Executive Summary

• Carter’s reported 1Q16 revenue of $724.1 million, up 5.7% year over year, beating the consensus estimate of $716.0 million and above company guidance of $712.4 million. On a constant-currency basis, revenue increased by 6.4% in the quarter.
• Adjusted EPS was $1.05, up 7.9% year over year and above the consensus estimate of $1.00. The upside was driven by the Carter’s and OshKosh B’gosh retail segments and the wholesale business.
• The company provided adjusted EPS guidance for 2Q16 of $0.62–$0.66, down 10%–15% year over year and below the $0.80 consensus estimate. Revenue is expected to increase by 3%–4% year over year, to $631.1–$637.3 million, which is lower than the consensus estimate of $651.5 million. For 2016, Carter’s raised its adjusted EPS guidance range to 10%–12% from 8%–10%, implying adjusted EPS of $5.07–$5.16 versus prior guidance of $4.98–$5.07 and the consensus estimate of $5.09.