Carter's, Inc. reported its financial results for the fiscal year ending January 3, 2026, revealing a consolidated net sales increase of $54.3 million, or 1.9%, reaching $2.90 billion. The growth was primarily driven by a $49 million increase in U.S. Retail sales, attributed to higher average unit retail (AUR) and unit volume. However, the U.S. Wholesale segment experienced a decline of $20.1 million, reflecting decreased sales of the Simple Joys brand and lower replenishment demand from department stores. International sales rose by $25.4 million, bolstered by growth in Canada and Mexico.
Despite the increase in sales, the company's gross profit decreased by $50.5 million, or 3.7%, to $1.31 billion, resulting in a gross margin decline of 260 basis points to 45.4%. This decline was primarily due to higher average unit costs driven by incremental tariff-related costs. Selling, general, and administrative (SG&A) expenses rose by $89.1 million, or 8.1%, to $1.19 billion, leading to a significant drop in operating income, which fell by 43.5% to $143.9 million. The company also reported a net income decrease of 50.5%, amounting to $91.8 million.
Strategically, Carter's initiated an organizational restructuring plan aimed at reducing office-based roles by approximately 15%, which is expected to generate annual savings of about $35 million starting in fiscal 2026. The company also plans to close around 150 low-margin stores by fiscal 2028, with 35 closures already executed in fiscal 2025. Additionally, the company is focusing on enhancing its product offerings and marketing strategies to better align with consumer preferences and stabilize business performance amid challenging market conditions.
As of January 3, 2026, Carter's operated 1,068 retail stores across North America and had approximately 15,400 employees globally. The company reported a significant increase in inventory levels, which rose by 8.4% to $544.6 million, largely due to incremental tariff-related costs. Looking ahead, Carter's aims to stabilize its business performance, recapture market share, and create long-term shareholder value through targeted investments and operational improvements. The company remains cautious about the impact of ongoing trade policies and inflationary pressures on its cost structure and profitability.
About CARTERS INC
Carter’s, Inc. is North America’s largest branded marketer of young children’s apparel, offering apparel and accessories for newborns to age 14 through its Carter’s and OshKosh B’gosh brands. It operates a multichannel business model including retail stores, eCommerce, and wholesale distribution across the U.S., Canada, Mexico, and international markets. The company emphasizes quality, value, brand strength, and broad distribution to serve families with young children.
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