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what it is
Carter’s sells baby and kids clothes through its own stores, big-box chains, and international partners.
how it gets paid
Last year Carter's made $2.9B in revenue. U.S. retail was the main engine at $1.44B, or 50% of sales.
why margins are tight
Revenue grew only 1.9% last year. Tariffs cut gross profit by about $20 million— a cost shock, not a growth engine.
what just happened
Latest quarter reported EPS was about $0.75; adjusted comparable EPS in commentary was about $0.74 vs ~$1.64 a year earlier— a big vs. prior year squeeze, not a clean “beat” story.
At a glance
B balance sheet — gets the job done, barely
70/100 earnings predictability — reasonably predictable
11.1x trailing p/e — the market's not buying it — or you found a deal
3.0% dividend yield — cash in your pocket every quarter
9.0% return on capital — nothing to write home about
xvary composite: 53/100 — below average
What they do
Carter’s sells baby and kids clothes through its own stores, big-box chains, and international partners.
You buy Carter’s because kids outgrow clothes on schedule, not because the economy sent an invitation. The company reaches you through 804 U.S. stores, plus Walmart and Target, so it shows up where parents already shop. Distribution → lots of places to buy → so what: Carter’s captured $2.9 billion of annual sales even with the business under pressure.
How they make money
$2.9B
annual revenue · their business grew +1.9% last year
U.S. retail
$1.44B
U.S. wholesale
$1.04B
International
$0.41B
The products that matter
designs and sells children's apparel
children's apparel
$2.9B revenue · entire business
it's the whole company: $2.9B in annual revenue, up 1.9% last year, with a thin net margin (~mid–high single digits on this page). When one product family is 100% of the story, execution is the story.
100% of revenue
Key numbers
11.1x
trailing p/e
You are paying 11.1 times trailing earnings for a company with falling profits. Cheap is doing a lot of work here.
3.0%
dividend yield
You get paid to wait, but only if earnings stabilize enough to keep supporting the dividend.
7.5%
operating margin
Operating margin → profit after running the business → so what: Carter’s does not have much cushion when tariffs bite.
$499M
long-term debt
Debt is 29% of capital, which is fine in a calm year and less fun when EPS gets cut in half.
Financial health
B
strength
- balance sheet grade B — adequate — nothing special
- risk rank 3 — safer than 50% of stocks
- price stability 50 / 100
- long-term debt $499M (29% of capital)
- net profit margin 4.7% — keeps 5 cents of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CRI 3 years ago → it's now worth $4,860.
The index would have given you $14,770.
source: institutional data · total return
What just happened
mixed vs. expectations
Carter’s reported quarterly EPS of $0.75, roughly in line with the ~$0.74 adjusted figure in the summary— far below the year-ago ~$1.64 adjusted comparable.
Annual revenue was $2.9 billion, up 1.9%, while gross margin was 46.4%. The bigger story is that tariffs cut gross profit by $20 million and adjusted EPS in the comparable quarter fell to $0.74 from $1.64 a year earlier.
~$870M
quarter revenue
$0.75
eps
46.4%
gross margin
the number that mattered
The $20 million tariff hit mattered most because it shows Carter’s margin problem is coming from costs, not just weak demand.
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carter’s business remains under pressure.the september quarter showed that while the company is holding revenues steady, profitability is being squeezed by import costs and sluggish consumer activity.
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sales were essentially flat, but adjusted earnings per share fell to $0.74 from $1.64 a year before.
-
in this case, the main driver was tariffs, which reduced gross profit by $20 million, or roughly 2% on the margin.
-
carter’s has been able to raise prices, particularly in its own retail channel, but not enough to fully offset the higher landed product costs.to wit, operating costs also rose substantially, as the company spent more on stores, marketing and compensation.
-
by segment, u.s.
source: company earnings report, 2026
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What could go wrong
the #1 risk is promotions and landed product costs crushing already-thin apparel margins.
med
promotional intensity in baby and kids apparel
parents still need to buy for fast-growing kids, but they do not need to buy at full price. if carter's has to discount more to keep units moving, a thin-margin model gets thinner fast.
with only a 3.2% net margin on $2.9B of revenue, even modest markdown pressure can do visible damage to earnings.
med
higher input, freight, and sourcing costs
management has already pointed to higher landed product costs. that matters more here than at a higher-margin brand because there is very little profit cushion to absorb it.
small cost increases hit a business keeping only about 3 cents of every sales dollar. the math is not forgiving.
med
single-category concentration
the current snapshot shows one revenue bucket for the whole company. that means no higher-margin division is around to offset weakness if the core apparel engine slows.
100% of the visible $2.9B revenue base is tied to the same category, so one operational stumble travels through the whole income statement.
the combined risk picture is simple: a $2.9B business earning a 3.2% net margin does not need a major shock to miss expectations.
source: institutional data · regulatory filings · risk analysis
Pay attention to
risk
whether flat sales produce another earnings miss
the next report matters less for revenue than for profit. if quarterly sales stay near the current $0.8B level but EPS still cracks, the low multiple starts looking deserved.
metric
net margin versus the current 3.2%
this is the cleanest operating signal on the page. if margin does not improve, revenue growth of 1.9% will not bail you out.
calendar
the next quarterly print
q4 2026 estimates sit at $1.00 EPS on $0.8B revenue. the street already expects weakness. management still has to show the slide is slowing.
trend
institutional flow after two selling quarters
131 buyers versus 156 sellers is caution, not panic. if that flips while margins stabilize, sentiment may improve before the rerating shows up in the stock.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a strong near-term edge either way.
risk profile
average
stability score 3 — typical stock risk, which means the business is not giving you a safety premium.
chart momentum
below average
technical score 4 — the tape is still skeptical, which fits a stock badly trailing the market over the last three years.
earnings predictability
70 / 100
the earnings line is readable enough to model, but not clean enough to make surprises rare.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 131 buyers vs. 156 sellers in 3q2025. total institutional holdings: 40.2M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$26
$68
$33
current price
$47
target midpoint · +41% from current · 3-5yr high: $60 (+80% · 19% ann'l return)
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