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

Carter’s (NYSE:CRI) released its quarterly earnings data on Friday. The textile maker reported $1.03 EPS for the quarter, beating analysts’ consensus estimates of $0.85 by $0.18, FiscalAI reports. The company had revenue of $752.46 million during the quarter, compared to the consensus estimate of $747.34 million. Carter’s had a net margin of 6.55% and a return on equity of 12.78%. Carter’s’s quarterly revenue was down .7% on a year-over-year basis. During the same quarter in the prior year, the firm 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 Price Performance

NYSE CRI traded down $1.84 during trading on Friday, reaching $31.54. The company’s stock had a trading volume of 1,850,560 shares, compared to its average volume of 1,204,828. The firm has a fifty day moving average of $32.08 and a 200 day moving average of $36.30. 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 stock has a market capitalization of $1.16 billion, a PE ratio of 5.91, a P/E/G ratio of 3.50 and a beta of 0.84. Carter’s has a one year low of $27.86 and a one year high of $44.44.

Carter’s Announces Dividend

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

Key Stories Impacting Carter’s

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

• Positive Sentiment: Carter’s reported third-quarter adjusted earnings of $1.03 per share, well above the $0.85 analyst consensus and up from $0.74 a year earlier. Revenue of $752.5 million also exceeded estimates of approximately $747.3 million. Carter’s Q3 Earnings and Revenues Top Estimates
• Positive Sentiment: Management highlighted progress in profitability-improvement initiatives, slight growth in U.S. retail comparable sales, and quarterly net sales that were modestly above its internal outlook. Carter’s Reports Third Quarter Fiscal 2026 Results
• Neutral Sentiment: The company announced a revised leadership structure, including new Chief Product Officer and Chief Commercial Officer roles and a standalone Chief Operating Officer position, intended to improve coordination across product, sales, brand, and operations. The changes could support longer-term execution but add near-term transition risk. Carter’s Evolves Leadership Structure
• Negative Sentiment: Carter’s lowered its fiscal 2026 earnings outlook and provided fourth-quarter guidance that signaled weaker profitability than investors expected. Full-year sales guidance also missed expectations, making the outlook the primary reason the stock declined despite the quarterly beat. Carter’s Updates Fiscal 2026 Guidance
• Negative Sentiment: Quarterly revenue fell about 0.7% year over year, while management cited an uneven macroeconomic environment. Investors may be concerned that cost and margin improvements are not yet translating into sustained top-line growth. Carter’s Q3 2026 Earnings Results

Wall Street Analysts Forecast Growth

Several analysts have commented on the company. Capital One Financial set a $40.00 price target on Carter’s in a report on Tuesday, September 8th. Zacks Research downgraded Carter’s from a “strong-buy” rating to a “hold” rating in a report on Tuesday, October 20th. UBS Group decreased their price objective on Carter’s from $41.00 to $38.00 and set a “neutral” rating for the company in a report on Monday, October 19th. 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. Finally, Wells Fargo & Company lowered their price objective on Carter’s from $42.00 to $30.00 and set an “equal weight” rating on the stock in a report on Monday, October 12th. One investment analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating and five have assigned a Hold rating to the stock. According to data from MarketBeat, the company currently has an average rating of “Moderate Buy” and a consensus target price of $40.86.

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.