U.S. the third our year. prices comparable be prices believe we unit competitive $X average piece to change. per are quarter, Our and about Retail volume last more to enabled In

on a new product share brand with customers We our some units new launched seek first growth plan drive quarter, and We sold a less near growth. X%. year special unit in term this spot We'll you this morning. beauty prices resonating higher to the in is reliant lift saw pricing consumers. childhood. third believe early half sweet down the Retail of the the By with that moments in in to offerings to and of campaign be were marketing third continue brand volume comparison, we quarter. drive to marketing We of our in on plan the the focused In to marketing

a more Retail saw year. this third We our reaffirming shop annual for their United continue, are better-than-forecasted may year. returning in to our in results, an forecasting we forecast. the year customers trends market-related upside That fourth may we With the our sales opportunities to last If purchase. of reactivated end in the also quarter current offset of sales billion us profitability outlook annual increase the said, risks States quarter to and since with high previous guidance. than we guidance, by are At our upside potential this be have we our $X.X after believe

our of down business of consumers the a believe very of Retail close is of shipping These digital Initiatives closing X%, in We sales purchases. our leases down day stores. annual a lift in the traffic the online sales see good as we need sales e-commerce stores the quarter. opening of U.S. new stores the shopping XX performance acquisition. the decrease. Increasingly, purchased about were Nearly omnichannel same our when lift include about improve X%, our of this margin-accretive and importance online stores contribute the picking as is saw expire. and stores Omnichannel drive online e-commerce purchases Retail #X year customer in in our are centers will our down XX% XX%. children's reduce stores sales. sales And purchase expression our assuming last of be transactions apparel source sales We up XX% year. we our to e-commerce stores, their are shopping our sales. When we Our XX and centers best year third consumers. low-margin stores, to in to up believe sales. We're for in in include sales store store high-margin open this XX% convenience in from about About expected XX% We brands. in see XX% store our orders declining stores, of market the stores, we e-commerce supported enjoy fulfillment related the by and

over XX% months. stores past XX flow of were our positive cash the

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new in with Maine support to us the our Hawaii. shopping of a from stores technology system our have consumers allocation in to to expectations improve better We performance, including invested inventory

we tailor our And to based on invested of have marketing their digital intelligence also in personalization technology consumers' new artificial by enabled child. to preferences and age product gender marketing the

business XX%. our of of in largest months our Carter's segment continues to advantage By to apparel unparalleled volume channel For has $X the the in sold to forecasting supplier exclusive year, volume unit X%. this unit Wholesale our was X up the U.S. year down about mass and Wholesale we as the retailers be first U.S. Target, The are billion. of sales over competitive retailers. to Amazon. brands an Walmart Collectively, children's comparison, Retail was in our strength these

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our With XX% managing forecasting year. we are we progress nearly year, a in are to retailers. inventories, off-price off-price reduction lower the For low-margin forecasting sales this also sales

which forecasting brands offerings. in our spring To date, for bookings, received sales sales, in for XXXX this indicate and single-digit we demand summer Excluding our we are Wholesale have modest growth off-price year. growth Wholesale low product U.S. our

of to over Our $XXX expected little International contribute or are million. this year annual Carter's a XX% sales about sales

expected a Mexico with to Bank are rates. in single-digit sales. cut the in down forecasting rates higher decrease Xx operations Like young Canada, in strengthen we're interest inflation this year. to and the year United high growth high this XX% interest Canada forecasting over Canada families economy. have International sales. single-digit We're in Our by and The weighed States, our contribute By Mexico of been of children comparison, has

in by trends weather are Retail recent quarter. with fourth in Canada Canada our encouraged the cooler positive we're sales said, in comping arriving, That

despite the Our avoid in single-digit the Product our Coast modest time strike X%, half down a unrest supply chain on The quarter. X% product the down largely source quarter. costs of of in on a forecasting and continued stores product on for in our in inflation. port a read Shipments the fourth of East suggests were be early were Bangladesh, and costs to We're Red the for ships Sea. costs us XXXX strength low Wholesale customers decrease year-to-date. to rerouting to first

