Carter’s Inc. Reports Robust Fourth‑Quarter Earnings, Mixed Outlook for 2026

Carter’s Inc. (CRI) released its fourth‑quarter and full‑year 2025 results on Friday, confirming solid revenue growth while underscoring challenges in profitability metrics that will shape the company’s strategic priorities heading into 2026.

Revenue and Sales Growth

Net sales for the quarter rose to $925 million, an 8 % increase over the $860 million recorded in Q4 2024. This rebound followed a 6 % decline in Q4 2024 sales, illustrating the company’s ability to regain traction after a difficult year. Across the full fiscal year, total revenue climbed to $3.9 billion, up 4 % YoY, driven by a 5 % increase in same‑store sales at its retail shops and a modest expansion of distribution agreements with national department stores and specialty chains.

Operating Margins

Operating margin for the quarter settled at 9.2 %, slightly below the 9.7 % margin reported in Q4 2024. Adjusted operating margin fell further to 9.7 % from 13.4 % in the prior period, reflecting higher discretionary spending on marketing and inventory investments aimed at capturing emerging market segments. The company’s management cited a 2‑3 % uptick in raw‑material costs as a key driver of margin compression, a trend that is expected to persist into 2026 unless supply‑chain efficiencies are realized.

Earnings per Share

Diluted earnings per share (EPS) for Q4 stood at $1.76, a modest increase from $1.71 in Q4 2024. Adjusted diluted EPS, which removes restructuring costs and debt extinguishment, reached $1.90 versus $2.39 in the prior quarter, marking a 20 % decline. Management emphasized that the adjusted EPS metric will be a key indicator for the next fiscal year as the company seeks to balance cost‑control initiatives with revenue‑growth projects.

Forward‑Looking Guidance

Carter’s guidance for FY 2026 remains conservative, with the board projecting a net sales growth of 6–7 % and an operating margin of 9.0–9.5 %. The company is investing in digital commerce platforms, aiming to increase e‑commerce sales by 15 % by year‑end, and is exploring strategic acquisitions in the children’s apparel segment to diversify its product mix.

Market Positioning

The company trades on the New York Stock Exchange under the ticker CRI and currently commands a market cap of approximately $1.55 billion. Its share price closed at $42.39 on February 23, 2026, near the 52‑week high of $44.44 set on February 19, yet well above the 52‑week low of $23.38 reached last July. With a price‑to‑earnings ratio of 17.17, CRI sits above the sector average, reflecting investor confidence in its brand equity and distribution network.

Conclusion

Carter’s Inc. demonstrates resilience in revenue generation and brand strength, yet faces headwinds from margin erosion and material cost volatility. The company’s strategic focus on digital expansion and selective acquisitions positions it to capture growth in the high‑margin children’s apparel space, while disciplined cost management will be essential to restore adjusted EPS performance in 2026.