Specialist apparel company Carter's Inc fell short of expectations with its fourth quarter results, blaming wholesale markdowns and slow-moving inventories.

The company, the largest branded marketer of clothing for babies and young children in the US, posted a 4.2% increase in fourth quarter sales to US$393.4m.

The Carter's brand saw revenues rise 4% to $294m, while OshKosh was up 4.8% to $99.4m.

Mass channel sales - consisting of Child of Mine in Wal-Mart and Just One Year in Target - were up 11.8% to $54.8m, while retail sales increased 9.6% to $189m. However, wholesale revenues dipped 4.1% to $149.6m.

Net income was up 4.2% to $28.6m.

"Our fourth quarter results fell short of our expectations, having been heavily impacted by higher than expected requests for markdown support from our wholesale customers and higher provisions for slow-moving inventories in our OshKosh retail stores," said Fred Rowan, Carter's chairman and CEO.

"While the macro-economic trends and overall slowdown in consumer spending have negatively affected our results, we are encouraged by the strong progress of our new retail team, whose initiatives delivered a 9% comp store sales increase at our Carter's stores."

The company's full year sales were up 5.1% to $1.4bn, led by a 7.3% increase in Carter's revenues.

However, OskKosh sales were down 1.6%. Retail sales were up 6.7% to $600.1m, mass channel sales increased 10.4% to $243.3m, while wholesale revenues inched up 1.4% to $568.9m.

The company recorded a net loss of $70.6m, compared with net income of $87.2m in 2006.

The loss includes charges of about $154.9m related to the writedown of OshKosh assets, plus another $7.4m related to the closure of the OshKosh distribution facility in Tennessee.

Rowan voiced caution about the company's prospects for 2008.

"Given the very challenging retail environment, our wholesale and mass channel customers are being more cautious in their 2008 growth plans, and therefore we must be too," he said. "It is very difficult to project growth in this current environment."