CARTERS INC Reports Material Event
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Form Type
8-K
8-K Event Classification
4 items: 2.02, 5.02, 8.01, 9.01
4 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers
Governance
Key personnel changes including departures, elections, or appointments of directors and executive officers.
Item 8.01
Other Events
Other
Voluntary disclosure of events the company deems important to shareholders but not covered by other items.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 26, 2026
| (Exact name of Registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices, including zip code)
(678 ) 791-1000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ((§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ((§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 30, 2026, Carter’s, Inc. (the "Company") issued a press release announcing its financial results for its fiscal quarter ended October 3, 2026. A copy of that press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in the Current Report on Form 8-K is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 26, 2026, Richard F. Westenberger gave notice of his decision to step down as Chief Operating Officer, which will be effective upon the Company's appointment of a new Chief Operating Officer. Mr. Westenberger will continue to serve as the Company's Chief Financial Officer.
Item 8.01 Other Events.
On October 30, 2026, the Company issued a press release announcing the evolution of its leadership structure. A copy of the Company's press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | ||||
| 99.1 | Press release dated October 30, 2026 | ||||
| 99.2 | Leadership press release dated October 30, 2026 | ||||
| 104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL | ||||
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, Carter’s, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| October 30, 2026 | CARTER’S, INC. | |||||||
| By: | /s/ Antonio D. Robinson | |||||||
| Name: | Antonio D. Robinson | |||||||
| Title: | Chief Administrative & Compliance Officer, Corporate Secretary | |||||||
EXHIBIT 99.1
 | ||||||||||||||
| Contact: | |||||
| T.C. Robillard | |||||
| Vice President, Investor Relations | |||||
| tc.robillard@carters.com | |||||
Carter’s, Inc. Reports Third Quarter Fiscal 2026 Results
•Net sales $752 million vs. $758 million in Q3 2025, decrease of 0.7%
•U.S. Retail comparable sales increased 0.4%
•Operating income $56 million vs. $29 million in Q3 2025
•Adjusted operating income $57 million vs. $39 million in Q3 2025, growth of 45%
•Diluted EPS $1.00 vs. $0.32 in Q3 2025
•Adjusted diluted EPS $1.03 vs. $0.74 in Q3 2025, growth of 39%
•Returned $27 million to shareholders through dividends in the first three quarters of fiscal 2026
•Announced strategic evolution of leadership structure; see separate press release issued today
•Updates full year 2026 outlook
ATLANTA, October 30, 2026 — Carter’s, Inc. (NYSE:CRI), North America’s largest and most-enduring apparel company exclusively for babies and young children, today reported its third quarter fiscal 2026 results.
“I am pleased with the significant progress of the company’s profitability improvement initiatives in the third quarter, especially in light of delivering slight growth in U.S. Retail comparative sales and overall net sales that were slightly above our outlook amid an uneven macroeconomic environment. As the quarter unfolded, the U.S. Retail team quickly and effectively worked to adjust our marketing and promotional efforts in response to the challenges to help deliver these results. Our solid third quarter performance is currently expected to contribute to another year of growth in net sales, U.S. Retail comparable sales, and operating profit for fiscal 2026, even as we moderate our revenue outlook to reflect the continued pressure on our consumers from the ongoing economic and geopolitical uncertainty,” said Sharon Price John, Chief Executive Officer & President. “Separately, over the past several months in my new role, we have continued to define a strategic framework based on our tenets of keeping the consumer at the center of all that we do, leveraging the power of our market-leading brands, and utilizing our meaningful data and insights to drive innovation and decision making while staying focused on delivering profitable sales. Indicative of our intent to take significant and rapid steps to improve the business, for the first time in 25 years, during the quarter we successfully launched a comprehensive initiative for our
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flagship Carter’s brand, including a reimagined logo and brand promise of “let every child's light shine”, with the goal of increasing appeal and relevance to today’s generation of parents. Separately, we announced the evolution of our leadership structure designed to increase synergy, improve processes, and better align with our go-forward strategy. While early, I’m encouraged by our progress and believe we are well positioned to continue to unlock this iconic company's potential to deliver meaningful shareholder returns over time,” Ms. John concluded.
Adjustments to Reported GAAP Results
In addition to the results presented in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements, as presented below. The Company believes these non-GAAP financial measurements provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company’s core performance. These measures are presented for informational purposes only. See “Reconciliation of Adjusted Results to GAAP” section of this release for additional disclosures and reconciliations regarding these non-GAAP financial measures.
Third quarter fiscal 2026 results included expenses associated with intellectual property litigation costs. Results for the first three quarters of fiscal 2026 included a benefit related to the receipt of a refund of previously paid import duties and related interest as well as expenses associated with leadership transition and intellectual property litigation costs. Third quarter and the first three quarters of fiscal 2025 results included expenses related to organizational restructuring initiatives, operating model improvement costs, leadership transition costs, a non-cash charge for settlement of the OshKosh B’Gosh Pension Plan, and a tax charge associated with the termination of the Company’s deferred compensation plan.
| Third Fiscal Quarter | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except earnings per share) | Operating Income | % Net Sales | Net Income | Diluted EPS | Operating Income | % Net Sales | Net Income | Diluted EPS | ||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 55.8 | 7.4 | % | $ | 36.6 | $ | 1.00 | $ | 29.1 | 3.8 | % | $ | 11.6 | $ | 0.32 | ||||||||||||||||||||||||||||||||||
| IP litigation | 1.2 | 0.9 | 0.02 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Organizational restructuring | — | — | — | 6.1 | 4.6 | 0.13 | ||||||||||||||||||||||||||||||||||||||||||||
| Operating model improvement costs | — | — | — | 3.7 | 2.8 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||
| Leadership transition costs | — | — | — | 0.5 | 0.4 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||
| Pension plan settlement | — | — | — | — | 6.7 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation plan termination | — | — | — | — | 0.8 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||
| As adjusted | $ | 56.9 | 7.6 | % | $ | 37.5 | $ | 1.03 | $ | 39.4 | 5.2 | % | $ | 26.8 | $ | 0.74 | ||||||||||||||||||||||||||||||||||
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| First Three Quarters | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except earnings per share) | Operating Income | % Net Sales | Net Income | Diluted EPS | Operating Income | % Net Sales | Net Income | Diluted EPS | ||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 224.0 | 10.9 | % | $ | 155.9 | $ | 4.27 | $ | 59.2 | 3.0 | % | $ | 27.6 | $ | 0.75 | ||||||||||||||||||||||||||||||||||
Tariff refund recovery | (127.7) | (100.1) | (2.74) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Leadership transition costs | 4.7 | 3.6 | 0.10 | 7.7 | 7.0 | 0.19 | ||||||||||||||||||||||||||||||||||||||||||||
| IP litigation | 2.4 | 1.8 | 0.05 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Organizational restructuring | — | — | — | 6.1 | 4.6 | 0.13 | ||||||||||||||||||||||||||||||||||||||||||||
| Operating model improvement costs | — | — | — | 13.5 | 10.2 | 0.29 | ||||||||||||||||||||||||||||||||||||||||||||
| Pension plan settlement | — | — | — | — | 6.7 | 0.19 | ||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation plan termination | — | — | — | — | 0.8 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||
| As adjusted | $ | 103.5 | 5.0 | % | $ | 61.2 | $ | 1.68 | $ | 86.5 | 4.4 | % | $ | 56.9 | $ | 1.57 | ||||||||||||||||||||||||||||||||||
Note: Results may not be additive due to rounding.
