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

"We saw an improving trend in the demand for our brands in the final weeks of 2023," said Michael D. Casey, Chairman and Chief Executive Officer. "Sales improved sequentially each month in the fourth quarter and drove higher than expected earnings. Our focus on product innovation, inventory management, pricing discipline, and cash flow enabled over 20% growth in earnings per share in the fourth quarter and over $500 million of operating cash flow for the year.

"In the fourth quarter, we saw higher than planned demand in our U.S. Wholesale business driven by improved replenishment trends, on-time deliveries, and earlier demand for our new Spring 2024 product offerings. We saw lower than planned sales in our U.S. Retail and International segments largely due to sluggish traffic to our stores and websites earlier in the quarter due, we believe, to warmer weather and the related impact on demand for our fall and winter product offerings.

"For the year, our sales and earnings continued to reflect the lingering effects of inflation weighing on families with young children. We saw a noteworthy correlation between the improved consumer sentiment late in the year and the trend in our sales. That favorable trend in sales continued into the early weeks of 2024. With the continued moderation in inflation, growth in real wages, and low unemployment, we believe market conditions may improve in the year ahead.

"Carter’s continues to be the market leader in young children’s apparel with unparalleled relationships with the largest retailers in North America. Our brands are sold through over 20,000 points of sale worldwide. No other company in young children’s apparel has broader distribution capabilities serving the needs of families with young children.

"Carter’s has built a resilient multichannel business model which has historically enabled a double digit operating margin, strong operating cash flow, low leverage, and the return of excess capital to our shareholders.

"During the market disruptions in recent years caused by the global pandemic and historic inflation, we focused on higher margin sales driven by strengthening our product offerings, the closure of lower margin stores, leaner inventories, and improved price realization. We expect that these improvements to our operating disciplines will enable Carter’s to grow sales and earnings in 2024.

"We enter the new year with a better mix and level of inventories. Inventories last year were reduced by nearly 30% driven by the reduction of excess inventories that grew when inflation surged in 2022 and consumer demand slowed.

"Our growth this year is expected to be driven by our U.S. Retail and U.S. Wholesale segments. International demand for our brands is expected to be comparable to last year, with sales impacted by market disruptions in the Middle East and Europe, and inflationary pressures weighing on consumers in Canada.

"We believe Carter’s is best in class in young children’s apparel. As demonstrated in recent years, Carter’s has multiple levers that have enabled us to manage through historic periods of market volatility, and we believe we are well positioned to benefit from the market recovery in the years ahead."