Carter’s Q4 EPS Surpasses Estimates as Sales Climb 7.6% to $925.5M
Carter’s reported Q4 adjusted EPS of $1.90, beating estimates by 20 cents, and net sales rose 7.6% to $925.5 million, including a $37 million boost from an extra week. Shares slid over 15% following guidance of mid-single-digit net sales growth and 2–8 cent EPS in Q1.
1. Q4 Financial Performance
Carter’s reported adjusted EPS of $1.90 for Q4, exceeding the $1.70 estimate by 20 cents, but down 20.5% from $2.39 a year earlier. Consolidated net sales reached $925.5 million, beating the $916 million forecast and rising 7.6% year over year.
2. Segment Sales and Margins
U.S. Retail sales increased 9.4% to $509.8 million, U.S. Wholesale climbed 3.4% to $274.4 million, and International sales grew 10.2% to $141.2 million. Gross margin contracted 460 basis points to 43.2%, and adjusted operating margin fell to 9.7% on higher tariff costs, product investments and compensation provisions.
3. Guidance and Market Reaction
The stock tumbled over 15% as management forecast mid-single-digit net sales growth for 2026 and Q1 net sales growth in the mid-single-digit range, with Q1 adjusted operating income of $12–$15 million and EPS of $0.02–$0.08 versus $0.66 a year ago.