Carter’s, Inc. CRI delivered solid first-quarter 2026 results, wherein earnings and revenues beat the Zacks Consensus Estimate. The company posted adjusted earnings of 39 cents per share, topping the Zacks Consensus Estimate of 7 cents. However, the metric fell 40.9% from the year-ago quarter.
Net sales increased 8.1% from the year-ago quarter to $681.1 million, supported by broad-based demand across segments and a strong Easter selling period. This exceeded the consensus mark of $662 million by 2.9%. A key operating highlight was U.S. Retail comparable net sales growth of 10.5%, marking the fourth straight quarter of increase.
Cater’s shares have jumped 17% during the trading hours post releasing its quarterly results. This Zacks Rank #1 (Strong Buy) stock gained 0.4% in the past three months against the industry’s 15.2% decline.
CRI's Segments Drive Top-Line Gains
CRI’s U.S. Retail segment net sales rose 12.8% year over year to $332.2 million, exceeding our model’s forecast of $320.1 million for the quarter.
The U.S. Wholesale segment’s sales edged up 0.5% year over year to $251.4 million, surpassing our estimate of $247.5 million for the segment.
The International segment recorded a 14.3% year-over-year increase in sales to $97.5 million, topping our estimate of $94.3 million.
Carter's, Inc. Price, Consensus and EPS Surprise
Carter's, Inc. price-consensus-eps-surprise-chart | Carter's, Inc. Quote
Focus on CRI’s Margins
Gross profit inched up 1% year over year to $293.9 million. Adjusted operating income decreased 19.6% to $28.4 million, and the adjusted operating margin fell 140 basis points to 4.2%, mainly owing to higher tariff costs, inflationary pressure in store-associated costs, partly offset by pricing, favorable channel mix and gains from cost savings.
CRI’s Financial Snapshot
Carter’s ended first-quarter 2026 with cash and cash equivalents of $473.4 million, net long-term debt of $567.5 million and shareholders’ equity of $928.5 million. Net cash provided by operating activities was $6.4 million against a $48.6 million use of cash in the year-ago quarter,
In the first quarter of 2026, the company paid a dividend of 25 cents a share in cash, amounting to $9.2 million. It did not repurchase shares in the reported quarter.
CRI's Q2 & 2026 View
Carter’s second-quarter and 2026 outlook include CEO transition-related adjustments. The company expects low single-digit to mid-single-digit percentage growth in net sales and adjusted operating income compared with fiscal 2025, alongside a low double-digit to mid-teens percentage decrease in adjusted earnings per share. It reported net sales of $2.9 billion, adjusted operating income of $176 million and adjusted earnings per share of $3.47 in 2025. Management projected operating cash flow of $110-$120 million and capital expenditures of $55 million for the year.
Earnings contributions weighted to the second half owing to higher projected tariff impacts and investment spend in the first half compared with the second half. 2026 outlook includes lower gross margin rate on higher tariff costs, partly offset by pricing, other tariff-mitigation efforts and productivity savings; and low-single digit rise in SG&A for the year.
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.
More Key Picks in the Consumer Discretionary Space
Gildan Activewear Inc. GIL, which is a designer and marketer of premium quality branded basic activewear, currently flaunts a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GIL delivered a negative trailing four-quarter earnings surprise of 1.1%, on average. The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales indicates growth of 68.9% from the year-ago number.
Boyd Gaming BYD, which is a gaming company, currently carries a Zacks Rank #2.
BYD delivered a trailing four-quarter earnings surprise of 7.5%, on average. The Zacks Consensus Estimate for BYD’s current financial-year EPS indicates growth of 0.1% from the year-ago number.
Columbia Sportswear Company COLM, which is a marketer and distributor of outdoor and active lifestyle apparel, footwear, accessories and equipment, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for COLM’s current financial-year sales is expected to rise 2.3% from the corresponding year-ago reported figure. COLM delivered a trailing four-quarter earnings surprise of 44.1%, on average.
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