• Fourth quarter fiscal 2025 results
  • Net sales $925 million vs. $860 million in Q4 2024, growth of 8%
  • Operating margin 9.2% vs. 9.7% in Q4 2024
  • Adjusted operating margin 9.7% vs. 13.4% in Q4 2024
  • Diluted EPS $1.76 vs. $1.71 in Q4 2024
  • Adjusted diluted EPS $1.90 vs. $2.39 in Q4 2024
• Fiscal year 2025 results
  • Net sales $2.898 billion vs. $2.844 billion in 2024, growth of 2%
  • Operating margin 5.0% vs. 9.0% in 2024
  • Adjusted operating margin 6.1% vs. 10.1% in 2024
  • Diluted EPS $2.53 vs. $5.12 in 2024
  • Adjusted diluted EPS $3.47 vs. $5.81 in 2024
  • Operating cash flow $122 million
  • $56 million returned to shareholders through dividends
• Board of Directors declares quarterly dividend of $0.25 per share
• Fiscal year 2026 outlook, which excludes potential benefits from recent tariff developments¹:
  • Low single-digit to mid-single digit percentage growth in net sales
  • Low single-digit to mid-single-digit growth in adjusted operating income
  • Low double-digit to mid-teens decline in adjusted diluted EPS

ATLANTA--(BUSINESS WIRE)--Feb. 27, 2026-- Carter’s, Inc. (NYSE:CRI), North America’s largest and most-enduring apparel company exclusively for babies and young children, today reported its fourth quarter and fiscal year 2025 results.

“Carter’s delivered improved fourth quarter results with each of our business segments posting sales growth over last year. We see momentum building behind our products and demand creation initiatives, which have driven an improvement in the rate of traffic, new customer acquisition, higher realized pricing, and increased penetration of the best portions of our product assortments. All of this gives us confidence that our strategies are gaining traction,” said Douglas C. Palladini, Chief Executive Officer & President.

“2025 was a year of meaningful progress in stabilizing our business while responding to significant new tariffs. We took actions to right-size our cost structure and we launched several important initiatives to improve the productivity of our merchandise assortments and store fleet. We also strengthened our balance sheet and liquidity with the successful refinancing of our long-term debt and a new asset-based revolving credit facility in place.

“While we’re encouraged by our progress, much work remains. Excluding the recent tariff developments, for 2026 we’re planning growth in net sales as we build on the momentum of our product and demand creation strategies. We’re also planning growth in operating income. We will remain focused and disciplined in our investments and overall spending and expect solid contributions from productivity initiatives. We believe the recent news regarding tariffs will be net positive for Carter’s, but it will take some time to fully understand the implications for our business and the broader marketplace. Our talented and dedicated teams and I are committed to returning Carter’s to long-term sustainable, profitable growth over time.”

53rd Week

The Company’s fiscal year ends on the Saturday nearest the last day of December, resulting in an additional week of results every five to six years. The fourth quarter of fiscal 2025 included 14 weeks, compared to 13 weeks in the fourth quarter of fiscal 2024. Fiscal year 2025 included 53 weeks, compared to 52 weeks in fiscal 2024. The additional week in fiscal 2025 contributed approximately $37 million in consolidated net sales.

Adjustments to Reported GAAP Results

In addition to the results presented in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements, as presented below. The Company believes these non-GAAP financial measurements provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company’s underlying performance. These measures are presented for informational purposes only. See “Reconciliation of Adjusted Results to GAAP” section of this release for additional disclosures and reconciliations regarding these non-GAAP financial measures.

Fourth quarter fiscal 2025 results included expenses related to previously announced organizational restructuring initiatives, operating model improvement costs, leadership transition costs, and a debt extinguishment loss. Fourth quarter fiscal 2024 results included expenses related to organizational restructuring initiatives and a non-cash charge related to the write down of the OshKosh tradename asset.

Fiscal year 2025 results included expenses related to operating model improvement costs, organizational restructuring initiatives, leadership transition costs, a non-cash charge for settlement of the OshKosh B’Gosh Pension Plan, debt extinguishment loss, and a tax charge associated with the termination of the Company’s deferred compensation plan. Fiscal year 2024 results included expenses related to organizational restructuring initiatives, a non-cash Pension Plan settlement charge, and a non-cash charge related to the write down of the OshKosh tradename asset.

Consolidated Results

The discussion of results below is presented on an adjusted (non-GAAP) basis where noted.

