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Factors Likely to Influence Carter's (CRI) in Q2 Earnings

Carter's, Inc. CRI is slated to report second-quarter 2020 results on Jul 24, before the opening bell. The company has a trailing four-quarter negative earnings surprise of 85.8%, on average. Moreover, it delivered a negative earnings surprise of 370% in the last reported quarter.

The Zacks Consensus Estimate for second-quarter stands at a loss of 38 cents, suggesting a decline from earnings of 95 cents in the year-ago period. However, the consensus mark narrowed from a loss of 45 cents in the past 30 days. Further, the consensus mark for revenues is pegged at $511.2 million, indicating a decrease of 30.4% from the figure reported in the year-ago quarter.

Key Factors to Note

Supply-chain disruptions and other impacts of the coronavirus outbreak are likely to have played spoilsports for Carter’s in second-quarter 2020. The company has been witnessing a decline in wholesale sales and higher inventory, which are likely to have marred the top and bottom-line performance in the to-be-reported quarter. The rise in inventory is likely to have affected margins. Further, the company expects an unfavorable mix of wholesale sales to mar gross margin in the second quarter.

However, the company has been benefiting from rising demand for its products online, which is likely to have boosted e-commerce sales in the second quarter. On the last earnings call, management noted that the company witnessed e-commerce growth in triple digits following the end of the first quarter. Also, its exclusive brands have been witnessing the highest rate of growth online. Further, the company’s brands are sold online at sites of its wholesale customers, the demand for which remained positive in the first quarter and the trend is likely to have continued in the second quarter.

Also, Carter’s has been making efforts to enhance omnichannel capabilities to capitalize on the consumers’ shifting preference to the online platform due to the ongoing pandemic. The company’s second-quarter results are likely to have gained from its same-day pickup service for online orders and easy access to its new credit card program. Moreover, the relaunch of the ship-in-store facility is likely to have boosted online sales in the to-be-reported quarter.

Carters, Inc. Price and EPS Surprise

Carters, Inc. Price and EPS Surprise

Carters, Inc. price-eps-surprise | Carters, Inc. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Carter's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carter's has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Hanesbrands HBI currently has an Earnings ESP of +962.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center RCII currently has an Earnings ESP of +3.39% and a Zacks Rank #3.

Netflix, Inc. NFLX presently has an Earnings ESP of +2.65% and a Zacks Rank #3.

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