Consolidated Results
Third Quarter Fiscal 2026 compared to Third Quarter Fiscal 2025
Net sales decreased $5.4 million, or 0.7%, to $752.5 million, compared to $757.8 million in the third quarter of fiscal 2025. Net sales increased 4.5% in the International segment, were comparable to prior year in U.S. Retail, and decreased 3.8% in U.S. Wholesale. U.S. Retail comparable net sales increased 0.4%. Changes in foreign currency exchange rates used for translation had a favorable effect on consolidated net sales of approximately $0.9 million, or 0.1% in the third quarter of fiscal 2026, as compared to the third quarter of fiscal 2025.
Operating income increased $26.7 million, or 91.7%, to $55.8 million, compared to $29.1 million in the third quarter of fiscal 2025, reflecting higher realized pricing, benefits from productivity initiatives, and the non-recurrence of organizational restructuring and operating model improvement costs in the prior year period. These benefits were partially offset by increased marketing investments as well as general cost inflation. Operating margin increased to 7.4%, compared to 3.8% in the prior year.
Adjusted operating income (a non-GAAP measure) increased $17.6 million, or 44.6% to $56.9 million, compared to $39.4 million in the third quarter of fiscal 2025, principally due to higher realized pricing and benefits from productivity initiatives, which more than offset increased marketing investments and general cost inflation. Adjusted operating margin increased to 7.6%, compared to 5.2% in the prior year period.
Net income was $36.6 million, or $1.00 per diluted share, compared to $11.6 million, or $0.32 per diluted share, in the third quarter of fiscal 2025.
Adjusted net income (a non-GAAP measure) was $37.5 million, compared to $26.8 million in the third quarter of fiscal 2025. Adjusted earnings per diluted share (a non-GAAP measure) was $1.03, compared to $0.74 in the prior-year quarter.
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First Three Quarters of Fiscal 2026 compared to First Three Quarters of Fiscal 2025
Net sales increased $76.1 million, or 3.9%, to $2.05 billion, compared to $1.97 billion in the first three quarters of fiscal 2025, reflecting growth in each segment. Net sales in the International, U.S. Retail, and U.S. Wholesale segments grew 6.8%, 4.5%, and 1.8%, respectively. U.S. Retail comparable net sales increased 5.0%. Changes in foreign currency exchange rates used for translation had a favorable effect on consolidated net sales of approximately $8.9 million, or 0.5% in the first three quarters of fiscal 2026, as compared to the first three quarters of fiscal 2025.
Operating income increased $164.8 million to $224.0 million, compared to $59.2 million in the first three quarters of fiscal 2025, reflecting a recovery of previously paid import duties, benefits from productivity initiatives, and the non-recurrence of organizational restructuring and operating model improvement costs in the prior year period. These benefits were partially offset by incremental tariff costs, increased marketing investments, and general cost inflation. Operating margin increased to 10.9%, compared to 3.0% in the prior year period.
Adjusted operating income (a non-GAAP measure) increased $17.0 million, or 19.6% to $103.5 million, compared to $86.5 million in the first three quarters of fiscal 2025, principally due to higher net sales and the benefits from productivity initiatives, which more than offset incremental tariff costs, increased marketing investments, and general cost inflation. Adjusted operating margin increased to 5.0%, compared to 4.4% in the prior year period.
Net income was $155.9 million, or $4.27 per diluted share, compared to $27.6 million, or $0.75 per diluted share, in the first three quarters of fiscal 2025.
Adjusted net income (a non-GAAP measure) was $61.2 million, compared to $56.9 million in the first three quarters of fiscal 2025. Adjusted earnings per diluted share (a non-GAAP measure) was $1.68, compared to adjusted earnings per diluted share of $1.57 in the first three quarters of fiscal 2025.
Net cash provided by operations in the first three quarters of fiscal 2026 was $101.8 million, compared to net cash used in operations of $136.3 million in the first three quarters of fiscal 2025. The improved operating cash flow was primarily driven by the receipt of a refund of previously paid import duties and improved working capital.
See “Reconciliation of Adjusted Results to GAAP” sections of this release for additional disclosures regarding non-GAAP measures.
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Return of Capital
In the third quarter of fiscal 2026, the Company paid a cash dividend of $0.25 per common share totaling $9.1 million. In the first three quarters of fiscal 2026, the Company paid cash dividends totaling $27.5 million. No shares were repurchased in the first three quarters of fiscal 2026.
Future declarations of quarterly dividends and the establishment of future record and payment dates will be at the discretion of the Company’s Board of Directors based on a number of factors, including business conditions, the Company’s future financial performance, investment priorities, and other considerations.
2026 Business Outlook
The Company does not reconcile forward-looking adjusted operating income or adjusted diluted earnings per share to its most directly comparable GAAP measures because it cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations that are not within its control due to factors described above, or others that may arise, without unreasonable effort. For these reasons, the Company is unable to assess the probable significance of the unavailable information, which could materially impact the amount of future operating income or diluted EPS, the most directly comparable GAAP metrics to adjusted operating income and adjusted diluted earnings per share, respectively.
The Company’s fiscal year 2025 and fourth quarter of 2025 included a 53rd week, which contributed approximately $37 million in consolidated net sales.
The Company’s outlook (and related assumptions) for the fourth quarter 2026 includes an anticipated non-GAAP adjustment for third-party legal costs related to IP litigation of approximately $1 million to $2 million. The Company’s full-year fiscal 2026 outlook (and related assumptions) includes anticipated non-GAAP adjustments for leadership transition costs and third-party legal costs related to IP litigation of approximately $8 million to $9 million and a recovery of previously paid import duties and related interest of $132 million.
For fiscal year 2026 (a 52 week fiscal year), the Company projects approximately:
•$2.91 billion to $2.93 billion in net sales ($2.898 billion in fiscal 2025, a 53 week fiscal year);
•$178 million to $187 million in adjusted operating income, reflecting low-single digit to mid-single digit percentage growth ($176 million in fiscal 2025);
•$3.05 to $3.23 in adjusted diluted earnings per share, reflecting a high-single digit to low-double digit percentage decline ($3.47 in fiscal 2025);
•Operating cash flow of $240 million to $250 million; and
•Capital expenditures of $50 million.
