Carter's Shares Rise 5% Post Q4 Earnings: What Should You Know?

Shares of Carter's, Inc. CRI have gained roughly 5% since it reported its fourth-quarter 2025 earnings on Feb. 27, 2026. The company reported sales and earnings beat in the fourth quarter, with the former increasing year over year. Consolidated net sales rose 7.6% year over year, driven by growth across the U.S. Retail, International and U.S. Wholesale segments. An additional week in the quarter contributed about $37 million to sales. On a comparable-week basis, net sales rose 3.4% in the reported quarter. 

Strong e-commerce demand and improved store traffic aided performance. The company also witnessed solid growth in its core baby and toddler categories. Additionally, international sales rose, driven by strong momentum in markets such as Mexico and Canada, highlighting Carter’s expanding global presence and resilient brand demand. 

The company saw broad demand across all three segments — U.S. Retail, U.S. Wholesale and International. Sales in the U.S. Retail segment increased 9.4% year over year, while the metric in the U.S. Wholesale and International segment jumped 3.4% and 10.2%, respectively. CRI recorded positive comparable sales, reflecting improving consumer demand. Management also noted broad-based product strength across baby, toddler and kids categories, with the baby segment marking its sixth straight quarter of growth.

Carter’s also benefited from improved pricing power, as average unit retail increased due to reduced promotional activity and a greater mix of higher-priced products. The company is increasingly attracting Gen Z and millennial families, expanding its active consumer base and supporting long-term demand. (Read More: Carter's Q4 Earnings Beat Estimates, Shares Fall on Soft EPS View)

What’s More?

For 2026, Carter’s projects net sales growth in the low single-digit to mid-single-digit percentage compared with $2.898 billion in 2025. Adjusted operating income is likely to increase in the low single-digit to mid-single-digit range compared with $176 million in the prior year. Adjusted earnings per share are expected to decline in the low double-digit to mid-teens from $3.47 reported in fiscal 2025. For the year, management projects an operating cash flow of $110-$120 million and capital expenditures of $55 million.

The outlook includes earnings contributions weighted to the second half owing to higher expected net tariff impacts and investment spending in the first half compared with the second half. Incremental tariff costs, somewhat offset by increased pricing, other tariff mitigation actions and productivity savings, are likely to hurt margins. Comparable SG&A expenses are likely to reflect organizational restructuring and store fleet rationalization savings. 

The company is boosting its omnichannel strategy by enhancing and integrating digital and physical retail experiences to resonate with the evolving consumer preferences. Carter’s is focusing on consumer-led and brand-focused growth. The company is strengthening connections with consumers through improved brand storytelling and higher-quality product offerings. This Zacks Rank #1 (Strong Buy) company stock has rallied 21.9% in the past six months against the industry’s 20.8% decline.

Other Key Picks in the Consumer Discretionary Space

Crocs, Inc. CROX, which is a leading footwear company, currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

CROX delivered a trailing four-quarter earnings surprise of 16.6%, on average. The Zacks Consensus Estimate for Crocs’ current financial-year EPS indicates a rise of 7.2% from the year-ago number. 

Ralph Lauren RL, which is a designer and marketer of premium lifestyle products, currently carries a Zacks Rank of 2. 

RL delivered a trailing four-quarter earnings surprise of 9.7%, on average. The Zacks Consensus Estimate for RL’s current financial-year sales indicates growth of 12.4% from the year-ago number. 

Kontoor Brands, Inc. KTB, which is an apparel company, currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for KTB’s current financial-year EPS is expected to rise 15.6% from the corresponding year-ago reported figure. KTB delivered a trailing four-quarter earnings surprise of 13.9%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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