Carter's (CRI) investor relations material

Executive summary

• Q4 net sales rose 8% year-over-year to $925 million, with all business segments growing and momentum in product and demand initiatives; the extra week in fiscal 2025 contributed $37 million to net sales.

• Fiscal 2025 net sales increased 2% to $2.9 billion, driven by U.S. Retail and International growth, partially offset by U.S. Wholesale decline.

• Operating income and margins declined due to higher tariffs, increased product costs, investments, and restructuring, despite higher pricing and productivity initiatives.

• Leadership transition, significant transformation initiatives, and organizational restructuring were executed during the year.

• New consumer acquisition, especially among Gen Z and millennial families, is driving higher lifetime value and increased sales of higher-priced products.

Financial highlights

• Q4 adjusted operating income was $89 million (margin nearly 10%), and adjusted EPS was $1.90, down from $2.39 last year; Q4 adjusted EBITDA was $105 million, down 18% year-over-year.

• FY25 adjusted operating margin was 6.1% (down from 10.1%); adjusted EBITDA was $232 million, down 32% year-over-year.

• Q4 gross margin was 43.2%, down 460 basis points year-over-year, mainly due to tariffs and higher product costs.

• Operating cash flow for FY25 was $122 million, down from $299 million in FY24; year-end liquidity over $1 billion, with $500 million cash and strong credit facility access.

• FY25 dividend payments totaled $56 million; share repurchases $51 million.

Outlook and guidance

• FY26 net sales expected to grow low to mid-single digits, with growth in all business segments; adjusted operating income also projected to grow low to mid-single digits.

• Adjusted EPS expected to be down low double digits to mid-teens due to higher interest and tax rates; FY26 operating cash flow projected at $110–$120 million, capex at $55 million.

• Q1 2026 net sales expected to rise mid-single digits; adjusted EPS guidance of $0.02–$0.08, down sharply from $0.66 in Q1 2025.

• Guidance does not reflect potential impacts from recent U.S. Supreme Court and global tariff developments.