Q4 2025 Carter's Inc Earnings Call Transcript
Key Points
- Carter's Inc (CRI) achieved year-over-year revenue growth for the first time since 2021, even excluding the 53rd week of sales.
- The company experienced its third consecutive quarter of Retail comp growth, with higher average unit retail prices (AURs) and reduced promotional activity.
- Carter's Inc (CRI) is attracting new consumers, particularly among Gen Z and Millennial families, who are purchasing higher-priced product assortments.
- The company has taken decisive actions to rationalize its store fleet and rightsize its workforce, leading to enhanced productivity.
- Carter's Inc (CRI) plans to continue investing in demand creation and productivity initiatives to drive store and ecommerce traffic, expecting both revenue and operating income to grow in 2026.
- Despite sales growth, earnings were down year over year, although at a lower rate than earlier in 2025.
- The company's gross margin decreased by 460 basis points in the fourth quarter due to tariffs and higher product costs.
- Carter's Inc (CRI) faced significant non-GAAP charges related to operating model improvements, organizational restructuring, and debt refinancing.
- The impact of tariffs is expected to continue affecting profitability, with a projected gross impact of over $200 million in 2026.
- First-half profitability in 2026 is expected to be down due to the timing of investment spending and higher interest costs from debt refinancing.
Welcome to Carter's fourth-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.
'-
Thank you, and good morning, everyone. We issued our fourth-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. The 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 find
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