holiday mix plan Our apparel for the increase year. purchases market of research this consumers to suggests giving their gift

back core We market pulled of scaled component have less distribution research continues inflation. less because unparalleled young inflationary spending apparel, value children's essential apparel $XX, also a on than that markets families and with including focus purchases many high market with Walmart children family's relatively Our capabilities, less include through indicate high-value brands discretionary believe back of and including products, is of mix even proposition been our multipacks. average our sold but our retail inflation. discretionary have small apparel Carter's Target, baby due on to and in Amazon, exclusive that compelling points of advantages broad a a our price to young like Children's budget,

objectives and market strategies leveraging children's fundamentals, multichannel improving elevating will the of growth is in the home growth way, share to offerings, our our these Our our of style thank plans and of quarter thoughts to each our stretch year. effectiveness with product in We'll focused consumers a ensure good this our our for meaningful and including want strategies wherever this apparel brands. the with sold value their I a our this us to achieve growth exceed you capabilities morning marketing employees, have our commitment presence morning. many all unparalleled are helping tuning third and on experience on in

will on and our walk the Richard through presentation website. this At Kendra us time,

Richard Westenberger

charges our included On the Page settlement This Mike. and Good included third OshKosh quarter year-to-date X reported X, results periods. charge B'Gosh included morning, On Pension P&Ls a related basis organizational Plan GAAP results. of non-GAAP our to presentation, a of summarized partial you, X quarter everyone. legacy and restructuring. for year's results to and Thank to third our year's year-to-date quarter adjustments the and we've third Pages last noncash we've related

this basis these adjusted an on results our to speak excludes I'll items. which morning,

Turning to Page X.

We third our to of quarter relative in performance have our provided a guidance last the summary on call July. we

earnings exceeded Mike As third noted, for quarter. the we sales our and objectives

sales comparable above result of were as sales net our consolidated a our U.S in better business. Our guidance Retail

were net a driven lower effective also guidance, and tax higher our lower interest sales, costs Earnings rate. higher spending, than by lower

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last products described, Mike by of margin inventory. through XXX quarter. we the was had brand quarter invested to some and higher operating third on largely on made enabling up achieved performance-based percent controlled sales pricing third last and operating was in for compensation. as actions of than professional and prior-season in well spending income gross $XX sales. $X lower them our Spending the we've a interest was to some costs view as the income as As year, targeted year. We SG&A sales And year, and lower outstanding we third due consolidated compared basis seasonal quarter point move competitiveness more last points, approximately pricing as These were interest XX.X%. the and the Below to Retail net was opening increase line, and investments in deleverage of margin in in we but fixed improvement provisions quarter the basis to had price comparable our points and XXX other no costs lower discussed, affected fees about lower credit year. million borrowings less by to driven was cost interest our million on facility marketing this

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with of strong liquidity at over Our end in balance sheet remains quarter. billion the the very $X

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full the operating of we're in cash flow year, million. $XXX excess forecasting For

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Kendra Krugman

Richard. you, Thank

and Page product, hard to strategies in the delivering business. our focus XX. our realizing momentum our reach, our across we customers points marketing deepening where are customers' grounded positive and expectations strategies, our growth with improving existing innovation brand our Through are customers. growth style on X commitment Turning experience of distribution Those XX,XXX focused to and our we teams, are new connections of work on unparalleled of and acquiring value, globally our in our our on

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Richard Westenberger

Thank you, Kendra.

