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Carter’s Buys Skip Hop, Boasts Booming 2016 Results

The Carter’s family has just gotten bigger.

The largest children’s apparel and products company today announced it has purchased Skip Hop, a leading juvenile products business, from Fireman Capital Partners, which acquired a majority stake in the brand in 2013. The deal was closed for $140 million in cash plus future performance incentives up to $10 million.

Skip Hop, which is known for its wide array of “musts” for parents, babies and kids, launched in 2003 with its signature bold colors and artwork. Its go-to products include the Playspot foam floor tiles set and its signature diaper bag among hundreds of other feeding, travel, sleep, play and bath goods. The brand can be found in more than 5,000 stores in the U.S. and Canada and in 60 countries worldwide.

Michael Diamant, co-founder and chief executive officer of Skip Hop, said, “Fireman Capital’s track record in the consumer space and vision for our company was immensely helpful as we developed Skip Hop into the market leader it is today. We thank the firm for their support and look forward to further growth as part of the Carter’s team.”

“Skip Hop has built a strong reputation for innovative, essential core products for families with young children,” said Michael D. Casey, Carter’s chairman and chief executive officer. “Its product offering nicely complements our Carter’s brand. We believe we have a wonderful opportunity to leverage our marketing, distribution, and supply chain capabilities to enable significant growth for the Skip Hop brand. We look forward to working with Skip Hop founders, Michael and Ellen Diamant, and their team to build on their long track record of success.”

J.P. Morgan Securities LLC acted as financial advisor and King & Spalding LLP acted as legal counsel to Carter’s in connection with the transaction. Harris Williams & Co. served as exclusive financial advisor and McDermott Will & Emery LLP acted as legal advisor to Skip Hop.

Atlanta-based Carter’s owns the Carter’s and OshKosh B’gosh brands, which are sold in department stores, national chains and specialty retailers around the world as well as 1,000 company stores. The company has also created special brands for Target and Walmart.

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The company released its fourth quarter and year-end financials today.

Net sales were up 8 percent to $934 million for the quarter and 6 percent for the year to $3.2 billion. The results were boosted by growth in almost every segment of the company’s business.

Net income spiked 20 percent for the quarter, reaching $14.5 million. For the year, net sales increased by 9.5 percent to $258.1 million.

“The fourth quarter represented a strong finish to another record year of sales and profitability for Carter’s,” Casey said. “Our focus on providing the best value and experience in young children’s apparel, extending the reach of our brands, and improving profitability enabled us to achieve our 28th consecutive year of sales growth, improve our profit margins, and increase the return of capital to shareholders. We are forecasting good growth in sales and earnings in 2017 as we strive to be the world’s favorite brands in young children’s apparel.”

Carter’s comp store sales increased 3.1 percent for the year, boosted by a 20.4 percent growth in online sales. Similarly, OshKosh comp store sales were up 3.3 percent with online sales growing by 25.3 percent.

The only cloudy part of the otherwise sunny results were the wholesale sales for OskKosh. Citing low demand and a drop in unit price, the brand’s wholesale sales decreased by 24.3 percent, to $15.9 million.

Carter’s anticipates net sales growth between 4 and 8 percent in fiscal year 2017.