Download PDF

1. Company Snapshot

1.a. Company Description

Carter's, Inc., together with its subsidiaries, designs, sources, and markets branded childrenswear under the Carter's, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter's My First Love, little planet, and other brands in the United States and internationally.The company operates through three segments: U.S. Retail, U.S. Wholesale, and International.Its Carter's products include babies and young children products, such as bodysuits, pants, dresses, knit sets, blankets, layette essentials, bibs, booties, sleep and play products, rompers, and jumpers; and OshKosh brand products comprise playclothes, such as denim apparel products with multiple wash treatments and coordinating garments, overalls, woven bottoms, knit tops, and bodysuits.


The company also provides products for playtime, travel, mealtime, bathtime, and homegear, as well as kid's bags and diaper bags under the Skip Hop brand.In addition, it offers bedding, cribs, diaper bags, footwear, gift sets, hair accessories, jewelry, outerwear, paper goods, socks, shoes, swimwear, and toys.The company operates 18,800 wholesale locations, including department stores, national chain stores, and specialty stores.


As of December 31, 2021, it operated 980 retail stores.The company also sells its products through its eCommerce websites, such as carters.com, oshkoshbgosh.com, oshkosh.com, and skiphop.com, as well as other international wholesale accounts and licensees.Carter's, Inc.


was founded in 1865 and is headquartered in Atlanta, Georgia.

Show Full description

1.b. Last Insights on CRI

Carter's, Inc. recent performance has been hindered by near-term pressures from U.S. Retail weakness, rising costs, and macroeconomic challenges. The company's Q4 earnings beat expectations, but profit fell due to higher freight costs, intense promotional competition, and macroeconomic challenges. Additionally, Carter's faces significant margin pressures, with a 30%+ drop in operating profits and EPS decline to $3.2-$3.8 in FY25. The company's guidance for a challenging FY25, with lower sales, margins, and higher SG&A expenses, further exacerbates these concerns.

1.c. Company Highlights

2. Carter's Delivers Mixed Results, Provides Insights into 2026 Plans

Carter's reported third-quarter fiscal 2025 net sales of $758 million, comparable to the same period last year. However, reported operating income was $29 million, and reported earnings per share (EPS) were $0.32, significantly lower than the $1.62 EPS in the same quarter last year. On an adjusted basis, operating income was $39 million, down from $77 million in the prior-year period. The actual EPS came in at $0.3271, missing estimates of $0.78. The company's gross margin rate was lower due to higher product costs, including higher tariffs.

Publication Date: Oct -28

📋 Highlights
  • Profitability Hit by One-Time Charges:: Q3 reported EPS dropped to $0.32 from $1.62 YoY, driven by $13.8M in restructuring and pension-related charges.
  • Adjusted Operating Income Declined:: Adjusted operating income fell to $39M (down 50% YoY) despite $758M net sales, impacted by higher tariffs and product costs.
  • Tariff Mitigation Actions:: Achieved $40M in duty reductions via supply chain adjustments, but Q4 2025 tariffs are expected to cost $25–35M.
  • Store Closures & Cost Savings:: Plan to close 150 North America stores by 2026, with $45M annual savings from 15% workforce reduction and SG&A cuts.
  • 2026 Growth Strategy:: Targeting sales growth above typical rates via price increases, $45M productivity savings, and 11% higher Q4 2025 marketing spend to boost traffic.

Operational Highlights and Challenges

The U.S. Retail business made progress in raising prices, with third-quarter Average Unit Retail (AUR) prices increasing in the mid-single-digit range over last year. However, the U.S. Wholesale business saw lower sales, driven by lower sales in the Simple Joys component of the exclusive brands business. The company is executing a new strategy in collaboration with Amazon for Simple Joys. Carter's is also managing the impact of tariffs by mitigating costs through their supplier base and raising prices where necessary.

Outlook for 2026

Carter's is planning for sales growth in 2026, driven by pricing rather than unit growth. The company expects to benefit from productivity initiatives, which will help offset the impact of higher tariffs and other inflationary pressures. Carter's is targeting $45 million in gross savings for 2026, with plans to reduce office-based roles by approximately 15% and close around 150 North America stores. The company is also investing in demand creation, with media spend up 11% in Q4 '25, and expects to drive traffic and consumer loyalty beyond promotion and price.

Valuation Insights

With a P/E Ratio of 13.11 and a P/S Ratio of 0.42, the market appears to be pricing in moderate growth expectations for Carter's. The company's ROE of 10.39% and ROIC of 5.27% indicate a reasonable return on equity and invested capital. However, the Net Debt / EBITDA ratio of 2.57 suggests that Carter's has a manageable debt burden. Analysts estimate next year's revenue growth at -0.2%, indicating a challenging environment for the company.

Key Takeaways and Risks

Carter's is navigating a challenging retail landscape with rising tariffs and inflation. While the company is taking steps to mitigate these impacts, there are risks to its plans, including the persistence of inflation and its possible impact on consumer demand. The company's focus on driving traffic to its owned platforms, consumer loyalty, and productivity initiatives will be crucial in achieving its growth objectives in 2026. As Douglas Palladini noted, "We're seeing our better and best categories perform well, driven by new consumers and higher Average Unit Rates (AUR) products, which are contributing to market share gains."