Fourth Quarter of Fiscal 2025 (14 weeks) compared to Fourth Quarter of Fiscal 2024 (13 weeks)

Net sales increased $65.7 million, or 7.6%, to $925.5 million, compared to $859.7 million in the fourth quarter of fiscal 2024, reflecting growth in each of our U.S.Retail, International, and U.S. Wholesale segments. The additional week in the fourth quarter of fiscal 2025, compared to the fourth quarter of fiscal 2024, contributed approximately $37.0 million in consolidated net sales. On a comparable week basis, net sales grew 3.4%. On a reported basis including the extra week in fiscal 2025, the U.S.Retail, International, and U.S. Wholesale segments grew 9.4%, 10.2%, and 3.4%, respectively. U.S. Retail comparable net sales increased 4.7%. Changes in foreign currency exchange rates used for translation in the fourth quarter of fiscal 2025, as compared to the fourth quarter of fiscal 2024, had a favorable effect on consolidated net sales of approximately $3.0 million, or 0.3%.

Operating income increased $1.5 million, or 1.8%, to $84.7 million, compared to $83.2 million in the fourth quarter of fiscal 2024. Operating margin decreased 50 basis points to 9.2%, reflecting incremental tariff costs, investments in product mix and make, and higher performance-based compensation provisions, partially offset by higher pricing, lower corporate expenses, and an asset impairment charge in the prior year period.

Adjusted operating income (a non-GAAP measure) decreased $25.6 million, or 22.2%, to $89.5 million, compared to $115.0 million in the fourth quarter of fiscal 2024. Adjusted operating margin decreased 370 basis points to 9.7%, reflecting incremental tariff costs, investments in product mix and make, and higher performance-based compensation provisions, partially offset by higher pricing and lower corporate expenses.

Net income increased $2.7 million, or 4.4%, to $64.2 million, compared to $61.5 million in the fourth quarter of fiscal 2024. Diluted earnings per share increased 2.9% to $1.76, compared to $1.71 in the prior year period.

Adjusted net income (a non-GAAP measure) decreased $16.8 million, or 19.5%, to $69.2 million, compared to $85.9 million in the fourth quarter of fiscal 2024. Adjusted diluted earnings per share (a non-GAAP measure) decreased 20.5% to $1.90, compared to $2.39 in the fourth quarter of fiscal 2024.

Fiscal Year 2025 (53 weeks) compared to Fiscal Year 2024 (52 weeks)

Consolidated net sales increased $54.3 million, or 1.9%, to $2.90 billion, compared to $2.84 billion in fiscal 2024, reflecting growth in our U.S. Retail and International segments that were partially offset by a decline in the U.S. Wholesale segment. The additional week in fiscal 2025, compared to fiscal 2024, contributed approximately $37.0 million in consolidated net sales. On a comparable week basis, net sales grew 0.6%. On a reported basis including the extra week in fiscal 2025, the Company’s U.S. Retail and International segments grew 3.5%, and 6.3%, respectively, while U.S. Wholesale net sales declined 2.0%. U.S. Retail comparable net sales increased 1.4%. Changes in foreign currency exchange rates used for translation in fiscal 2025, as compared to fiscal 2024, had an unfavorable effect on consolidated net sales of approximately $6.7 million, or 0.2%.

Operating income in fiscal 2025 decreased $110.8 million, or 43.5%, to $143.9 million, compared to $254.7 million in fiscal 2024. Operating margin decreased 400 basis points to 5.0%, reflecting incremental tariff costs, investments in product mix and make, investments in new and remodeled stores, increased provisions for performance-based compensation, and costs related to operating model improvements, leadership transition, and organizational restructuring. These increases were partially offset by higher pricing and an asset impairment charge in the prior year.

Adjusted operating income (a non-GAAP measure) decreased $110.6 million, or 38.6% to $176.0 million, compared to $286.6 million in fiscal 2024. Adjusted operating margin decreased 400 basis points to 6.1%, principally due to incremental tariff costs, investments in product mix and make, investments in new and remodeled stores, and increased provisions for performance-based compensation, partially offset by higher pricing and lower corporate expenses.

Net income in fiscal 2025 decreased $93.7 million, or 50.5%, to $91.8 million, compared to $185.5 million in fiscal 2024. Diluted earnings per share decreased 50.6% to $2.53, compared to $5.12 in fiscal 2024.

Adjusted net income (a non-GAAP measure) decreased $84.6 million, or 40.2%, to $126.1 million compared to $210.7 million in fiscal 2024. Adjusted earnings per diluted share (a non-GAAP measure) decreased 40.3% to $3.47, compared to $5.81 in fiscal 2024.

