Q3 2025 Carter's Inc Earnings Call Transcript
Key Points
- Carter's Inc (CRI) reported positive retail comp growth for the second consecutive quarter, with average unit retail prices (AURs) up mid-single digits.
- The company has identified $45 million in gross savings for 2026 through cost reduction and organizational restructuring initiatives.
- Carter's Inc (CRI) is seeing growth in its better and best categories, which are higher AUR segments, and is gaining market share with new consumers, particularly among young Gen Z families.
- The company has successfully raised prices in response to higher tariffs, with consumers accepting the increases, particularly in the US Retail segment.
- Carter's Inc (CRI) has a strong liquidity position with $184 million in cash and plans to implement a new $750 million credit facility to enhance financial flexibility.
- Carter's Inc (CRI) reported a significant decline in third-quarter adjusted operating income, down to $39 million from $77 million a year ago.
- The company is facing substantial tariff impacts, with the gross impact estimated at $200 million to $250 million annually, affecting profitability.
- US Wholesale sales declined, particularly due to lower demand for the Simple Joys brand on Amazon, which has been a drag on revenue.
- The company plans to close 150 North American stores by the end of 2026, which will result in short-term revenue loss.
- Carter's Inc (CRI) is experiencing higher SG&A expenses, up 8% over the last year, driven by increased store-based expenses, marketing, and variable compensation provisions.
Welcome to the Carter's third-quarter fiscal 2025 earnings conference call. On the call are Doug Palladini, Chief Executive Officer and President; Richard Westenberger, Chief Financial Officer and Chief Operating Officer; and Sean McHugh, Treasurer. Please note that today's call is being recorded.
I'll now turn the call over to Mr. McHugh.
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Thank you and good morning, everyone. We issued our third-quarter 2025 earnings release earlier today. The release and presentation materials for today's call are available on our Investor Relations website at ir.carters.com. Note that statements on today's call about items such as the company's expectations and plans are forward-looking statements.
For a discussion of factors that could cause actual results to vary from those contained in the forward-looking statements, please see our most recent SEC filings and the earnings release and presentation materials posted on our website. In these materials, you will also
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