Carter’s, Inc. (NYSE:CRI), the largest branded marketer in North America of apparel exclusively for babies and young children, today reported its third quarter fiscal 2023 results.

“We achieved our sales and earnings objectives in the third quarter,” said Michael D. Casey, Chairman and Chief Executive Officer.

“In our U.S. Wholesale segment, demand for our fall and holiday product offerings was higher than planned. Our wholesale customers entered this year leaner on inventories and they planned consumer demand cautiously for 2023. For the fourth consecutive quarter, we saw higher than planned wholesale demand for our brands which provides fresh product offerings for consumers and better sell-throughs for our wholesale customers.

“In our U.S. Retail segment, our sales trend began to slow in September due largely, we believe, to unseasonably warm weather. This September was the warmest on record, and the higher temperatures weighed on demand for cooler weather product offerings in our stores and online.

“Sales in our International segment were also affected in the latter part of September due to unseasonably warm weather that weighed on demand for cool-weather apparel in Canada.

“Warmer weather continued to weigh on the demand for our brands in the early weeks of the fourth quarter. Where weather is cooler, sales trends have improved. With colder weather on the way, we expect sales trends will improve in the weeks ahead.

“We continued to make good progress reducing our inventories that grew following the historic peak in inflation and related slow-down in consumer demand that began in the first half last year. Inventories at the end of September this year were down over 30% and are expected to be lower in the balance of the year.

“Our progress reducing inventories has significantly improved our free cash flow this year and supported the continued return of excess capital to our shareholders.

“Year-over-year comparability has been distorted in recent years by pandemic-related disruptions, unprecedented government stimulus and historic inflation. Our second half forecasts this year reflect a meaningful improvement in the trend in our sales and earnings relative to last year and the first half of this year.

“We believe this planned improvement reflects the strength of our product offerings, on-time deliveries from Asia, lower product and ocean freight costs and the right-sizing of inventories enabling better sell-throughs and price realization.

“Inflation, generational high interest rates, and the suspension of pandemic-related stimulus payments to child-care centers have weighed on families with young children and their demand for our brands. Thankfully, birth trends in the United States have stabilized after a 14-year decline that began with the Great Recession. With a near 40-year high in weddings last year, continued strength in the labor market, and moderation in inflation, we believe market conditions will improve.

“Carter’s is the best-selling brand in young children’s apparel. We believe our unparalleled market distribution capabilities, and brand reputation for quality and value, will enable Carter’s to continue leading the market and be well-positioned to gain market share in the years ahead.”