Carter's Earnings Call Transcripts
Fiscal Year 2026
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Q2 net sales rose 5% year-over-year, with adjusted operating profit up 54% and strong e-commerce growth. Full-year sales growth is now projected at 2%-3%, with adjusted operating income up low to mid-single digits. Tariff recoveries boosted liquidity, while risks remain from tariffs and consumer price sensitivity.
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First quarter 2026 sales and earnings exceeded expectations, with strong US retail and international growth offset by wholesale margin pressure from tariffs. Full-year guidance is reiterated, with ongoing tariff and inflation risks, increased marketing investment, and continued store optimization.
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Leadership is focused on unlocking brand value and investing in marketing and product design to attract new, higher-income consumers. Store optimization and omnichannel integration are underway, with a shift in wholesale strategy and expectations for sustainable growth in 2026.
Fiscal Year 2025
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Q4 and FY25 saw revenue growth and strong new customer acquisition, but profitability declined due to tariffs and higher product costs. 2026 guidance calls for low to mid-single digit sales and operating income growth, with margin pressure from tariffs offset by pricing and productivity gains.
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Q3 sales were flat year-over-year with adjusted EPS and operating income down, impacted by higher tariffs and one-time charges. Strategic transformation includes cost reductions, store closures, and a shift to core brands on Amazon, with 2026 growth expected from price increases and productivity gains.
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Q2 sales grew 4% year-over-year to $585M, led by U.S. retail and international, but profitability declined due to pricing investments and higher SG&A. Tariffs present significant risk, but actions are underway to offset costs by 2026, with a focus on brand growth and store productivity.
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First quarter sales and earnings met internal plans but declined 5% year-over-year amid a volatile retail environment. Guidance is suspended due to leadership transition and tariff uncertainty, while pricing investments and supply chain shifts are underway to mitigate risks.
Fiscal Year 2024
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Q4 sales and earnings exceeded guidance, but full-year 2024 saw declines in sales and profit. 2025 outlook is cautious, with flat to slightly lower sales and lower operating income expected, driven by continued pricing, FX, and cost pressures.
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Third quarter sales and earnings exceeded guidance, led by strong U.S. retail and effective pricing and marketing investments. Gross margin declined due to price actions, but inventory and cash flow improved. Full-year outlook reaffirmed, with continued focus on value, exclusive brands, and disciplined capital allocation.
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The company is investing $50 million in price reductions and brand marketing to counter softening direct-to-consumer sales and declining store traffic, while wholesale business with major retailers remains strong. A shift in merchandising focuses on premium and value products, with new store concepts and enhanced marketing and loyalty programs supporting growth.
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Q2 results met sales forecasts with strong US wholesale growth and record gross margin, but US retail and international sales declined. Full-year guidance was revised lower due to weaker consumer confidence and increased promotional activity, with continued investment in pricing and marketing.
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The company leads the North American kids' apparel market, leveraging omni-channel growth, store innovation, and strong retailer partnerships. Despite consumer pressures, it is investing in pricing clarity, premium products, and store expansion, forecasting mid-single-digit growth for the second half.