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Carter's, Inc.
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$1.1B
Market Cap
13.1
P/E
86.08
PEG
7.0%
ROCE
19.8%
ROE
1.16
D/E
5.0%
OPM
-25.5%
% from 52W High
61
α RS
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About

Carter's, Inc., together with its subsidiaries, designs, sources, and markets branded childrenswear in the United States and internationally. It operates through three segments: U.S. Retail, U.S. Wholesale, and International. The company’s products include babies and young children’s products, such as bodysuits, layette essentials, sleep and play, pants, tops and t-shirts, multipiece sets, dresses, and sleepwear; and playclothes, such as denim jeans, overalls, core bottoms, knit tops, t-shirts, and layering pieces. It also provides products for playtime, travel, mealtime, bath time, and home gear, as well as kid’s and diaper bags, as well as range of licensed sports and character t-shirts. In addition, the company offers sleepwear, swimwear, outerwear, bedding, accessories, and toys; and toddler apparel and accessories. It sells its products through its retail stores, websites, and mobile app, as well as its wholesale distribution; and distributes its products to wholesale customers, including department stores, national chains, and specialty retailers. The company markets its products under the Carter’s, OshKosh B’gosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Little Planet, Otter Avenue, and other brands. Carter's, Inc. was founded in 1865 and is headquartered in Atlanta, Georgia.

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3-Statement Financial Model
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📊 MIXED Carter's Q1 2026 net sales rose 8% to $681M; US retail comps up 10%+; tariff impact $50M.
Revenue & Profitability
Q1 2026 GAAP net sales $681M (+8% YoY); adjusted operating income $28M (down from $35M in prior-year adjusted); adjusted EPS $0.39 (vs. $0.66 prior year). Gross margin declined 300+ bps to 43.1%, driven by $50M incremental tariff costs partially offset by pricing and mix. SG&A increased 3% to $270M but leveraged 180 bps. The company reiterated full-year guidance: low-to-mid single-digit net sales growth and adjusted operating income growth, with EPS expected down low double digits to mid-teens from $3.47 in 2025.
Outlook
Management noted that industry demand was healthy in Q1, with the children's apparel market growing nearly 5% year-over-year. However, they see a consumer becoming more value-focused, evidenced by increased penetration of opening price point products and clearance sales. Headwinds include uncertainty around tariff policy (assumed to re-escalate in H2), persistent inflation, and potential competitive price reductions. Easter timing boosted Q1 but softened April demand; early May trends are solidly positive.
Growth Drivers
Key growth drivers include: (1) US retail comparable sales growth of 10%+ in Q1 (fourth consecutive positive comp), driven by demand creation investments and higher traffic; (2) international expansion, particularly in Mexico (+40% net sales, +21% comp), with plans to open 12 new stores there in 2026; (3) increasing active consumer file and attracting Gen Z consumers to higher-AUR products; (4) wholesale order books improving for fall/winter as customers respond positively to product offerings; (5) collaborations that bring new customers and higher average transaction values.
Balance Sheet & CapEx
2026 capital expenditure guidance is unchanged at approximately $55 million. Spending is directed toward new store openings in Mexico, distribution center upgrades, and technology initiatives (including e-commerce enhancements). The company is also investing over $20 million in demand creation (marketing) this year, up from historical levels of around 3% of sales. No major AI or capacity expansion plans were disclosed.
Margins
Consolidated gross margin was 43.1% in Q1, down 300+ bps year-over-year, due to $50M of incremental tariffs partially offset by pricing, mix shift to retail, and productivity savings. SG&A was $270M (+3% YoY) but leveraged 180 bps on higher sales. Adjusted operating margin was 4.2%, down from 5.4% in the prior year. Management expects gross margin to remain pressured in 2026, with H2 benefiting from better tariff comparability and planned pricing. Productivity initiatives are on track and help fund marketing investments.
Key Risks
Primary risks highlighted: (1) ongoing tariff uncertainty—the Supreme Court reduced IEEPA tariffs to 10% but management assumes re-escalation in H2; (2) consumer spending fragility due to inflation, higher gas prices, and volatile confidence; (3) potential need to reinvest tariff relief into sharper pricing, limiting profit upside; (4) timing of tariff refunds (~$130M filed) is uncertain; (5) April U.S. retail comps fell nearly 4% after Easter, and management expects unit growth to moderate; (6) foreign exchange exposure (Hong Kong minimum tax, Mexico exchange rates).
Generated by AI · Q1 2026 results · Not investment advice
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✓ 📞 Earnings Call Transcripts (5 quarters) submit a missing quarter
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📞 Earnings Call Transcripts (5)
Q2 2026 Q2 2026 2026-07-31
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.
Q1 2026 Q1 2026 2026-05-06
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.
Q4 2025 Q4 2025 2026-02-27
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.
Q3 2025 Q3 2025 2025-10-27
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.
Q2 2025 Q2 2025 2025-07-25
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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Financial Model
Projections are built from each company's audited annual financials (Income Statement, Balance Sheet, Cash Flow) over the last 5 fiscal years. Forward assumptions — revenue growth %, EBITDA margin, D&A (USD millions), interest expense, tax rate, and capex — are AI-generated using historical context and refreshed twice a year: after the December results season and after the September/Q4 results season.

DCF Valuation
Fair Value = Σ(FCFt / (1+WACC)t) + Terminal Value. Terminal Value uses the Gordon Growth Model: FCF5 × (1+g) / (WACC−g). Default WACC: 10% (US risk-free ~4.5%, equity risk premium ~5.5%). Default terminal growth: 3% (long-run US nominal GDP proxy).

CAGR Tracker
Expected 5-year CAGR = (DCF Fair Value / Current Price)1/5 − 1. Assumes fair value is reached in exactly 5 years — a mechanical estimate only.

Data Sources & Limitations
Financial statements sourced from public filings. Prices updated daily. Forward assumptions are AI-generated. All monetary values in USD millions. Non-US ADR companies may have currency conversion inaccuracies. Models are point-in-time and do not update intra-quarter or account for M&A, macro shocks, or extraordinary items.

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Investment Risk:
Investing in securities, including US equities and ETFs, involves inherent risks including the potential loss of principal. All investments are subject to market fluctuations, economic conditions, regulatory changes, and other factors that may affect their value. Past performance is not indicative of future results. This analysis is provided for informational and educational purposes only and should not be construed as investment advice under any circumstances.

No Investment Recommendation:
This analysis does not constitute, nor should it be interpreted as, an offer, solicitation, or recommendation to buy, sell, or hold any securities or financial products. Investors are strongly advised to conduct their own independent research and due diligence and to consult with a licensed financial advisor or an SEC-registered investment adviser before making any investment decisions, taking into account their individual financial situation, risk tolerance, and investment objectives.

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Conflict of Interest Disclosure:
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Information Sources:
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