Carter's (CRI) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 2026 rose 5.2% year-over-year to $615.5 million, with growth across all segments and strong e-commerce momentum.

• Operating income surged to $140 million from $4 million in Q2 2025, driven by a $128–$132 million tariff/import duty recovery; adjusted operating income increased 54% to $18 million.

• Net income for Q2 2026 was $105 million ($2.87 per diluted share), up from $0.4 million; adjusted net income was $9.4 million ($0.26 per share), up 49%.

• U.S. Retail comparable sales rose 5.1%, supported by improved marketing and productivity initiatives.

• Leadership transition completed with a new CEO appointed; IP litigation and transition costs impacted results.

Financial highlights

• Q2 2026 consolidated net sales: $615.5 million (+5.2% YoY); gross margin: 67.0% (GAAP), 46.3% (adjusted); operating margin: 22.7% (GAAP), 2.9% (adjusted).

• SG&A expenses decreased 1.7% to $276.1 million; SG&A rate improved by 310 bps to 44.9%.

• EBITDA for Q2 2026: $152.5 million (GAAP), $30.8 million (adjusted).

• First half 2026 net sales: $1.30 billion (+6.7% YoY); net cash from operations: $202.3 million, up from a $8.3 million outflow in H1 2025.

• Cash and cash equivalents at quarter-end: $653.6 million.

Outlook and guidance

• FY 2026 net sales expected to grow 2–3%; adjusted operating income projected to grow low- to mid-single digits; adjusted EPS to decline high single- to low double-digits.

• Q3 2026 guidance: ~$750 million net sales, ~$50 million adjusted operating income, ~$0.85 adjusted EPS.

• Operating cash flow forecasted at $230–$240 million; capital expenditures at $50 million.

• Board will evaluate future dividends based on business conditions and financial performance.

• Earnings contributions weighted to the second half due to tariff and investment timing.