the Our XX. for expectations Page summarized full year are on

and today's are outlook As sales we noted income. previous our for net press reaffirming operating full year in release,

and single-digit range up sales International million. the the to billion range. We're sales Retail planning $XXX lower expecting full million We of U.S. income Wholesale $X.XXX range net low adjusted comparable to billion. with $XXX in in operating in continue the year We're expect in sales U.S. to to of $X.XXX

expense a We've net rate lower raised to by share we per planned. reflect to $X.XX to $X.XX than tax earnings for effective our $X.XX interest had previous lower previously and adjusted expectations

digits for double the range $XXX net XX in sales the We're of planning $XXX total our to fourth down high quarter. million. sales the million we're single Page outlook planning to In in to low down digits. Retail, U.S. Turning and

of comp We prior decline a to sales guidance XX%. X% our of maintained have

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the of driving business range. single-digit is International on planned of down we're International, the majority side that quarter In sales, Wholesale fourth in market. planning in decline more the to sales the mid- in Canada high the

your of in we're planning our we've said, business, $X.XX. We're operating $XX since in weather macroeconomic disruption election. risks, profitability, the intensity Canada, conditions in several including of we've monitoring ongoing some represents in families to children also years, elections. of remarks, on consumer improving We're of million $XX income to degree context demand the and with the range arrival impact the respect and which trend business to In with the range in seen take I've million $X.XX demand to of seen the As across October. in around EPS upcoming these an ready temporary confidence questions. presidential the adjusted promotional and of young marketplace. we're With especially Retail colder monitoring the of And majority adjusted to past the the

Operator

of [Operator Boruchow from Fargo. the Wells Instructions] from Our first line comes question Ike

Irwin Boruchow

guys I implementing. the are wanted the in strategies gross to ask relation pricing about you to margins

and full I to the better was believe basically grosses basis million But XQ it was and somewhere gross the million implemented, it the $XX kind investment. are like $XX only strategies if decline of XQ. looks points XXX around XQ and down in in XX. were be guide, down XQ correctly, I'm in But going of in margin terms understanding to like your in brand get to So this year

in would similar how investment how dollars to more how XQ comp is trying the -- and weighing understand pressure that? look of think like promo versus kind just to much to you're XQ and how So so just relation about at much be the price if and why pricing in to there the

Richard Westenberger

Sure.

closer earmarked third effect Ike, I third for would your was $XX quarter, amount, a us. similar number quarter quarter. reasonably and quarter. and pricing million significant that fourth that's U.S. to in that's between the to investment do a And assumption point, for the fairly I Retail have say So mix a in different forecast fourth the the you consistent think

Wholesale. nice is very of for growth lower gross business. in we along, the the part margin That planned All have

wouldn't each quarters. that third XXX investment million points, say fairly consistent in of QX. probably gross and Retail, XXX one fourth So $XX down difference QX U.S. is and we're key the pricing points, margins planning close I basis between basis but to

Irwin Boruchow

to whatever, in or quarter pricing, the it you however fair quarter? deeper say, Day discount Labor on relative third that is going in you're to But characterize to fourth that Richard, or be promo doing to want you're what is during it, the

Michael Casey

Friday, Typically, holidays Black with Ike, the in to more promotional. year-over-year typically be tends

I prior-season think and the was knocking big summer. down progress goods, in we spring quarter made third the the

in about prices Our down XX% goods third the prior-season on quarter. the were

sharper, items, about just in-season only were goods, X%. we where competitive certain got down more key the prices on On

it through the been. heading inventory good very than made year which position better prior-season in the we would into this puts But shape goods, of moving balance progress the otherwise have

Operator

next from line Jay question comes Sole UBS. Our of from the

Jay Sole

side the that. about And In have Terrific. are like you lapping is look the in versus just a what October. My post then how last follow-up Retail December? year words, on and other compares U.S. after question I November

Michael Casey

easier of terms changes, In tougher comparisons? comparison, comp

Jay Sole

Yes.