Net cash provided by operations in fiscal 2025 was $122.3 million compared to $298.8 million in fiscal 2024. The change in net cash from operating activities was primarily driven by lower earnings and higher inventory levels.

See the “Reconciliation of Adjusted Results to GAAP” section of this release for additional disclosures regarding non-GAAP measures.

Liquidity and Financial Position

The Company’s total liquidity at the end of fiscal 2025 was $1.2 billion, comprised of cash and cash equivalents of $487 million and $744 million in available borrowing capacity under the Company’s $750 million secured asset-based revolving credit facility (“ABL facility”). At the end of fiscal 2025, we had no outstanding borrowings under the ABL facility, exclusive of $6.3 million of outstanding letters of credit.

As previously announced in the fourth quarter of fiscal 2025, the Company completed the sale of $575 million aggregate principal amount of 7.375% senior unsecured notes due 2031. Proceeds from this offering were used to redeem $500 million principal amount of its 5.625% senior notes due in 2027.

Also in the fourth quarter of fiscal 2025, the Company, through its wholly-owned subsidiary The William Carter Company, entered into a five-year secured ABL facility of up to $750 million that matures in November 2030. The ABL facility replaced the Company’s existing $850 million secured cash flow–based revolving credit facility due April 2027.

Return of Capital

In the fourth quarter of fiscal 2025, the Company paid a cash dividend of $0.25 per common share totaling $9.1 million. In fiscal 2025, the Company paid cash dividends totaling $56.4 million. No shares were repurchased in fiscal 2025.

On February 19, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share for payment on March 27, 2026, to shareholders of record at the close of business on March 13, 2026.

Future declarations of quarterly dividends and the establishment of future record and payment dates will be at the discretion of the Company’s Board of Directors based on a number of factors, including business conditions, the Company’s future financial performance, investment priorities, and other considerations.

Business Outlook

We do not reconcile forward-looking adjusted operating income or adjusted diluted earnings per share to their most directly comparable GAAP measures because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations that are not within our control due to factors described above, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future operating income or diluted EPS, the most directly comparable GAAP metrics to adjusted operating income and adjusted diluted earnings per share, respectively.

The Company’s outlooks (and related assumptions) for fiscal year 2026 and the first quarter fiscal 2026 do not reflect the potential impacts of the recent U.S. Supreme Court decision regarding tariffs imposed under the International Emergency Economic Powers Act of 1977, as amended, as well as recently-announced global tariffs imposed under Section 122 of the Trade Act of 1974, as amended.

For fiscal year 2026 (a 52 week fiscal year), the Company projects approximately:

• Low single-digit to mid-single-digit percentage growth in net sales ($2.898 billion in fiscal 2025);
• Low single-digit to mid-single-digit growth in adjusted operating income ($176 million in fiscal 2025);
• Low double-digit to mid-teens decline in adjusted diluted earnings per share ($3.47 in fiscal 2025);
• Operating cash flow of $110 million to $120 million; and
• Capital expenditures of $55 million.

Our outlook for fiscal year 2026 assumes (comparisons vs. prior year unless otherwise noted):

• Earnings contributions weighted to the second half due to greater projected net impact of tariffs and investment spending in the first half relative to the second half;
• Lower gross margin rate, reflecting incremental tariff costs partially offset by higher pricing, other tariff mitigation actions, and productivity savings;
• Comparable SG&A expense, reflecting organizational restructuring and store fleet rationalization savings offset by investments in demand creation, information technology, and other cost inflation across the business;
• Net interest expense of approximately $40 million, reflecting higher principal amount and coupon rate associated with the refinancing of our senior notes in Q4 2025;
• Effective tax rate of approximately 22%; and
• Average number of shares outstanding of approximately 36 million.

For the first quarter of fiscal 2026, the Company projects approximately:

• Mid-single-digit percentage growth in net sales ($630 million in Q1 fiscal 2025);
• $12 million to $15 million in adjusted operating income ($35 million in Q1 fiscal 2025); and
• $0.02 to $0.08 in adjusted diluted earnings per share ($0.66 in Q1 fiscal 2025).

Our outlook for first quarter fiscal 2026 assumes (comparisons vs. prior year unless otherwise noted):

• An earlier Easter holiday;
• Lower gross margin rate, reflecting higher net incremental tariff costs, partially offset by a higher mix of U.S. Retail sales and lower sales of excess inventory;
• Low single-digit growth in SG&A, reflecting investments in demand creation, technology initiatives, and higher wage and rent expenses;
• Net interest expense of approximately $9 million, reflecting higher principal amount and coupon rate associated with the refinancing of our senior notes in Q4 2025;
• Effective tax rate of approximately 37%; and
• Average number of shares outstanding of approximately 36 million.

