Carter's Reports Q4 & FY2025 Results, Projects Significant FY2026 EPS Decline Amid Tariff Headwinds

summarizeSummary

Carter's reported Q4 and FY2025 results showing sales growth but significant declines in profitability, and projected a low double-digit to mid-teens decline in adjusted diluted EPS for FY2026 due to tariff costs and investments.

check_boxKey Events

• Q4 2025 Sales Growth

  Net sales for the fourth quarter of fiscal 2025 increased 8% to $925 million, with comparable week sales up 3.4%.

• FY 2025 Profitability Decline

  For fiscal year 2025, adjusted diluted EPS fell 40.3% to $3.47, and adjusted operating margin decreased 400 basis points to 6.1%.

• FY 2026 EPS Outlook

  The company projects a low double-digit to mid-teens decline in adjusted diluted EPS for fiscal year 2026, despite expected sales and operating income growth.

• Weak Q1 2026 Guidance

  Carter's forecasts adjusted diluted EPS of $0.02 to $0.08 for Q1 2026, a substantial drop from $0.66 in Q1 2025.

auto_awesomeAnalysis

Carter's reported mixed financial results for Q4 and fiscal year 2025, with sales growth but significant declines in profitability. While Q4 2025 net sales increased by 8% (3.4% on a comparable week basis), adjusted diluted EPS fell 20.5%. For the full fiscal year 2025, adjusted diluted EPS plummeted 40.3% to $3.47, and adjusted operating margin decreased by 400 basis points, primarily due to incremental tariff costs and investments. The company's outlook for fiscal year 2026 is particularly concerning, projecting a low double-digit to mid-teens decline in adjusted diluted EPS, despite anticipated low to mid-single-digit growth in net sales and adjusted operating income. The Q1 2026 EPS guidance is also notably weak. This indicates ongoing and significant margin pressure, likely from tariffs and operational investments, which is severely impacting the company's bottom line. While the dividend remains stable and liquidity is strong, the profitability outlook presents a substantial challenge for investors.