The Company’s outlook for fiscal year 2026 assumes (comparisons vs. prior year unless otherwise noted):
•Slightly lower gross margin rate;
•Comparable SG&A expense;
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•Net interest expense of approximately $32 million;
•Effective tax rate of approximately 23%; and
•Average number of shares outstanding of approximately 36 million.
For the fourth quarter of fiscal 2026 (a 13 week fiscal quarter), the Company projects approximately:
•$860 million to $880 million in net sales ($925 million in Q4 fiscal 2025, a 14 week fiscal quarter);
•$74 million to $83 million in adjusted operating income ($89 million in Q4 fiscal 2025); and
•$1.37 to $1.55 in adjusted diluted earnings per share ($1.90 in Q4 fiscal 2025).
The Company’s outlook for fourth quarter fiscal 2026 assumes (comparisons vs. prior year unless otherwise noted):
•Higher gross margin rate;
•Comparable to low-single digit decrease in SG&A expense;
•Net interest expense of approximately $10 million;
•Average number of shares outstanding of approximately 36 million.
Conference Call
The Company will hold a conference call with investors to discuss third quarter fiscal 2026 results and its business outlook on October 30, 2026, at 8:30 a.m. Eastern Time (ET). To listen to a live webcast and view the accompanying presentation materials, please visit ir.carters.com and select links for “News & Events” followed by “Events.” To access the call by phone, please preregister on https://register-conf.media-server.com/register/BI7875ac900b784e79b5a34e479a9e48d7 to receive your dial-in number and unique passcode. A presentation of third quarter results will be available in the “Events” section at ir.carters.com at approximately 7:00 a.m. ET. Important information may be disseminated initially or exclusively via the website; investors should consult the site to access this information.
A webcast replay will be available shortly after the conclusion of the call at ir.carters.com.
About Carter’s, Inc.
Carter’s, Inc. is North America’s largest and most-enduring apparel company exclusively for babies and young children. The Company’s core brands are Carter’s and OshKosh B’gosh, iconic and among the sector’s most trusted names. These brands are sold through more than 1,000 Company-operated stores in the United States, Canada, and Mexico, and online at www.carters.com, www.oshkosh.com, www.cartersoshkosh.ca, and www.carters.com.mx. Carter’s also is the largest supplier of baby and young children’s apparel to North America’s biggest retailers. The Company’s Child of Mine brand is available exclusively at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon.com. The Company’s emerging brands include Little Planet, crafted with organic fabrics and sustainable materials, Otter Avenue, a toddler-focused apparel brand, and Skip Hop, baby essentials from tubs to toys. Carter’s is headquartered in Atlanta, Georgia. Additional information may be found at www.carters.com.
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Forward Looking Statements
Statements in this press release that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “opportunities”, “are confident” and similar words are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this press release. These risks and uncertainties include, but are not limited to, those disclosed in Part II, Item 1A. “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 3, 2026 and Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; risks related to public health crises; risks related to the organizational restructuring plan, including, but not limited to, our ability to achieve the expected savings from the plan and to fully implement the plan; risks related to consumer tastes and preferences, as well as fashion trends; the failure to protect our intellectual property; the diminished value of our brands, potentially as a result of negative publicity or unsuccessful branding and marketing efforts; delays, product recalls, or loss of revenue due to a failure to meet our quality standards; risks related to uncertainty regarding the future of international trade agreements and the United States’ position on international trade, as well as significant political, trade, and regulatory developments and other circumstances beyond our control; the roll-back of incremental tariffs imposed under the International Emergency Economic Powers Act (the “incremental tariffs”) and any additional actions taken in response to their roll-back, including, but not limited to, tariffs imposed pursuant to Section 122 of the Trade Act of 1974 and tariffs imposed under Section 301 of the Trade Act of 1974; our ability to recover refunds of incremental tariff amounts or other tariff amounts paid; increased competition in the marketplace; ongoing political and economic conflicts that could impact our global and domestic operations, including, but not limited to, the conflict between the United States, Israel, and Iran; financial difficulties for one or more of our major customers; identification of locations and negotiation of appropriate lease terms for our retail stores; distinct risks facing our eCommerce business; failure to forecast demand for our products and our failure to manage our inventory; increased margin pressures, including increased cost of materials and labor and our inability to successfully increase prices to offset these increased costs; continued inflationary pressures with respect to labor and raw materials and global supply chain constraints that have, and could continue, to affect freight, transit, and other costs; fluctuations in foreign currency exchange rates; unseasonable or extreme weather conditions; risks associated with corporate responsibility issues; our foreign sourcing arrangements; a relatively small number of vendors supply a significant amount of our products; disruptions in our supply chain, including increased transportation and freight costs; our ability to effectively source and manage inventory; problems with our Braselton, Georgia distribution facility; pending and threatened lawsuits; a breach of our information technology systems and the loss of personal data or a failure to implement new information technology systems successfully; unsuccessful expansion into international markets; failure to
