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

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

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

Shares of CRI stock opened at $31.54 on Friday. The stock has a market capitalization of $1.16 billion, a PE ratio of 5.91, a price-to-earnings-growth ratio of 3.76 and a beta of 0.84. Carter’s has a 52-week low of $27.86 and a 52-week high of $44.44. The stock’s 50-day moving average price is $31.98 and its 200 day moving average price is $36.28. The company has a quick ratio of 1.50, a current ratio of 2.47 and a debt-to-equity ratio of 0.55.

Carter’s Announces Dividend

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

Analyst Ratings Changes

A number of equities research analysts have weighed in on the company. BMO Capital Markets initiated coverage on Carter’s in a research note on Tuesday, September 8th. They issued an “outperform” rating and a $40.00 price objective for the company. Weiss Ratings raised Carter’s from a “sell (d+)” rating to a “hold (c)” rating in a report on Thursday, August 13th. Capital One Financial set a $40.00 target price on shares of Carter’s in a research report on Tuesday, September 8th. Needham & Company LLC restated a “hold” rating on shares of Carter’s in a research report on Tuesday, October 20th. Finally, UBS Group cut their target price on shares of Carter’s from $41.00 to $38.00 and set a “neutral” rating on the stock in a report on Monday, October 19th. One investment analyst has rated the stock with a Strong Buy rating, three have issued a Buy rating and five have assigned a Hold rating to the stock. According to data from MarketBeat.com, Carter’s presently has a consensus rating of “Moderate Buy” and a consensus target price of $40.86.

Carter’s News Roundup

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

About Carter’s

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.