Conference Call

The Company will hold a conference call with investors to discuss fourth quarter and fiscal 2025 results and its business outlook on February 27, 2026, at 8:30 a.m. Eastern Standard Time. To listen to a live webcast and view the accompanying presentation materials, please visit ir.carters.com and select links for “News & Events” followed by “Events.” To access the call by phone, please preregister on https://register-conf.media-server.com/register/BI7f4fa80ca3c043a88d01a18358a65daa to receive your dial-in number and unique passcode.

A webcast replay will be available shortly after the conclusion of the call at ir.carters.com.

About Carter’s, Inc.

Carter’s, Inc. is North America’s largest and most-enduring apparel company exclusively for babies and young children. The Company’s core brands are Carter’s and OshKosh B’gosh, iconic and among the sector’s most trusted names. These brands are sold through more than 1,000 Company-operated stores in the United States, Canada, and Mexico, and online at www.carters.com, www.oshkosh.com, www.cartersoshkosh.ca, and www.carters.com.mx. Carter’s also is the largest supplier of baby and young children’s apparel to North America’s biggest retailers. The Company’s Child of Mine brand is available exclusively at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon.com. The Company’s emerging brands include Little Planet, crafted with organic fabrics and sustainable materials, Otter Avenue, a toddler-focused apparel brand, and Skip Hop, baby essentials from tubs to toys. Carter’s is headquartered in Atlanta, Georgia. Additional information may be found at www.carters.com.

Forward Looking Statements

Statements in this press release that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “are confident” and similar words are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this press release. These risks and uncertainties include, but are not limited to, those disclosed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; risks related to public health crises; risks related to the organizational restructuring plan, including, but not limited to, our ability to achieve the expected savings from the plan and to fully implement the plan; risks related to consumer tastes and preferences, as well as fashion trends; the failure to protect our intellectual property; the diminished value of our brands, potentially as a result of negative publicity or unsuccessful branding and marketing efforts; delays, product recalls, or loss of revenue due to a failure to meet our quality standards; risks related to uncertainty regarding the future of international trade agreements and the United States’ position on international trade, as well as significant political, trade, and regulatory developments and other circumstances beyond our control; the roll-back of incremental tariffs imposed under the International Emergency Economic Powers Act (the “incremental tariffs”) and any additional actions taken in response to their roll-back, including tariffs imposed pursuant to Section 122 of the Trade Act of 1974 (the “122 tariffs”); our ability to recover refunds of incremental tariff amounts or other tariff amounts paid; increased competition in the marketplace; financial difficulties for one or more of our major customers; identification of locations and negotiation of appropriate lease terms for our retail stores; distinct risks facing our eCommerce business; failure to forecast demand for our products and our failure to manage our inventory; increased margin pressures, including increased cost of materials and labor and our inability to successfully increase prices to offset these increased costs; continued inflationary pressures with respect to labor and raw materials and global supply chain constraints that have, and could continue, to affect freight, transit, and other costs; fluctuations in foreign currency exchange rates; unseasonable or extreme weather conditions; risks associated with corporate responsibility issues; our foreign sourcing arrangements; a relatively small number of vendors supply a significant amount of our products; disruptions in our supply chain, including increased transportation and freight costs; our ability to effectively source and manage inventory; problems with our Braselton, Georgia distribution facility; pending and threatened lawsuits; a breach of our information technology systems and the loss of personal data or a failure to implement new information technology systems successfully; unsuccessful expansion into international markets; failure to comply with various laws and regulations; failure to properly manage strategic initiatives; retention of key individuals; acquisition and integration of other brands and businesses; failure to achieve sales growth plans and profitability objectives to support the carrying value of our intangible assets; our continued ability to meet obligations related to our debt; changes in our tax obligations, including additional customs, duties or tariffs; our continued ability to declare and pay a dividend; volatility in the market price of our common stock; and the cost or effort required for our shareholders to bring certain claims or actions against us, as a result of our designation of the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings. Except for any ongoing obligations to disclose material information as required by federal securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The inclusion of any statement in this press release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP. We define EBITDA as net income before interest, income taxes and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items described in the footnotes (a) - (f) to the table above.

We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. These measures are used by the Company’s executive management to assess the Company’s performance.

The use of EBITDA and Adjusted EBITDA instead of net income or cash flows from operations has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA, Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. EBITDA and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us for working capital, debt service and other purposes.