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comply with various laws and regulations; failure to properly manage strategic initiatives; retention of key individuals; acquisition and integration of other brands and businesses; failure to achieve sales growth plans and profitability objectives to support the carrying value of our intangible assets; our continued ability to meet obligations related to our debt; changes in our tax obligations, including additional customs, duties or tariffs; our continued ability to declare and pay a dividend; the timing of, and our ability to conduct, share repurchases; volatility in the market price of our common stock; and the cost or effort required for our shareholders to bring certain claims or actions against us, as a result of our designation of the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings. Except for any ongoing obligations to disclose material information as required by federal securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The inclusion of any statement in this press release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
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CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | ||||||||||||||||||||
| Net sales | $ | 752,456 | $ | 757,836 | $ | 2,049,060 | $ | 1,972,975 | |||||||||||||||
| Cost of goods sold | 397,690 | 416,208 | 987,822 | 1,058,497 | |||||||||||||||||||
| Gross profit | 354,766 | 341,628 | 1,061,238 | 914,478 | |||||||||||||||||||
| Royalty income, net | 5,176 | 5,428 | 13,158 | 14,008 | |||||||||||||||||||
| Selling, general, and administrative expenses | 304,172 | 317,963 | 850,357 | 869,246 | |||||||||||||||||||
| Operating income | 55,770 | 29,093 | 224,039 | 59,240 | |||||||||||||||||||
| Interest expense | 11,826 | 7,173 | 34,895 | 22,849 | |||||||||||||||||||
| Interest income | (4,797) | (2,573) | (16,536) | (10,007) | |||||||||||||||||||
| Other expense (income), net | 329 | 882 | 766 | (265) | |||||||||||||||||||
| Pension plan settlement | — | 8,777 | — | 8,777 | |||||||||||||||||||
| Income before income taxes | 48,412 | 14,834 | 204,914 | 37,886 | |||||||||||||||||||
| Income tax provision | 11,801 | 3,241 | 49,009 | 10,308 | |||||||||||||||||||
| Net income | $ | 36,611 | $ | 11,593 | $ | 155,905 | $ | 27,578 | |||||||||||||||
| Basic net income per common share | $ | 1.00 | $ | 0.32 | $ | 4.27 | $ | 0.75 | |||||||||||||||
| Diluted net income per common share | $ | 1.00 | $ | 0.32 | $ | 4.27 | $ | 0.75 | |||||||||||||||
| Dividend declared and paid per common share | $ | 0.25 | $ | 0.25 | $ | 0.75 | $ | 1.30 | |||||||||||||||
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CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(dollars in thousands)
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| October 3, 2026 | % of Total Net Sales | September 27, 2025 | % of Total Net Sales | October 3, 2026 | % of Total Net Sales | September 27, 2025 | % of Total Net Sales | |||||||||||||||||||||||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Retail | $ | 362,624 | 48.2 | % | $ | 362,307 | 47.8 | % | $ | 999,549 | 48.8 | % | $ | 956,288 | 48.5 | % | ||||||||||||||||||||||||||||||||||
| U.S. Wholesale | 273,110 | 36.3 | % | 283,805 | 37.4 | % | 740,069 | 36.1 | % | 726,899 | 36.8 | % | ||||||||||||||||||||||||||||||||||||||
| International | 116,722 | 15.5 | % | 111,724 | 14.8 | % | 309,442 | 15.1 | % | 289,788 | 14.7 | % | ||||||||||||||||||||||||||||||||||||||
| Total consolidated net sales | $ | 752,456 | 100.0 | % | $ | 757,836 | 100.0 | % | $ | 2,049,060 | 100.0 | % | $ | 1,972,975 | 100.0 | % | ||||||||||||||||||||||||||||||||||
| Segment operating income: | Segment operating margin | Segment operating margin | Segment operating margin | Segment operating margin | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Retail | $ | 19,307 | 5.3 | % | $ | 9,976 | 2.8 | % | $ | 32,597 | 3.3 | % | $ | 16,052 | 1.7 | % | ||||||||||||||||||||||||||||||||||
| U.S. Wholesale | 48,715 | 17.8 | % | 43,998 | 15.5 | % | 115,240 | 15.6 | % | 126,369 | 17.4 | % | ||||||||||||||||||||||||||||||||||||||
| International | 11,705 | 10.0 | % | 9,172 | 8.2 | % | 21,273 | 6.9 | % | 12,564 | 4.3 | % | ||||||||||||||||||||||||||||||||||||||
| Total segment operating income | $ | 79,727 | 10.6 | % | $ | 63,146 | 8.3 | % | $ | 169,110 | 8.3 | % | $ | 154,985 | 7.9 | % | ||||||||||||||||||||||||||||||||||
| Items not included in segment operating income: | Consolida-ted operating margin | Consolida-ted operating margin | Consolida-ted operating margin | Consolida-ted operating margin | ||||||||||||||||||||||||||||||||||||||||||||||
Tariff refund recovery (a) | $ | — | n/a | $ | — | n/a | $ | 127,669 | n/a | $ | — | n/a | ||||||||||||||||||||||||||||||||||||||
Unallocated corporate expenses (b) | (22,794) | n/a | (23,767) | n/a | (65,635) | n/a | (68,465) | n/a | ||||||||||||||||||||||||||||||||||||||||||
IP litigation (c) | (1,163) | n/a | — | n/a | (2,379) | n/a | — | n/a | ||||||||||||||||||||||||||||||||||||||||||
Leadership transition costs (d) | — | n/a | (500) | n/a | (4,726) | n/a | (7,694) | n/a | ||||||||||||||||||||||||||||||||||||||||||
Operating model improvement costs (e) | — | n/a | (3,669) | n/a | — | n/a | (13,469) | n/a | ||||||||||||||||||||||||||||||||||||||||||
Organizational restructuring (f) | — | n/a | (6,117) | n/a | — | n/a | (6,117) | n/a | ||||||||||||||||||||||||||||||||||||||||||
| Consolidated operating income | $ | 55,770 | 7.4 | % | $ | 29,093 | 3.8 | % | $ | 224,039 | 10.9 | % | $ | 59,240 | 3.0 | % | ||||||||||||||||||||||||||||||||||
(a)Related to $128 million of IEEPA tariff recoveries, excluding interest received, which are reflected as a reduction of Cost of goods sold in the first three quarters of fiscal 2026.
(b)Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of the Company’s business segments and include unallocated accounting, finance, legal, human resources, and information technology expenses, occupancy costs for its corporate headquarters, and other benefit and compensation programs, including performance-based compensation.
(c)Related legal defense costs arising from intellectual property litigation not in the ordinary course of business.
(d)Related to costs associated with the retirement of Michael D. Casey, the Company’s former Chief Executive Officer, in the first quarter of fiscal 2025 and costs related to the departure of Douglas C. Palladini, the Company’s former Chief Executive Officer, in the second quarter of fiscal 2026.
(e)Primarily related to third-party consulting costs.
(f)Related to charges for severance and other termination benefits as a result of organizational restructuring.
Note: Results may not be additive due to rounding.
