Carter's Inc
NYSE:CRI
Carter's Inc
Carter's Inc. traces its roots back to 1865, a year where enterprising foresight came to life with the vision of William Carter. Initially founded to produce the finest-quality children's undergarments in America, the company has grown over the decades with changes in consumer needs, parenting trends, and retail landscapes. Today, Carter’s is a leading provider in the sector, boasting a stellar reputation for quality and longevity in children's clothing. The company skillfully aligns its business model around brand loyalty, craftsmanship, and an ever-adapting product line that spans from newborn to toddler apparel. Their offerings include a range of stylish, comfortable, and affordable essentials that meet every parenting demand, from playtime to bedtime.
At its core, Carter’s capitalizes on a multi-channel distribution strategy that ensures a robust revenue pipeline. The company sells its products through its proprietary stores, significant online presence, and notable partnerships with big-box and department stores nationwide. This diverse approach not only broadens the reach of the Carter's and OshKosh B’gosh labels but also caters to varying consumer preferences in the baby and toddler apparel markets. By effectively leveraging brand strength and distribution channels, Carter's has maintained a firm grasp on its target demographic: a niche market focused on high-quality, affordable clothing for young children. The company’s adept handling of supply chain efficiencies and strategic planning further solidifies its position as a stalwart of the children’s apparel industry.
Carter's Inc. traces its roots back to 1865, a year where enterprising foresight came to life with the vision of William Carter. Initially founded to produce the finest-quality children's undergarments in America, the company has grown over the decades with changes in consumer needs, parenting trends, and retail landscapes. Today, Carter’s is a leading provider in the sector, boasting a stellar reputation for quality and longevity in children's clothing. The company skillfully aligns its business model around brand loyalty, craftsmanship, and an ever-adapting product line that spans from newborn to toddler apparel. Their offerings include a range of stylish, comfortable, and affordable essentials that meet every parenting demand, from playtime to bedtime.
At its core, Carter’s capitalizes on a multi-channel distribution strategy that ensures a robust revenue pipeline. The company sells its products through its proprietary stores, significant online presence, and notable partnerships with big-box and department stores nationwide. This diverse approach not only broadens the reach of the Carter's and OshKosh B’gosh labels but also caters to varying consumer preferences in the baby and toddler apparel markets. By effectively leveraging brand strength and distribution channels, Carter's has maintained a firm grasp on its target demographic: a niche market focused on high-quality, affordable clothing for young children. The company’s adept handling of supply chain efficiencies and strategic planning further solidifies its position as a stalwart of the children’s apparel industry.
Sales Flat: Q3 net sales were $758 million, essentially flat compared to last year, with growth in U.S. Retail and International offset by declines in U.S. Wholesale.
Profit Drop: Adjusted operating income dropped to $39 million from $77 million last year, and adjusted EPS fell to $0.74 from $1.64, mainly due to higher product costs and tariffs.
Margin Pressure: Gross margin declined by 180 basis points to 45.1% due to increased product costs, higher tariffs, and investments in product mix.
Tariffs Headwind: Tariffs are a major challenge, with an estimated annual gross impact of $200–$250 million and a $25–$35 million Q4 net impact on operating income.
Cost Cutting: Carter’s plans to eliminate about 15% of office-based roles and close 150 stores by end of 2026, targeting $45 million in annualized cost savings.
Price Increases: Carter’s is raising prices to offset tariffs, with mid-single-digit AUR increases in retail accepted so far, and plans for more price hikes into 2026.
No Guidance: The company did not reinstate formal sales or earnings guidance due to ongoing tariff uncertainty but expects sales and earnings growth in 2026 driven by higher pricing.
Marketing Investment: Significant increase in marketing spend planned, with demand creation investment up 11% in Q4 and nearly 20% ($16 million) in 2026.
