Carter's Reports Q4 Earnings, Sees Sales and Profit Growth in 2026

Retailer cites tariffs and higher costs as pressures on profitability, plans store closures and productivity initiatives

Published on Feb. 28, 2026

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Carter's (NYSE:CRI) executives said the company ended fiscal 2025 with improving demand trends and its first year-over-year revenue increase since 2021, while acknowledging that profitability remained pressured by tariffs and higher product costs. The company expects sales and adjusted operating income growth in fiscal 2026, though adjusted EPS is projected to decline due to higher interest expense and taxes.

Why it matters

Carter's is a leading designer and marketer of infant and children's apparel in North America, with a diversified distribution platform including wholesale, e-commerce, and a network of retail stores. The company's performance and outlook provide insights into broader trends in the children's apparel industry, consumer demand, and the impact of macroeconomic factors like tariffs and inflation.

The details

In the fourth quarter, Carter's reported an 8% year-over-year increase in net sales to $925 million, including a 53rd week that added $37 million in revenue. However, adjusted gross margin declined 460 basis points to 43.2%, which the company attributed primarily to tariffs and higher product costs. Adjusted operating income was $89 million, or a 9.7% margin, down from 13.4% a year earlier. Adjusted EPS was $1.90, down from $2.39. The company cited momentum in its direct-to-consumer business, with U.S. retail comparable sales up 4.7% and e-commerce comps particularly strong. In the wholesale segment, sales grew 3% but profitability was pressured by tariffs. Internationally, sales grew 10% on strength in Canada and Mexico.

  • Carter's ended fiscal 2025 with its first year-over-year revenue increase since 2021.
  • The company reported fourth-quarter 2025 results on February 28, 2026.

The players

Carter's, Inc.

A leading designer and marketer of infant and young children's apparel in North America, headquartered in Atlanta, Georgia.

Doug Palladini

CEO and President of Carter's.

Richard Westenberger

CFO and COO of Carter's.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

The company expects sales and adjusted operating income growth in fiscal 2026, though adjusted EPS is projected to decline due to higher interest expense and taxes.

The takeaway

Carter's performance and outlook highlight the challenges of operating in the children's apparel industry, with tariffs, inflation, and other macroeconomic factors pressuring profitability despite improving demand trends. The company's focus on productivity initiatives, store optimization, and brand-building suggests it is adapting to the evolving retail landscape.