10
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
| October 3, 2026 | January 3, 2026 | September 27, 2025 | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 450,957 | $ | 487,075 | $ | 184,190 | |||||||||||
| Short-term investments | 75,000 | — | — | ||||||||||||||
Accounts receivable, net of allowance for credit losses of $11,231, $7,587, and $12,026, respectively | 228,858 | 178,566 | 237,866 | ||||||||||||||
Finished goods inventories, net of inventory reserves of $15,394, $8,897, and $12,347, respectively | 587,035 | 544,624 | 656,149 | ||||||||||||||
Prepaid expenses and other current assets | 74,497 | 60,508 | 55,576 | ||||||||||||||
| Total current assets | 1,416,347 | 1,270,773 | 1,133,781 | ||||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $581,338, $609,059, and $599,467, respectively | 177,632 | 186,307 | 189,012 | ||||||||||||||
| Operating lease assets | 562,384 | 591,806 | 611,569 | ||||||||||||||
| Tradenames, net | 268,483 | 268,659 | 268,718 | ||||||||||||||
| Goodwill | 207,559 | 208,994 | 208,351 | ||||||||||||||
| Customer relationships, net | 17,483 | 20,128 | 20,993 | ||||||||||||||
| Other assets | 19,389 | 18,803 | 37,015 | ||||||||||||||
| Total assets | $ | 2,669,277 | $ | 2,565,470 | $ | 2,469,439 | |||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 254,353 | $ | 235,700 | $ | 240,235 | |||||||||||
| Current operating lease liabilities | 131,492 | 136,488 | 150,548 | ||||||||||||||
| Other current liabilities | 123,781 | 133,809 | 110,907 | ||||||||||||||
| Total current liabilities | 509,626 | 505,997 | 501,690 | ||||||||||||||
| Long-term debt, net | 568,135 | 567,173 | 498,738 | ||||||||||||||
| Deferred income taxes | 43,340 | 39,380 | 41,200 | ||||||||||||||
| Long-term operating lease liabilities | 479,181 | 508,461 | 529,139 | ||||||||||||||
| Other long-term liabilities | 14,767 | 19,411 | 34,030 | ||||||||||||||
| Total liabilities | $ | 1,615,049 | $ | 1,640,422 | $ | 1,604,797 | |||||||||||
| Commitments and contingencies | |||||||||||||||||
| Shareholders’ equity: | |||||||||||||||||
Preferred stock; par value $0.01 per share; 100,000 shares authorized; none issued or outstanding | $ | — | $ | — | $ | — | |||||||||||
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 36,692,152, 36,425,877, and 36,518,637 shares issued and outstanding, respectively | 367 | 364 | 365 | ||||||||||||||
| Additional paid-in capital | 26,751 | 19,584 | 18,029 | ||||||||||||||
| Accumulated other comprehensive loss | (30,719) | (24,361) | (28,107) | ||||||||||||||
| Retained earnings | 1,057,829 | 929,461 | 874,355 | ||||||||||||||
| Total shareholders’ equity | 1,054,228 | 925,048 | 864,642 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,669,277 | $ | 2,565,470 | $ | 2,469,439 | |||||||||||
11
CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Three Fiscal Quarters Ended | |||||||||||
| October 3, 2026 | September 27, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 155,905 | $ | 27,578 | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation of property, plant, and equipment | 36,698 | 37,797 | |||||||||
| Amortization of intangible assets | 2,825 | 2,781 | |||||||||
| Provision for excess and obsolete inventory, net | 6,581 | 3,912 | |||||||||
| Amortization of debt issuance costs | 1,723 | 1,253 | |||||||||
| Stock-based compensation expense | 10,951 | 18,667 | |||||||||
| Unrealized foreign currency exchange loss (gain), net | 394 | (393) | |||||||||
| Provision for credit losses | 3,657 | 6,864 | |||||||||
| Unrealized gain on investments | (1,589) | (1,477) | |||||||||
| Pension plan settlement | — | 8,777 | |||||||||
| Deferred income taxes expense | 4,317 | 879 | |||||||||
| Other operating items, net | (620) | 21 | |||||||||
| Effect of changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (54,436) | (48,893) | |||||||||
| Finished goods inventories | (51,836) | (153,621) | |||||||||
| Prepaid expenses and other assets | (14,448) | (25,509) | |||||||||
| Accounts payable and other liabilities | 1,689 | (14,946) | |||||||||
| Net cash provided by (used in) operating activities | $ | 101,811 | $ | (136,310) | |||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | $ | (29,663) | $ | (42,662) | |||||||
| Purchases of short-term investments | (75,000) | — | |||||||||
| Net cash used in investing activities | $ | (104,663) | $ | (42,662) | |||||||
| Cash flows from financing activities: | |||||||||||
| Dividends paid | $ | (27,465) | $ | (47,247) | |||||||
| Withholdings from vesting of restricted stock | (3,817) | (4,489) | |||||||||
| Other | — | (370) | |||||||||
| Net cash used in financing activities | $ | (31,282) | $ | (52,106) | |||||||
| Net effect of exchange rate changes on cash and cash equivalents | (1,984) | 2,342 | |||||||||
| Net decrease in cash and cash equivalents | $ | (36,118) | $ | (228,736) | |||||||
| Cash and cash equivalents, beginning of period | 487,075 | 412,926 | |||||||||
| Cash and cash equivalents, end of period | $ | 450,957 | $ | 184,190 | |||||||
12
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(dollars in millions, except earnings per share)
(unaudited)
| Fiscal Quarter Ended October 3, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Goods Sold | Gross Profit | % Net Sales | SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Interest Income | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 397.7 | $ | 354.8 | 47.1 | % | $ | 304.2 | 40.4 | % | $ | 55.8 | 7.4 | % | $ | 4.8 | $ | 11.8 | $ | 36.6 | $ | 1.00 | |||||||||||||||||||||||||||||||||||||||||||
IP litigation (b) | — | — | (1.2) | 1.2 | — | 0.3 | 0.9 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 397.7 | $ | 354.8 | 47.1 | % | $ | 303.0 | 40.3 | % | $ | 56.9 | 7.6 | % | $ | 4.8 | $ | 12.1 | $ | 37.5 | $ | 1.03 | |||||||||||||||||||||||||||||||||||||||||||
| Three Fiscal Quarters Ended October 3, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Goods Sold | Gross Profit | % Net Sales | SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Interest Income | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 987.8 | $ | 1,061.2 | 51.8 | % | $ | 850.4 | 41.5 | % | $ | 224.0 | 10.9 | % | $ | 16.5 | $ | 49.0 | $ | 155.9 | $ | 4.27 | |||||||||||||||||||||||||||||||||||||||||||
Tariff refund recovery (d) | 127.7 | (127.7) | — | (127.7) | (4.0) | (31.6) | (100.1) | (2.74) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leadership transition costs (c) | — | — | (4.7) | 4.7 | — | 1.1 | 3.6 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IP litigation (b) | — | — | (2.4) | 2.4 | — | 0.6 | 1.8 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 1,115.5 | $ | 933.6 | 45.6 | % | $ | 843.2 | 41.2 | % | $ | 103.5 | 5.0 | % | $ | 12.5 | $ | 19.1 | $ | 61.2 | $ | 1.68 | |||||||||||||||||||||||||||||||||||||||||||
| Fiscal Quarter Ended September 27, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Goods Sold | Gross Profit | % Net Sales | SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Interest Income | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 416.2 | $ | 341.6 | 45.1 | % | $ | 318.0 | 42.0 | % | $ | 29.1 | 3.8 | % | $ | 2.6 | $ | 3.2 | $ | 11.6 | $ | 0.32 | |||||||||||||||||||||||||||||||||||||||||||
Organizational restructuring (e) | — | — | (6.1) | 6.1 | — | 1.5 | 4.6 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating model improvement costs (f) | — | — | (3.7) | 3.7 | — | 0.9 | 2.8 | 0.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leadership transition costs (c) | — | — | (0.5) | 0.5 | — | 0.1 | 0.4 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension plan settlement (g) | — | — | — | — | — | 2.1 | 6.7 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred compensation plan termination (h) | — | — | — | — | — | (0.8) | 0.8 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 416.2 | $ | 341.6 | 45.1 | % | $ | 307.7 | 40.6 | % | $ | 39.4 | 5.2 | % | $ | 2.6 | $ | 7.1 | $ | 26.8 | $ | 0.74 | |||||||||||||||||||||||||||||||||||||||||||
