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Carter's (CRI) investor relations material

Carter's Q2 2025 earnings summary

Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
Logotype for Carter's Inc
Q2 2025 earnings summary25 Jul, 2025

Executive summary

  • Q2 2025 net sales grew 4% year-over-year to $585M, led by U.S. Retail and International, but net income and EPS declined sharply due to higher SG&A, margin pressure, and one-time costs.

  • Leadership transition completed with a new CEO and key hires, focusing on long-term growth, brand investments, and operational improvements.

  • Profitability was impacted by pricing investments, new stores, performance-based compensation, and higher tariffs.

  • Adjusted results exclude $8M in Q2 and $17M in H1 for operating model improvement and leadership transition costs.

  • Dividend per share was reduced in Q2 2025 to align with lower profitability and anticipated tariff impacts.

Financial highlights

  • Q2 2025 net sales: $585.3M (+3.7% YoY); gross margin: 48.1% (down 200 bps YoY); operating income: $4.0M (down 89.7% YoY); net income: $0.4M ($0.01 EPS).

  • Adjusted Q2 operating income: $11.8M (down 70.2% YoY); adjusted net income: $6.3M ($0.17 EPS).

  • SG&A rose 10–13.5% to $273–$281M, mainly from higher store expenses, compensation, and improvement costs.

  • Inventory up 3% year-over-year, with quality improved and excess inventory reduced.

  • Cash and cash equivalents at quarter-end: $338.2M; no borrowings under revolving credit facility.

Outlook and guidance

  • Fiscal 2025 guidance suspended due to leadership transition and significant tariff uncertainty.

  • New tariffs expected to reduce pre-tax income by ~$35M in H2 2025 and $125–$150M annually; mitigation efforts underway but may not fully offset impact.

  • Plans to offset tariff costs through assortment changes, vendor cost sharing, production mix shifts, and price increases.

  • Management anticipates continued volatility in cash flows and margin pressure due to trade policy and inflation.

  • Positive trends in July and back-to-school sales; expecting revenue growth acceleration in H2, led by DTC.

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Frequently asked questions

Carter's, Inc. is the largest branded marketer in North America focused on apparel for babies and young children. The company owns several well-known brands, including Carter's, OshKosh B'gosh, Skip Hop, and Little Planet. Carter's sells a range of products such as clothing, accessories, footwear, and home décor for young children, primarily through its retail stores, e-commerce platforms, and various wholesale channels. Additionally, Carter's brands are available at major retailers like Walmart and Target, and online via platforms such as Amazon. Carter's is headquartered in Atlanta, Georgia, and its shares are traded on the NYSE.

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