Michael Casey

and down at planning looking quarter X% we're to around the XX%. fourth So somewhere range year, were in last X%, down comps of them

comp that better previous of in last year year. it's had the last probably we the again, So one quarter X fourth was the quarters to relative comps

low So we are fourth quarter. good in And quarter. pajamas value had we fourth is our out given quarter. the good points, Typically, proposition, a holiday. have price a kids Christmas buying Christmas people the a their fourth

guidance So quarter we're upside trends. there's than relative fourth downside -- current we our hope the in U.S. more to given Retail

Jay Sole

how ROI And little that. on how Mike, we are up judging pricing do of bit follow question, if the you I A judge could it? different the Understood. but investments?

Michael Casey

and ground. of when marketing volume. XXXX. channel over lose Return to volume. reengage swung and these The the to strategies ground strategies started are focus whole We've losing to growth in to That's retailers consumer in surged in off-price where inflation mass who we pricing been unit unit

the we seems it had the and reengaging to reengage consumer. to hit, be And then off-price good and our prices them. sharper as though prices felt the September as competition. online, trying channel a some off in consecutive we the retailers, are Prior when started of pandemic, got widened gap that And And on the unintentionally a in though swung strategies, strong mass we had XXXX, between 'XX inflation because we had to August of XX growth, and starting year. widened, over we to consumers years particularly recovery

the good The out first this quarter year market. in started

got described rock was quarter confidence the notably in Second dropped weaker. like a being the moderating. second as first Consumer quarter. quarter Inflation in

Second prices quarter sticky. being were Gas described trending higher. as

weaken the So to goods needed They prices. product inventory we stores offering position though saw the second good shape. was because position we they the and quarter, in We inventory through drive competitors and the saw their in because to good our move traffic was dropping dropped the quarter. second and market as prices in our the felt

participate to second in the second Memorial half, comparable but in in the different had strategy Xth it Labor Day. those got didn't particularly holidays. the very Day shopping We a good deep in in decided growth quarter, discounts in had beat of Day, take We sales July Labor we a

we brands, to and So reengaged we and prices that other just and them. private it, consumer spread, by narrowing responded our competitors the between see label

in the decide the The balance best plan of to continue then strategy year is for to the XXXX. and what's reengage

Kendra Krugman

to to that units. growth, add mentioned just our is unit I'd the want And to see basket. We Mike that, over but whole Jay,

lifting goods items basket. these with basket items adding we're these then be are reduced starters only her other the she's not seeing and So for prices, her but into

in UPT a not just we're necessarily these So lift, total seeing items.

Michael Casey

comp are up, are conversion rates and are Transactions better. Yes. the trends better

we're that's on measuring the how So return investment.

Operator

the from comes Our Nardone of America. next from Chris Bank of line question

Christopher Nardone

think How we first and back in marketing this year million should about efforts in $XX half? as half pricing the the we of move into the

of to then stick would promotional Should into you more that rate year? growth And next of improve how maintaining balance next your pricing of risk kind your you do continue some your comp just XXXX? with the get around into striving terms that see also to in year? And strategy, margins competition could

Richard Westenberger

Chris, a the the date on portion Yes. good to pricing, of in mind, Keep at focused that mix. has we been improving -- least

goods inventories of better the XX% That's want holiday you prior-season of of XX%. mix portion a the some where prior-season think quarter. in I of it not the to online end to of second time So fall at closer the you and Today, be. and were at our goods, year. they're stores probably product want this Retail

sure quarter. So to we and shouldn't if promotions the third portion level make of of that manage fourth in saw the we we some quarter that inventory, we see continue the

Christopher Nardone

exclusive your might order color just your on Wholesale spring/summer, think then about Okay. differ and partners? how book on your as for business, And nonexclusive we the between that you gave

Richard Westenberger

where We the days. people from to would presence continue performance you'll with these Go brands. exclusive benefiting better at most That's shopping we're Target, probably brand dominant Walmart, expect -- into the expect both those are And better is the see brand that. retailers. into Carter's go

traffic. benefiting we're So that from

performance would we would to continue good for that be us So of that, XXXX. expect in a source