13
| Three Fiscal Quarters Ended September 27, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Goods Sold | Gross Profit | % Net Sales | SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Interest Income | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 1,058.5 | $ | 914.5 | 46.4 | % | $ | 869.2 | 44.1 | % | $ | 59.2 | 3.0 | % | $ | 10.0 | $ | 10.3 | $ | 27.6 | $ | 0.75 | |||||||||||||||||||||||||||||||||||||||||||
Operating model improvement costs (f) | — | — | (13.5) | 13.5 | — | 3.2 | 10.2 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leadership transition costs (c) | — | — | (7.7) | 7.7 | — | 0.7 | 7.0 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organizational restructuring (e) | — | — | (6.1) | 6.1 | — | 1.5 | 4.6 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension plan settlement (g) | — | — | — | — | — | 2.1 | 6.7 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred compensation plan termination (h) | — | — | — | — | — | (0.8) | 0.8 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 1,058.5 | $ | 914.5 | 46.4 | % | $ | 842.0 | 42.7 | % | $ | 86.5 | 4.4 | % | $ | 10.0 | $ | 17.0 | $ | 56.9 | $ | 1.57 | |||||||||||||||||||||||||||||||||||||||||||
| Fiscal quarter ended January 3, 2026 (14 weeks) | ||||||||||||||||||||||||||||||||||||||||||||
| SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | ||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 319.6 | 34.5 | % | $ | 84.7 | 9.2 | % | $ | 11.7 | $ | 64.2 | $ | 1.76 | ||||||||||||||||||||||||||||||
Organizational restructuring (e) | (3.7) | 3.7 | 0.9 | 2.8 | 0.08 | |||||||||||||||||||||||||||||||||||||||
Operating model improvement costs (f) | (0.7) | 0.7 | 0.2 | 0.5 | 0.01 | |||||||||||||||||||||||||||||||||||||||
Leadership transition costs (c) | (0.4) | 0.4 | — | 0.3 | 0.01 | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt (i) | — | — | 0.4 | 1.3 | 0.03 | |||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 314.8 | 34.0 | % | $ | 89.5 | 9.7 | % | $ | 13.2 | $ | 69.2 | $ | 1.90 | ||||||||||||||||||||||||||||||
| Fiscal Year Ended January 3, 2026 (53 weeks) | ||||||||||||||||||||||||||||||||||||||||||||
| SG&A Expenses | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | ||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 1,188.8 | 41.0 | % | $ | 143.9 | 5.0 | % | $ | 22.0 | $ | 91.8 | $ | 2.53 | ||||||||||||||||||||||||||||||
Operating model improvement costs (f) | (14.2) | 14.2 | 3.4 | 10.8 | 0.30 | |||||||||||||||||||||||||||||||||||||||
Organizational restructuring (e) | (9.8) | 9.8 | 2.4 | 7.5 | 0.20 | |||||||||||||||||||||||||||||||||||||||
Leadership transition costs (c) | (8.1) | 8.1 | 0.7 | 7.3 | 0.20 | |||||||||||||||||||||||||||||||||||||||
Pension plan settlement (g) | — | — | 2.1 | 6.7 | 0.18 | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt (i) | — | — | 0.4 | 1.3 | 0.03 | |||||||||||||||||||||||||||||||||||||||
Deferred compensation plan termination (h) | — | — | (0.8) | 0.8 | 0.03 | |||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 1,156.7 | 39.9 | % | $ | 176.0 | 6.1 | % | $ | 30.3 | $ | 126.1 | $ | 3.47 | ||||||||||||||||||||||||||||||
(a)In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present COGS, gross profit, SG&A, operating income, interest income, income tax, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company's core performance. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations.
(b)Related legal defense costs arising from intellectual property litigation not in the ordinary course of business.
(c)Related to costs associated with the retirement of Michael D. Casey, the Company’s former Chief Executive Officer, in the first quarter of fiscal 2025 and costs related to the departure of Douglas C. Palladini, the Company’s former Chief Executive Officer, in the second quarter of fiscal 2026.
(d)Related to $132 million of IEEPA tariff recoveries, including $4 million of interest received.
(e)Related to charges for severance and other termination benefits as a result of organizational restructuring.
(f)Primarily related to third-party consulting costs.
(g)Non-cash charges for settlement of the OshKosh B’Gosh Pension Plan.
(h)Incremental income tax impact resulting from the announced termination of the Company’s deferred compensation plan.
(i)Related to redemption of the $500 million senior notes due 2027 and cash-flow based revolving credit facility.
Note: Results may not be additive due to rounding.
14
CARTER’S, INC.
RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | ||||||||||||||||||||
| Weighted-average number of common and common equivalent shares outstanding: | |||||||||||||||||||||||
| Basic number of common shares outstanding | 35,623,722 | 35,443,712 | 35,569,482 | 35,388,596 | |||||||||||||||||||
| Dilutive effect of equity awards | 12,505 | 146 | 7,957 | 348 | |||||||||||||||||||
| Diluted number of common and common equivalent shares outstanding | 35,636,227 | 35,443,858 | 35,577,439 | 35,388,944 | |||||||||||||||||||
| As reported on a GAAP Basis: | |||||||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||||
| Basic net income per common share: | |||||||||||||||||||||||
| Net income | $ | 36,611 | $ | 11,593 | $ | 155,905 | $ | 27,578 | |||||||||||||||
| Income allocated to participating securities | (842) | (305) | (4,103) | (1,118) | |||||||||||||||||||
| Net income available to common shareholders | $ | 35,769 | $ | 11,288 | $ | 151,802 | $ | 26,460 | |||||||||||||||
| Basic net income per common share | $ | 1.00 | $ | 0.32 | $ | 4.27 | $ | 0.75 | |||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Net income | $ | 36,611 | $ | 11,593 | $ | 155,905 | $ | 27,578 | |||||||||||||||
| Income allocated to participating securities | (842) | (305) | (4,102) | (1,118) | |||||||||||||||||||
| Net income available to common shareholders | $ | 35,769 | $ | 11,288 | $ | 151,803 | $ | 26,460 | |||||||||||||||
| Diluted net income per common share | $ | 1.00 | $ | 0.32 | $ | 4.27 | $ | 0.75 | |||||||||||||||
As adjusted (a): | |||||||||||||||||||||||
| Basic net income per common share: | |||||||||||||||||||||||
| Net income | $ | 37,491 | $ | 26,846 | $ | 61,238 | $ | 56,898 | |||||||||||||||
| Income allocated to participating securities | (863) | (743) | (1,561) | (1,377) | |||||||||||||||||||
| Net income available to common shareholders | $ | 36,628 | $ | 26,103 | $ | 59,677 | $ | 55,521 | |||||||||||||||
| Basic net income per common share | $ | 1.03 | $ | 0.74 | $ | 1.68 | $ | 1.57 | |||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Net income | $ | 37,491 | $ | 26,846 | $ | 61,238 | $ | 56,898 | |||||||||||||||
| Income allocated to participating securities | (863) | (743) | (1,561) | (1,377) | |||||||||||||||||||
| Net income available to common shareholders | $ | 36,628 | $ | 26,103 | $ | 59,677 | $ | 55,521 | |||||||||||||||
| Diluted net income per common share | $ | 1.03 | $ | 0.74 | $ | 1.68 | $ | 1.57 | |||||||||||||||
(a)In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present per share data excluding the adjustments discussed above. The Company has excluded $0.9 million in after-tax expenses from these results for the fiscal quarter ended October 3, 2026, and $94.7 million in after-tax benefits from these results for the three fiscal quarters ended October 3, 2026. Additionally, the Company has excluded $15.3 million and $29.3 million in after-tax expenses from these results for the fiscal quarter and three fiscal quarters ended September 27, 2025, respectively.
