Carter's Sews Up More Of The Kids' Apparel Market

It Took A Little Tumble
When Carter's (CRI ), a leading maker of young children's quality apparel, fell to 21 in September after hitting 35 in March, Robert Olstein, president of investment firm Olstein & Associates, started buying in. Carter's missed its second-quarter profit estimates, but Olstein believes it will surprise the Street with earnings for all of 2006 of $1.50 a share, vs. a consensus estimate of $1.45. For 2007, the consensus figure is $1.75. It's possible, says Olstein, that Carter's could earn $2 in 2008-2009. The company has cut costs to the bone, he says, and its acquisition of Oshkosh B'Gosh in July, 2005, is boosting sales. He expects Carter's will nearly double its 340 stores nationwide, including Oshkosh's 143 outlets, to 600 in three years. Olstein figures the stock, now at 27, will hit 40 by 2008. Carter's also supplies high-quality but low-priced clothes to Target (TGT ) and Wal-Mart (WMT ). R.J. Hottovy of Next Generation Equity Research, who rates Carter's a "buy," estimates 2006 sales of $1.34 billion, driven by further momentum in discount/mass-market sales and contributions from Oshkosh.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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