Carter's, Inc. CRI is expected to report top-line growth when it reports second-quarter 2026 results. However, the branded marketer of apparel, exclusively for babies and children in North America, is likely to witness a year-over-year decline in the bottom line in the quarter to be reported.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $609 million, indicating a rise of 4.1% from the figure reported in the year-ago quarter. The consensus estimate for quarterly earnings is pegged at 2 cents per share, stable in the past 30 days. This indicates a decline from 17 cents in the year-earlier quarter.
Carter's, Inc. Price, Consensus and EPS Surprise
Carter's, Inc. price-consensus-eps-surprise-chart | Carter's, Inc. Quote
The company has a trailing four-quarter earnings surprise of 100.8%, on average. In the last reported quarter, CRI’s bottom line surpassed the Zacks Consensus Estimate by 457.1%.
Factors to Note for CRI’s Quarterly Performance
Carter’s second-quarter performance is likely to benefit from sustained momentum in its direct-to-consumer business, supported by higher traffic, successful marketing initiatives and continued consumer acquisition. Management highlighted that investments in demand creation have been driving improved store and online traffic, while the active customer base continues to expand, particularly among Gen-Z parents. The company also indicated that business turned positive again in early May after temporary April softness related to Easter timing, reinforcing expectations for mid-single-digit comparable sales growth in the U.S. Retail segment during the second quarter.
Product innovation and brand collaborations are expected to remain key growth drivers. Carter’s continues to enhance its product assortment while introducing collaborations such as Winnie the Pooh and Umbro, which have attracted new customers and generated strong consumer engagement. Management also emphasized that investments in product quality, compelling assortments and digital experiences remain central to its strategy. In addition, ongoing productivity initiatives across stores, e-commerce and supply chain operations are helping offset higher operating costs while supporting long-term profitability.
Carter’s is also expected to benefit from improving pricing actions and productivity savings. Management noted that second-quarter gross margin pressure from tariffs should be partially offset by higher planned pricing, supply-chain mitigation initiatives, a richer mix of U.S. Retail sales and continued productivity improvements. Wholesale trends are also expected to improve sequentially, supported by stronger seasonal order bookings and favorable customer response to the company’s fall and winter product offerings.
For the second quarter of 2026, CRI projects low-single-digit net sales growth compared with $585 million in the prior-year quarter, adjusted operating income of $11-$13 million and adjusted earnings per share of 2-6 cents. The outlook assumes an earlier Easter benefit, a lower gross margin rate tied to tariff impacts and low single-digit SG&A growth. We expect sales growth of 2.6% for the Retail and 5.4% for the International segments in the second quarter.
However, Carter’s continues to face a challenging operating environment. Higher tariffs remain a meaningful headwind to margins despite recent moderation, while management continues to monitor potential pricing actions by competitors amid a value-conscious consumer backdrop. Inflationary pressures on wages, rent and transportation costs, along with increased marketing investments and delayed store closures, are expected to keep SG&A expenses elevated. In addition, management acknowledged that consumer demand softened in April following a strong Easter season, highlighting the continued uncertainty surrounding discretionary spending trends.
What the Zacks Model Unveils for CRI
Our proven model doesn’t conclusively predict an earnings beat for Carter's this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Carter's currently has an Earnings ESP of 0.00% and a Zacks Rank of 2. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Valuation Picture
From a valuation perspective, Carter’s offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 12.19x, which is below the five-year high of 18.37x and the Shoes and Retail Apparel industry’s average of 19.69x, the stock offers compelling value for investors seeking exposure to the sector.
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The recent market movements show that CRI’s shares have risen 6.3% in the past three months against the industry's 3.5% fall.
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Stocks With the Favorable Combination
Here are some companies, which according to our model, have the right combination of elements to post an earnings beat:
SharkNinja, Inc. SN currently has an Earnings ESP of +2.65% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
SN is likely to register growth in its bottom and top lines when it reports second-quarter 2026 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.6 billion, indicating a 13.5% increase from the figure reported in the year-ago quarter.
The consensus estimate for SN’s second-quarter earnings is pegged at $1.10 per share, implying 13.4% growth from the year-ago quarter’s actual. The consensus mark has dipped a penny in the past 30 days.
MGM Resorts International MGM currently has an Earnings ESP of +18.79% and a Zacks Rank of 3. MGM is likely to register a top-line increase when it reports second-quarter 2026 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $4.5 billion, indicating a 0.93% rise from the figure reported in the year-ago quarter.
The consensus estimate for MGM Resorts’ second-quarter earnings is pegged at 63 cents a share, implying a 20.3% decrease from the year-earlier quarter. The consensus mark has increased from 60 cents in the past 30 days.
Cintas Corporation CTAS currently has an Earnings ESP of +0.09% and a Zacks Rank of 3. CTAS is likely to register growth in its bottom and top lines when it reports first-quarter fiscal 2027 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3 billion, indicating 9.2% growth from the figure reported in the year-ago quarter.
The consensus estimate for CTAS’ first-quarter earnings is pegged at $1.35 a share, implying a 12.5% increase from the year-earlier quarter. The consensus mark has been stable in the past seven days.
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This article originally published on Zacks Investment Research (zacks.com).