Note: Results may not be additive due to rounding.
15
RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
(dollars in millions)
(unaudited)
The following table provides a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated:
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | Four Fiscal Quarters Ended | ||||||||||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | October 3, 2026 | ||||||||||||||||||||||||||||
| Net income | $ | 36.6 | $ | 11.6 | $ | 155.9 | $ | 27.6 | $ | 220.1 | ||||||||||||||||||||||
| Interest expense | 11.8 | 7.2 | 34.9 | 22.8 | 46.3 | |||||||||||||||||||||||||||
| Interest income | (4.8) | (2.6) | (16.5) | (10.0) | (20.0) | |||||||||||||||||||||||||||
| Income tax expense | 11.8 | 3.2 | 49.0 | 10.3 | 60.7 | |||||||||||||||||||||||||||
| Depreciation and amortization | 12.9 | 13.8 | 39.5 | 40.6 | 54.2 | |||||||||||||||||||||||||||
| EBITDA | $ | 68.3 | $ | 33.2 | $ | 262.8 | $ | 91.3 | $ | 361.3 | ||||||||||||||||||||||
| Adjustments to EBITDA | ||||||||||||||||||||||||||||||||
Tariff refund recovery (a) | $ | — | $ | — | $ | (127.7) | $ | — | $ | (127.7) | ||||||||||||||||||||||
IP litigation (b) | 1.2 | — | 2.4 | — | 2.4 | |||||||||||||||||||||||||||
Leadership transition costs (c) | — | 0.5 | 4.7 | 7.7 | 5.1 | |||||||||||||||||||||||||||
Operating model improvement costs (d) | — | 3.7 | — | 13.5 | 0.7 | |||||||||||||||||||||||||||
Organizational restructuring (e) | — | 6.1 | — | 6.1 | 3.7 | |||||||||||||||||||||||||||
Loss on extinguishment of debt (f) | — | — | — | — | 1.7 | |||||||||||||||||||||||||||
Pension plan settlement (g) | — | 8.8 | — | 8.8 | — | |||||||||||||||||||||||||||
| Total adjustments | 1.2 | 19.1 | (120.6) | 36.1 | (114.1) | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 69.5 | $ | 52.3 | $ | 142.2 | $ | 127.4 | $ | 247.2 | ||||||||||||||||||||||
(a)Related to $128 million of IEEPA tariff recoveries, excluding $4 million of interest received in the first three quarters of fiscal 2026.
(b)Related legal defense costs arising from intellectual property litigation not in the ordinary course of business.
(c)Related to costs associated with the retirement of Michael D. Casey, the Company’s former Chief Executive Officer, in the first quarter of fiscal 2025 and costs related to the departure of Douglas C. Palladini, the Company’s former Chief Executive Officer, in the second quarter of fiscal 2026.
(d)Primarily related to third-party consulting costs.
(e)Related to charges for severance and other termination benefits as a result of organizational restructuring.
(f)Related to redemption of the $500 million senior notes due 2027 and cash-flow based revolving credit facility.
(g)Non-cash charges for settlement of the OshKosh B’Gosh Pension Plan.
Note: Results may not be additive due to rounding.
EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP. The Company defines EBITDA as net income before interest, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items described in footnotes (a) - (g) to the table above.
The Company presents EBITDA and Adjusted EBITDA because it considers them important supplemental measures of its performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These measures also afford investors a view of what management considers to be the Company's core performance.
The use of EBITDA and Adjusted EBITDA instead of net income or cash flows from operations has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA, Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. EBITDA and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters that the Company considers not to be indicative of its ongoing operations. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to the Company for working capital, debt service and other purposes.
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RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
(dollars in millions)
(unaudited)
The table below reflects the calculation of constant currency net sales on a consolidated and International segment basis for the fiscal quarter and first three fiscal quarters ended October 3, 2026:
| Fiscal Quarter Ended | |||||||||||||||||||||||||||||||||||
| Reported Net Sales October 3, 2026 | Impact of Foreign Currency Translation | Constant-Currency Net Sales October 3, 2026 | Reported Net Sales September 27, 2025 | Reported Net Sales % Change | Constant-Currency Net Sales % Change | ||||||||||||||||||||||||||||||
| Consolidated net sales | $ | 752.5 | $ | 0.9 | $ | 751.5 | $ | 757.8 | (0.7) | % | (0.8) | % | |||||||||||||||||||||||
| International segment net sales | $ | 116.7 | $ | 0.9 | $ | 115.8 | $ | 111.7 | 4.5 | % | 3.6 | % | |||||||||||||||||||||||
| Three Fiscal Quarters Ended | |||||||||||||||||||||||||||||||||||
| Reported Net Sales October 3, 2026 | Impact of Foreign Currency Translation | Constant-Currency Net Sales October 3, 2026 | Reported Net Sales September 27, 2025 | Reported Net Sales % Change | Constant-Currency Net Sales % Change | ||||||||||||||||||||||||||||||
| Consolidated net sales | $ | 2,049.1 | $ | 8.9 | $ | 2,040.2 | $ | 1,973.0 | 3.9 | % | 3.4 | % | |||||||||||||||||||||||
| International segment net sales | $ | 309.4 | $ | 8.9 | $ | 300.5 | $ | 289.8 | 6.8 | % | 3.7 | % | |||||||||||||||||||||||
Note: Results may not be additive due to rounding.