Operator

question comes line Citi. of from from the Our next Paul Lejuez

Paul Lejuez

Should unit the pressure next quarter if in a you continue to I happy it's that perspective. first did half if seem this, what the Sorry missed you're with the we doing you expect seeing say year? gross of into expect from You just fourth pricing margin but investments? the

half? through first expect we should price the investments continue the So to

margin And a maybe I similar season. then was worse? again, be could expect some a there pressure spring in well mentioned it you we as Or gross little the should decline? AC level think of

gross you So maybe about talk margin? if could the half just outlook, first

Richard Westenberger

probably February comment would I year. plans you say for expectations too to early on next more specific those margin share our call. We'll for Paul, on for of gross

What into past extend Transportation costs higher. been year. expectation, favorable in that up. that of are Labor favorable. next in continues the go continue said has be -- will our a Cotton, we've is product to costs to number input particular,

through you cost. That's of next in I'd our first gross say, we'll margin expecting sight good that's don't low are kind product give kind year, we we what we But of So line we're line February what for of of part right in working of inflation have fall, to, now. we We're the the in expectations single-digit get expecting so of to call. that. process on the still have sight when modest

Michael Casey

selling on responds And best well. and if the is opportunity, the well to summer product product Paul, margin offerings, half, consumer in the the spring first

relative So year. what that's on selling experienced of to next the bought it first side right half past opportunity we this the if it's through, in and the year margin we

Paul Lejuez

X it. and lower Wholesale you're what the slightly the of seeing large about talk Got guidance just year? accounts And it. the rates the your drivers Got at just for Wholesale can And then you what sell-through there? were

Richard Westenberger

of growth I that Wholesale in considerably One, things. really before. we fourth replenishment, replenishment quarter. had momentum the demand cancellations would department store just the good a in of But more in And say We terms for at up bit We're the I'd brands. the still those order a very orders expectations. the are their fairly bit to the balloon and in saw a revisions. air planning X group with quite down previous good our moving say to exclusive right, forecast, out planned some customers, level the continued of of came little on demand replenishment majority the relative I'd say the not

Michael Casey

lower planned to we what relative were off-price And in sales thought July.

Richard Westenberger

Yes.

Operator

from from the comes question Bank America. Reuter of Our William next of line

William Reuter

upon guess, of the of I excess cash forward? kind free XXX% what out on flow? your on in first it pause? putting pause time just that be say My for going paying of of Did will the kind always for your share repo. And the based And of this is share you're repo period you guardrails

Richard Westenberger

we've we used cash free years, flow of to of returning make. amount recent in distribution think the fans guide capital I forecast capital. We're of our So for that

this the relates balance to more of pause So the year.

plans said, beyond, as this I with together the certainly it. for our As about and And XXXX we continually talk come revisit Board. we'll

relative for to for the purpose returning come expectations down take We capital. of initial But appropriate forecast on sole free our think don't into bit the year. to flow a coming debt cash has our it's

think bit, free for that we so revisit of to forecast it. a capital flow we'll continue our return cash And down appropriate come it's But plans. modify since has to

William Reuter

price of of you're or bigger in products limited, based see, you these seeing you know price that be fared? versus terms to label somewhat in investments do how that the quarter? meant to these your private can do mass. you the were category picture, then stop seed third feel data point clearly, Great. can of upon kind of think I seed the in lower share I but guess, How And points did share you anything some

Michael Casey

in That's Toddler XX% living. share what for we a apparel. gained over of Baby and We do

the with results. pleased we're So

Operator

Chartier question comes Jim line from Monness, our [Operator of the next Hardt. Crespi & from Instructions]

James Chartier

on I better the the those adding and assortment to just good. parts to go the deeper about assortment? in wanted shift towards to best of products units plan you Or Is and ask a additional there assortment? are

Kendra Krugman

it's both. Jim, this would is say Kendra. I

will be we our into little So investing that depth more but say breadth brands assortments and fit best it's I breadth, is both. and it bucket. our and would new it there more will a particularly new leaning depth in categories, than bit the be good