3. NewsRoom

Card image cap

Geode Capital Management LLC Increases Stake in Carter’s, Inc. $CRI

Nov -29

Source: defenseworld.net

Card image cap

Carter's and March of Dimes Partner to Support Families During Prematurity Awareness Month

Nov -17

Source: businesswire.com

Card image cap

Carter's, Inc. Announces Closing of Sale of $575 Million 7.375% Senior Notes Due 2031

Nov -13

Source: businesswire.com

Card image cap

Carter's, Inc. Announces Quarterly Dividend

Nov -13

Source: businesswire.com

Card image cap

New Strong Sell Stocks for Nov. 5

Nov -05

Source: zacks.com

Card image cap

Carter's, Inc. Announces Upsize and Pricing of Senior Notes Offering

Oct -29

Source: businesswire.com

Card image cap

Carter's, Inc. Announces Proposed Senior Notes Offering

Oct -28

Source: businesswire.com

Card image cap

Carter's Top Line Resists At The Expense Of Margins, Not Worth 15x Earnings

Oct -27

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

United States Retail

Expected Growth: 1.0%

Carter's, Inc. United States Retail segment growth of 1.0% is driven by increasing demand for baby and children's apparel, expansion of e-commerce channels, and strategic marketing efforts. Additionally, the company's focus on product innovation, quality, and affordability contributes to its growth in the US market.

United States Wholesale

Expected Growth: 1.0%

Carter's, Inc. United States Wholesale segment growth of 1.0% is driven by increasing demand for baby and children's apparel, expansion of e-commerce channels, and strategic partnerships with major retailers. Additionally, the company's focus on product innovation, quality, and affordability contributes to its growth in the wholesale market.

International

Expected Growth: 1.0%

Carter's, Inc. international segment growth of 1.0% is driven by increasing demand for baby and children's apparel in emerging markets, expansion of e-commerce platforms, and strategic partnerships with local retailers. Additionally, the company's focus on product innovation, quality, and affordability also contribute to its growth in international markets.

7. Detailed Products

Baby Clothing

Carter's offers a wide range of baby clothing, including onesies, sleepers, footed rompers, and more for newborns to toddlers.

Kids' Clothing

Carter's kids' clothing line includes t-shirts, jeans, dresses, and more for boys and girls from toddler to big kid sizes.

Sleepwear

Carter's sleepwear collection features cozy pajamas, footed sleepers, and more for babies and kids.

Swimwear

Carter's swimwear line includes swimsuits, rash guards, and swim trunks for babies and kids.

Accessories

Carter's accessories include hats, socks, shoes, and more to complete any outfit.

Gift Sets

Carter's gift sets include adorable outfits and accessories packaged together, perfect for baby showers or special occasions.

8. Carter's, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Carter's, Inc. faces moderate threat from substitutes, as consumers have limited alternatives for children's apparel and accessories. However, the rise of online marketplaces and fast fashion retailers poses a moderate threat to the company's market share.

Bargaining Power Of Customers

Carter's, Inc. faces high bargaining power from customers, as they have numerous options for children's apparel and accessories. Additionally, the rise of e-commerce has increased price transparency, making customers more price-sensitive.

Bargaining Power Of Suppliers

Carter's, Inc. has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's large scale of operations also gives it negotiating power over suppliers.

Threat Of New Entrants

Carter's, Inc. operates in a highly competitive market, but the threat of new entrants is low due to the high barriers to entry, including significant capital requirements and established distribution networks.

Intensity Of Rivalry

Carter's, Inc. operates in a highly competitive market, with numerous players vying for market share. The company faces intense rivalry from established brands and new entrants, which drives down prices and increases marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.81%
Debt Cost 4.08%
Equity Weight 57.19%
Equity Cost 10.61%
WACC 7.82%
Leverage 74.86%

11. Quality Control: Carter's, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Urban Outfitters

A-Score: 5.4/10

Value: 6.3

Growth: 6.9

Quality: 6.1

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
Gap

A-Score: 5.0/10

Value: 6.6

Growth: 4.7

Quality: 5.2

Yield: 7.0

Momentum: 5.0

Volatility: 1.3

1-Year Total Return ->

View Full Report
Stock-Card
Carter's

A-Score: 4.5/10

Value: 7.1

Growth: 3.8

Quality: 4.5

Yield: 8.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
American Eagle Outfitters

A-Score: 4.4/10

Value: 6.6

Growth: 4.6

Quality: 4.5

Yield: 6.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Abercrombie & Fitch

A-Score: 4.3/10

Value: 7.1

Growth: 8.3

Quality: 6.8

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

View Full Report
Stock-Card
Boot Barn

A-Score: 4.2/10

Value: 2.3

Growth: 8.0

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

31.87$

Current Price

31.87$

Potential

-0.00%

Expected Cash-Flows