Carter's Reports 3.4% Sales Decline and 20.2% Drop in Net Income for Fiscal Year 2024

Carter's, Inc. reported a consolidated net sales decrease of $101.5 million, or 3.4%, for the fiscal year ending December 28, 2024, totaling $2.84 billion. The decline was primarily attributed to reduced traffic and demand in its U.S. Retail segment, which saw a 5.6% drop in sales, alongside decreased sales to wholesale customers and in international markets. The company's gross profit also fell by $30.8 million, or 2.2%, to $1.37 billion, although the gross margin improved by 60 basis points to 48.0%, driven by lower average costs per unit sold and a favorable customer mix.

In terms of profitability, Carter's reported a significant decline in operating income, which decreased by $68.7 million, or 21.2%, to $254.7 million. This decline was influenced by a $30 million non-cash impairment charge related to the OshKosh tradename, reflecting lower forecasted sales and profitability. The company's net income also fell by 20.2% to $185.5 million, with diluted earnings per share decreasing to $5.12 from $6.24 in the previous fiscal year.

Strategically, Carter's has focused on enhancing its product offerings and marketing capabilities. The company invested approximately $65 million in the second half of fiscal 2024 to improve its direct-to-consumer product offerings and drive customer acquisition. This included $55 million allocated to pricing strategies aimed at enhancing competitiveness and increasing clearance velocity on prior season goods. The company also opened 41 new stores while closing 29 in the U.S., indicating a continued commitment to optimizing its retail footprint.

Operationally, Carter's maintained a strong market position, holding approximately 10% market share in the U.S. children's apparel market as of December 2024. The company operated 1,057 retail stores in North America and had a significant presence in the wholesale market with approximately 19,500 locations. However, the company faced challenges, including a decrease in eCommerce sales and increased competition in the retail sector, which may impact future performance.

Looking ahead, Carter's anticipates that its growth will be driven by improvements in product assortment, enhanced marketing efforts, and leveraging its multichannel presence. The company plans to continue investing in its retail and wholesale segments, particularly focusing on exclusive brands and international expansion, while navigating ongoing macroeconomic challenges that could affect consumer demand.