Below is a note from Hedgeye CEO Keith McCullough on why we're adding Carter's (CRI) back to the short side of Investing Ideas today:
"I've been waiting on Carter's (CRI) to bounce from its bombed out oversold level (where I removed it from our Investing Ideas product on the short side) and now it has. Looks like an Old Wall upgrade to sell into today too!
We think the 4Q earnings report will be a tough one. Especially considering the weakness shown when CRI reported its third quarter, missing for the first time in 25 quarters where they had actually guided up the full year. CRI is historically a beat and guide down company, to keep the bar low each quarter. They almost never miss and they have never missed and guided up. This deviation from the norm is concerning.
Additionally, cotton prices have continued to rise, from the bottom seen in March, and this margin pressure has to start flowing through to the P&L. We think that happens as soon as the 4Q print."
