Carter’s, Inc. reported fourth‑quarter 2025 revenue of $925.5 million, an 8% year‑over‑year increase from $859.7 million in Q4 2024. The growth was driven by higher sales across its U.S. Retail, International, and U.S. Wholesale segments, while tariff costs and an extra week in the fiscal calendar added headwinds.
Adjusted earnings per share for the quarter were $1.90, beating consensus estimates that ranged from $1.56 to $1.72. The beat was largely due to disciplined cost management and a stronger mix of higher‑margin products, which helped offset the impact of tariff‑related cost increases.
Full‑year 2025 revenue totaled $2.898 billion, up 2% from the prior year, and adjusted EPS was $3.47, above the consensus range of $3.20 to $3.80. The modest revenue growth was accompanied by margin compression, signaling ongoing pressure on profitability.
Operating margin fell to 9.7% in Q4 2025 from 13.4% in Q4 2024, and the full‑year margin dropped to 5.0% from 9.0% in 2024. The compression was driven by incremental tariff costs, investments in product mix and make, higher performance‑based compensation, and the effect of an additional week in the fiscal calendar.
Management projected a “low double‑digit to mid‑teens decline” in adjusted diluted EPS for fiscal 2026, reflecting concerns over continued tariff impact and cost inflation. The cautious outlook dampened enthusiasm despite the earnings beat.
Investor sentiment was negative, with analysts highlighting margin compression and guidance concerns. "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 CEO Douglas C. Palladini. "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," added Palladini.
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