Carter’s (NYSE:CRI) Announces Earnings Results, Beats Expectations By $0.18 EPS

Carter’s (NYSE:CRI) posted its quarterly earnings results on Friday. The textile maker reported $1.03 EPS for the quarter, beating the consensus estimate of $0.85 by $0.18, FiscalAI reports. The firm had revenue of $752.46 million for the quarter, compared to analyst estimates of $747.34 million. Carter’s had a net margin of 6.55% and a return on equity of 12.78%. Carter’s’s revenue for the quarter was down .7% compared to the same quarter last year. During the same quarter last year, the firm posted $0.74 earnings per share.

Here are the key takeaways from Carter’s’ conference call:

• Third-quarter profitability exceeded expectations: Net sales were essentially flat at $752 million, while adjusted operating income rose 45% to $57 million and adjusted EPS increased nearly 40% to $1.03. Adjusted operating margin expanded 240 basis points to 7.6%, supported by gross-margin improvement, productivity savings, and store closures.
• Carter’s new branding initiative and targeted merchandising helped reverse weak early-quarter trends. September retail comps increased double digits, the baby business posted its eighth consecutive quarter of comp growth, and the Stellar Sleep initiative generated double-digit unit and dollar growth.
• Management reduced its fourth-quarter revenue outlook to $860 million-$880 million, citing softer demand, cautious consumer spending, and lower expected replenishment demand in wholesale. Fourth-quarter adjusted EPS is now expected at $1.37-$1.55 versus $1.90 last year, with heavier holiday promotions and inflationary pressures remaining risks.
• The company ended the quarter with more than $525 million in cash and short-term investments, inventory down 11% year over year, and year-to-date free cash flow of $72 million versus negative $180 million last year. Management also maintained its full-year adjusted operating-income outlook and expects $240 million-$250 million of operating cash flow.
• Carter’s is reorganizing leadership to combine retail, e-commerce, and wholesale under a Chief Commercial Officer, broaden marketing into a Chief Brand Officer role, add a Chief Product Officer, and search for a Chief Operating Officer. Longer-term initiatives include expanding into older children, higher-income consumers, and asset-light international markets.

Carter’s Stock Performance

Carter’s stock opened at $31.54 on Friday. Carter’s has a 12-month low of $27.86 and a 12-month high of $44.44. The company has a market capitalization of $1.16 billion, a price-to-earnings ratio of 5.24, a price-to-earnings-growth ratio of 3.55 and a beta of 0.84. The company has a debt-to-equity ratio of 0.55, a current ratio of 2.47 and a quick ratio of 1.50. The firm’s fifty day moving average price is $31.98 and its 200 day moving average price is $36.28.

Carter’s Dividend Announcement

The company also recently declared a quarterly dividend, which was paid on Friday, September 25th. Investors of record on Tuesday, September 1st were paid a dividend of $0.25 per share. The ex-dividend date of this dividend was Tuesday, September 1st. This represents a $1.00 annualized dividend and a yield of 3.2%. Carter’s’s payout ratio is 18.73%.

Analyst Ratings Changes

Several research analysts have commented on the company. Wall Street Zen lowered Carter’s from a “strong-buy” rating to a “buy” rating in a research report on Saturday, September 26th. BMO Capital Markets started coverage on Carter’s in a research note on Tuesday, September 8th. They issued an “outperform” rating and a $40.00 target price for the company. Weiss Ratings upgraded Carter’s from a “sell (d+)” rating to a “hold (c)” rating in a research note on Thursday, August 13th. UBS Group dropped their target price on Carter’s from $41.00 to $38.00 and set a “neutral” rating on the stock in a report on Monday, October 19th. Finally, Citigroup reissued a “buy” rating on shares of Carter’s in a research report on Tuesday, July 21st. One analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating and five have issued a Hold rating to the stock. According to data from MarketBeat, the company has an average rating of “Moderate Buy” and an average target price of $40.86.

Key Carter’s News

Here are the key news stories impacting Carter’s this week:

• Positive Sentiment: Third-quarter earnings exceeded expectations. Carter’s reported adjusted earnings of $1.03 per share, above the $0.85 analyst consensus and up from $0.74 a year earlier. Carter’s Q3 Earnings and Revenues Top Estimates
• Positive Sentiment: Revenue slightly topped forecasts. Quarterly sales were approximately $752.5 million, ahead of the $747.3 million estimate, while U.S. retail comparable sales posted slight growth. Management also cited progress from its profitability-improvement initiatives. Carter’s Reports Third Quarter Fiscal 2026 Results
• Neutral Sentiment: Leadership changes are intended to support growth. Carter’s created or expanded product, commercial and operations roles, including a new Chief Product Officer, Chief Commercial Officer and standalone Chief Operating Officer. The restructuring could improve coordination, but its financial benefits are not yet demonstrated. Carter’s Evolves Leadership Structure
• Negative Sentiment: Lower guidance overshadowed the earnings beat. Carter’s reduced its fiscal-year 2026 earnings outlook and provided fourth-quarter guidance that indicates weaker expected profitability. The company also issued full-year sales guidance below expectations, reinforcing concerns about sluggish demand despite cost and margin improvements. Carter’s Provides and Updates Earnings Guidance
• Negative Sentiment: Sales remained slightly below the prior year. Third-quarter revenue declined about 0.7% year over year, suggesting that the children’s apparel retailer continues to face uneven consumer demand and limited top-line momentum. Carter’s Q3 Earnings Results and Guidance

Carter’s Company Profile

Carter’s, Inc (NYSE:CRI) is a major designer, source and marketer of apparel and related products for babies and young children. The company offers clothing, accessories, footwear, gifts and other products for infants, toddlers and children through brands including Carter’s, OshKosh B’gosh, Little Planet and Skip Hop.

Founded in 1865, Carter’s has built a long-standing presence in the children’s apparel market. Its products are sold through company-operated retail stores, e-commerce websites and wholesale partners, including department stores, mass merchants and specialty retailers.