Children's clothing retailer Carter's saw its profits fall as it dealt with rising cotton prices, the impact of a late Easter holiday and sales hurt by bad weather.
Despite a 10 percent decrease in cotton prices since March, executives said they still intend to raise clothing prices to offset overall higher cotton prices. Carter's has done so modestly thus far, but expects to do so more uniformly going forward.
"Initial results are indicating that there is some price tolerance," retail stores president Jim Petty said.
The Atlanta company said its business was trending better than it had planned as it made $32.1 million for the first quarter, a 25 percent decrease from the $42.8 million it made in the first quarter of 2010. Earnings per share were 56 cents, compared to 73 cents a share for the same period last year.
The company has seen its online sales exceed expectations in the first year of its eCommerce site, and said average orders online are twice what they are in the stores. But same-store sales at the company's OshKosh B'gosh retail stores fell nearly 10 percent, and improving that line's profitability is Carter's "number one objective" for that brand, CEO Michael Casey said in a company conference call.
Executives said the stores' locations in outlet centers may have contributed to falling OshKosh B'gosh sales, as more people are shopping closer to home. Sales of Carter's brands overall were up 15 percent, to $469 million, as wholesale sales rose. The company continues to open new stores, and plans to add 55 locations in 2011.
The company expects its second-quarter earnings to decrease by more than 50 percent, to 10 to 14 cents a share from 32 cents a share, and its net sales to rise by 16 to 19 percent.
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