Carter's, Inc. Reports 5.2% Increase in Net Sales to $615.5 Million for Fiscal Quarter Ending July 4, 2026

Carter's, Inc. reported significant financial improvements in its latest quarterly results, with net sales reaching $615.5 million for the fiscal quarter ending July 4, 2026, a 5.2% increase from $585.3 million in the same quarter last year. The company's gross profit surged by 46.4% to $412.6 million, driven largely by $128 million in tariff refunds related to the International Emergency Economic Powers Act (IEEPA). This resulted in a gross margin of 67.0%, up from 48.1% in the prior year. Operating income also saw a dramatic rise, increasing to $139.8 million from just $4.0 million a year earlier, reflecting a substantial operating margin improvement to 22.7%.

In comparison to the previous fiscal period, Carter's demonstrated a marked recovery in profitability. The company reported net income of $105.0 million, a significant increase from $446,000 in the same quarter last year. Basic and diluted net income per share rose to $2.87, compared to $0.01 in the prior year. The effective tax rate for the quarter was 23.2%, a notable decrease from 73.8% in the previous year, primarily due to higher pre-tax income and the absence of discrete tax items that had impacted the prior year's rate.

Strategically, Carter's has undergone leadership changes, appointing Sharon Price John as CEO effective June 15, 2026, following the departure of Douglas C. Palladini. The company also opened four new stores while closing 29 in the U.S., reflecting a shift in its retail strategy. The company continues to focus on its core brands, including Carter's and OshKosh B'gosh, while expanding its international presence, particularly in Canada and Mexico, where sales have shown growth.

Operationally, Carter's reported a total of 1,042 company-operated retail stores in North America and approximately 19,500 wholesale locations. The U.S. Retail segment saw a 1.7% increase in net sales to $304.7 million, while the U.S. Wholesale segment experienced an 11.7% increase to $215.6 million. The International segment also grew by 2.7% to $95.3 million. The company noted that its average unit retail price increased, contributing to the overall sales growth, although unit volume in the International segment declined slightly.

Looking ahead, Carter's remains optimistic about its financial trajectory, bolstered by the recent tariff refunds and a strong liquidity position, with $653.6 million in cash and cash equivalents as of July 4, 2026. The company plans to continue investing in its retail and eCommerce operations while navigating the complexities of the current trade environment. However, it acknowledges potential risks related to geopolitical tensions and changing consumer spending patterns that could impact future performance.