James Chartier

guess, is Or part I of Great. the the of there And that then the in that or this the well? there Or assortment? some some -- in assortment? focused in terms the was part good as primarily pricing quarter, promotions better that third of part of in of good year, the was

Kendra Krugman

good It almost our the portion assortment. in was entirely of

in that differentiation starter So the private on those deep most kind really is brands private basket t-shirts, we positioned items there little and where label where against items are stock-up like prices. product some label competitively other of low those leggings, saw are go and

good well. around almost assortments bucket as the it's So bucket, mostly in in mostly entirely the and good and Kid Toddler

Michael Casey

of our generally. didn't shorts go the because that each. some second selling what of gap sales we competitors and to We but did competitors' refresher generally and the in down thrift Yes. narrow we kind as business And store quarter pricing. products, And level Jim, just would we level, a basic t-shirts $XXX for pricing. again, saw saw apparel our slowed between I pricing that describe in

where Once raised cleared price in to back know, unit their another we we important And think the up. we product came that didn't up. see through, cases prices I the prices, velocity, thing so some lowered

stuck we pricing. velocity, So with in one-way trend in an where street. we a unit this and didn't we it those change prices a see noteworthy improvement lowered velocity, we When saw unit we isn't restored the

James Chartier

be good implications shift any margin assortment headwind from gross Okay. year? XX the Is margin gross You're going to year? next that points. next mix the increasing percentage a to And then

Kendra Krugman

margin product huge doesn't impact have composition The in our to rate. shift gross a

Michael Casey

opted and It a in and just the Older that differentiation mid-tier particularly which between it caught best. they XX, other be clear the in working The didn't not it's good-looking for and should and one promotional got the to more good, it had was not to mid-tier. segment, out. the product because working, we X much net sufficient to is benefit because It see Age -- the the middle get isn't consumer

you'll had pressure the margin. we get the it. have to If we less on right, promote So mix

Operator

Casella Our line next question from Carla the JPMorgan. comes from of

Carla Casella

that And dropped whether may there for has you we've but could Did had the inventory for warmer X you third moment. I either fall or ending follow-ups. answered, be say have impact Just thoughts and weather to the the on one any a third that? a related quarter quarter clearance

Richard Westenberger

we bit. certainly always weather in the have the up and sales It I quarter warm of a in I going Well, X the forward. in would final good say that summer would made would did slowed third been the say the quarter, a of through problematic spring U.S. Canada, otherwise inventory, and we progress impact. though weeks course which have very moving which the entire over

Michael Casey

sales. the to in -- sales. see cooler every lift improve. a half the second turns weather comes stimulus It weather natural business more the then we parts It's always year, trends And turns when certainty seen of the comes, that When nice Yes. in see we from we've to with nice in cold again, cooler but in a hard it spring, predict a as in we warm, when turns weather year. lift country, of

Carla Casella

Can then much the takes And if thoughts Great. Okay. And China? remind one you on you from House? how tariffs potential us you any import have Trump just question. just White

Michael Casey

Yes.

So the so. countries out we've past X%. The of goods coming years amount probably now finished the than or X over less origin is the diversifying been of of China

So suppliers we've have for our us in capacity even Cambodia and -- Vietnam. China-based built

Indonesia. and India in suppliers first-class got We've

we reduced apparel, The be ago. that were, say, will So likelihood I don't the short to significantly children's believe, X tariffs years is put list, where on to think get the time tariffs but tell. exposure, on relative will I

Operator

conference At Casey this to to closing. time, the like over back Mr. for I would remarks. turn now

Michael Casey

all We all wish Thanks in families to Thank all updating February. us of for your you Goodbye, you very and a morning. much. everybody. our on again look we progress season, this forward happy and holiday joining you

Operator

conference call. for Thank participating. This concludes you today's

may now You disconnect.

Carter's (CRI) 25 Oct 242024 Q3 Earnings call transcript