The Company evaluates its net sales on both an “as reported” and a “constant currency” basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. Constant currency net sales results are calculated by translating current period net sales in local currency to the U.S. dollar amount by using the currency conversion rate for the prior comparative period. The Company consistently applies this approach to net sales for all countries where the functional currency is not the U.S. dollar. The Company believes that the presentation of net sales on a constant currency basis provides useful supplemental information regarding changes in its net sales that were not due to fluctuations in currency exchange rates and such information is consistent with how the Company assesses changes in its net sales between comparative periods.
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EXHIBIT 99.2
| Contact: | ||||||||
| T.C. Robillard | ||||||||
| Vice President, Investor Relations | ||||||||
| tc.robillard@carters.com | ||||||||
Carter’s, Inc. Evolves Leadership Structure to Advance Growth Strategy by
Driving Improved Alignment Across Product, Sales, Brand, Operations
Announces new Chief Product Officer after thorough search
Creates Chief Commercial Officer role, combining management of retail and wholesale businesses
Forms standalone Chief Operating Officer role to strengthen and streamline operational execution
Elevates roles and expands responsibilities of Brand and Strategy leaders
ATLANTA, October 30, 2026 – Carter’s, Inc. (NYSE:CRI), the market share leader and the most iconic and enduring children’s apparel company, today announced the strategic evolution of its corporate leadership structure designed to advance its growth strategy. In addition to securing a new Chief Product Officer, changes include new and expanded roles for several executives, including the creation of a Chief Commercial Officer role, as well as a standalone Chief Operating Officer role. These positions will report to Chief Executive Officer & President Sharon Price John, who joined Carter’s, Inc. in June, and are designed to better align the business functions with its strategy to accelerate profitable growth by leveraging Carter’s core competencies and assets to harness the power of its iconic brands, further engage and elevate its trusted relationship with consumers and more synergistically execute with an innovative, data-driven lens.
“Carter’s is a diversified company with a rich history spanning over 160 years, with brands that families have trusted for generations. However, to meet today’s consumers where they are and better serve them, we need to evolve,” said Ms. John. “Today we announced key changes to our leadership structure to better connect our businesses, strengthen accountability, and advance our growth strategy. Aligning our structure with our go-forward strategy is an important step toward becoming a more consumer-centric, brand-building, data-driven company that is positioned to consistently deliver profitable growth and increased value to our stakeholders.”
The new structure organizes Carter’s leadership across product, commercial operations, strategy and consumer insights, and brand under the following executives:
•Chief Product Officer: Maria Gemzell
•Chief Commercial Officer: Allison Peterson
•Chief Strategy and Business Development Officer: Emily Evert
•Chief Brand Officer: Sarah Crockett
In addition, Carter’s is commencing a search for a standalone Chief Operating Officer. Richard Westenberger, currently Chief Financial Officer and Chief Operating Officer, will continue to serve as Chief Financial Officer, and together with Antonio Robinson, Chief Administrative and Compliance Officer, Corporate Secretary, these executives comprise Carter’s go-forward leadership team.
Elevating Product
Product is at the heart of the trust families place in Carter’s. Given the varied needs of its customers and the consistently shifting landscape, the Company is evolving its product organization and its processes. Maria Gemzell is expected to join Carter’s as Chief Product Officer in early 2027, leading design, merchandising, licensing, and product development. Gemzell joins Carter’s from H&M’s headquarters in Stockholm, Sweden, one of the world’s leading fashion retailers, where she oversaw strategic and new product initiatives. She brings valuable experience and a global perspective to the Company that will help develop products that appeal to today’s consumers and meet the needs of both its Wholesale and Direct-to-Consumer businesses.
Coordinating the North American Commercial Organization
As consumers have become more channel agnostic, the Company is evolving its commercial organization to ensure a seamless shopping experience. Allison Peterson, who joined Carter’s in 2024, has been appointed to the newly created role of Chief Commercial Officer, where she will oversee the North American Retail and Wholesale businesses. By consolidating its commercial operations under Peterson, Carter’s is simplifying its commercial structure across the U.S., Canada, and Mexico, strengthening its go-to-market approach through improved channel coordination, better leveraging its scale and cross-market insights, and creating clearer accountability for business performance.
In connection with this new commercial structure, Julie D’Emilio, currently Carter’s Chief Sales Officer, has decided to retire from the Company and will serve as an advisor through year-end to ensure a seamless transition.
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Connecting Strategy, Insights and Growth
Emily Evert, Chief Strategy and Business Development Officer, will have expanded responsibility to lead a unified global consumer insights function as well as new responsibility for the Company’s International business. A coordinated strategy and global consumer-insights function positions the Company to translate strategy into better results by providing a deeper understanding of the consumer, more informed decision-making capabilities, and the ability to more quickly identify growth opportunities, including international expansion.
Strengthening the Brand Organization
Sarah Crockett, who joined Carter’s in 2025, has been appointed to the role of Chief Brand Officer. With brand-building as a core tenet of its growth strategy, the Company is evolving its Brand organization to better connect brand strategy, marketing and consumer engagement with its product and go-to-market capabilities to drive consistent profitable growth.
Advancing Operational Execution
Carter’s is creating a standalone Chief Operating Officer role to provide dedicated leadership and clear accountability for the operations that bring its products to the families it serves. The role will focus on strategically leveraging technology and data with the goal of modernizing Carter’s operations, improving efficiency, and building a scalable foundation for profitable growth. The Company has commenced a search for the role.
Karen Smith, Carter’s Chief Supply Chain Officer, will retire in March 2027 after serving Carter’s for almost five years and more than 35 years in the apparel industry. Ms. Smith informed the Company of her decision to retire in February 2026 and will continue to serve in her role through her retirement date to ensure a seamless transition.
Ms. John commented: “I would like to welcome Maria to Carter’s as well as congratulate Allison, Emily and Sarah on their expanded roles. I would also like to acknowledge and thank Julie for the lasting impact she has made on our sales organization and customer relationships over her 20 years with the Company as well as Karen for her leadership of our supply chain and her deep commitment to the families we serve. We wish Julie and Karen the very best in their retirements from Carter’s.”
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About Carter’s, Inc.
Carter’s, Inc. is North America’s largest and most-enduring apparel company exclusively for babies and young children. The Company’s core brands are Carter’s and OshKosh B’gosh, iconic and among the sector’s most trusted names. These brands are sold through more than 1,000 Company-operated stores in the United States, Canada, and Mexico, and online at www.carters.com, www.oshkosh.com, www.cartersoshkosh.ca, and www.carters.com.mx. Carter’s also is the largest supplier of baby and young children’s apparel to North America’s biggest retailers. The Company’s Child of Mine brand is available exclusively at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon.com. The Company’s emerging brands include Little Planet, crafted with organic fabrics, Otter Avenue, a toddler-focused apparel brand, and sustainable materials and Skip Hop, baby essentials from tubs to toys. Carter’s is headquartered in Atlanta, Georgia. Additional information may be found at www.carters.com.
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