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

Carter’s (NYSE:CRI) announced its earnings results on Friday. The textile maker reported $1.03 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.85 by $0.18, FiscalAI reports. The firm had revenue of $752.46 million for the quarter, compared to analyst estimates of $747.34 million. Carter’s had a net margin of 6.55% and a return on equity of 12.78%. Carter’s’s revenue was down .7% compared to the same quarter last year. During the same quarter last year, the business earned $0.74 earnings per share.

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 Trading Down 5.5%

Shares of CRI traded down $1.84 during mid-day trading on Friday, reaching $31.54. The company had a trading volume of 1,850,560 shares, compared to its average volume of 1,204,828. The stock has a market cap of $1.16 billion, a price-to-earnings ratio of 5.91, a price-to-earnings-growth ratio of 3.50 and a beta of 0.84. The firm has a fifty day simple moving average of $32.08 and a 200-day simple moving average of $36.30. Carter’s has a fifty-two week low of $27.86 and a fifty-two week high of $44.44. The company has a current ratio of 2.47, a quick ratio of 1.50 and a debt-to-equity ratio of 0.55.

Carter’s Dividend Announcement

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

Carter’s News Roundup

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 Analyst Weigh In

A number of research analysts have weighed in on CRI shares. Needham & Company LLC reissued a “hold” rating on shares of Carter’s in a research note on Tuesday, October 20th. Wall Street Zen cut Carter’s from a “strong-buy” rating to a “buy” rating in a report on Saturday, September 26th. BMO Capital Markets began coverage on Carter’s in a research report on Tuesday, September 8th. They issued an “outperform” rating and a $40.00 price objective for the company. UBS Group dropped their target price on Carter’s from $41.00 to $38.00 and set a “neutral” rating for the company in a research note on Monday, October 19th. Finally, Zacks Research downgraded Carter’s from a “strong-buy” rating to a “hold” rating in a research report on Tuesday, October 20th. One analyst has rated the stock with a Strong Buy rating, three have given a Buy rating and five have issued a Hold rating to the company’s stock. According to data from MarketBeat, the company currently has a consensus rating of “Moderate Buy” and a consensus price target of $40.86.

Carter’s Company Profile

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.