Financial Data and Key Metrics Changes - For Q3 2025, the company reported net sales of $758 million, with operating income of $29 million and earnings per share (EPS) of $0.32, compared to EPS of $1.62 in the previous year [4][10] - Year-to-date sales approached $2 billion, with an operating income of $59 million, reflecting a 3% operating margin and year-to-date EPS of $0.75 [4][10] - Adjusted EPS for Q3 was $0.74, down from $1.64 a year ago, with adjusted operating income of $39 million compared to $77 million in the prior year [10][11] Business Line Data and Key Metrics Changes - U.S. retail net sales grew by 3% in Q3, with a positive 2% comparable sales growth, while U.S. wholesale sales declined, particularly in the Simple Joys brand [11][12] - International segment sales increased by 5%, with strong performance in Mexico, achieving a 16% comparable sales growth [17][18] - The U.S. retail business saw improved inventory management, contributing to better sales performance during key promotional periods [12][13] Market Data and Key Metrics Changes - The company faced significant tariff impacts, estimating an annualized incremental impact of $200 to $250 million due to higher tariffs, with a net impact on operating income projected between $25 to $35 million for Q4 [30][31] - The effective duty rate increased to the high 30% range, significantly affecting cost structures [30] Company Strategy and Development Direction - The company is undergoing a transformation to enhance productivity, reduce costs, and streamline operations, targeting $45 million in gross savings for 2026 [24][25] - Plans include closing approximately 150 stores in North America, with expectations of sales transfer benefits to nearby stores and e-commerce channels [25][49] - The company aims to focus on core brands and reduce reliance on the Simple Joys brand, which has seen declining demand [16][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to sustainable growth, emphasizing the importance of managing tariff impacts through pricing strategies and cost reductions [22][39] - The company is preparing for a strong holiday season, with expectations of low single-digit comparable sales growth in U.S. retail for Q4 [33][34] - Concerns were raised about macroeconomic indicators, including inflation and consumer confidence, which could impact future performance [37][38] Other Important Information - The company ended Q3 with $184 million in cash and significant borrowing capacity, maintaining a strong balance sheet amid uncertainties [19][20] - The company plans to invest more in demand creation and marketing, with a projected increase of nearly 20% in marketing spend for 2026 [27][28] Q&A Session Summary Question: What is happening with the Simple Joys brand and its future? - Management indicated that the Simple Joys brand is being reduced in significance as they focus on core brands like Carter's and OshKosh B'gosh, which are expected to perform better on platforms like Amazon [41][43][62] Question: Can you elaborate on the expected sales transfer from store closures? - The company expects a 20% sales transfer rate to nearby stores and e-commerce from the 150 stores planned for closure, which generated about $110 million in revenue over the last 12 months [49] Question: What is the confidence level for sales growth in 2026? - Management noted that sales growth will be driven more by pricing than unit sales, with expectations that the entire industry will raise prices in response to tariff challenges [55][71] Question: How will the company manage the impact of tariffs on margins? - The company plans to cover most of the incremental tariff impact through pricing strategies and operational efficiencies, while also monitoring cotton and freight costs [76][80]

Financial Data and Key Metrics Changes - For Q3 2025, net sales were $758 million, with operating income of $29 million and earnings per share (EPS) of $0.32, compared to EPS of $1.62 in the previous year [7][16] - Year-to-date sales reached nearly $2 billion, with an operating income of $59 million, representing a 3% operating margin, and year-to-date EPS of $0.75 [7][10] - Adjusted Q3 EPS was $0.74, down from $1.64 a year ago, reflecting significant one-time charges [16][28] Business Line Data and Key Metrics Changes - U.S. Retail segment saw a 3% increase in net sales, with a positive 2% comparable sales growth [18][19] - U.S. Wholesale segment experienced a decline in sales, particularly in the Simple Joys brand, while International segment sales increased by 5% [25][26] - Adjusted operating income declined by nearly $40 million, with U.S. Retail and U.S. Wholesale contributing equally to this decline [16][17] Market Data and Key Metrics Changes - International sales were up 5%, with strong performance in Mexico (+16% comp) and a 10% increase in sales to international partners [26] - U.S. Retail's average unit retail (AUR) increased in the mid-single digits, contributing to a low single-digit increase in average transaction values [14][19] - The impact of higher tariffs on gross margin was approximately $20 million in Q3, with gross margin decreasing to 45.1% [13][44] Company Strategy and Development Direction - The company is focused on transforming its business model, aiming for sustainable and profitable growth while managing costs and enhancing productivity [4][32] - Plans include closing 150 North American stores, which is expected to lead to a sales transfer to nearby stores and e-commerce channels [36][68] - The company is also investing in demand creation and marketing, with a planned increase of nearly 20% in marketing spend for 2026 [40][41] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant impact of tariffs, estimating an annualized incremental impact of $200 million to $250 million for 2025 [44] - The company has not reinstated sales and earnings guidance due to ongoing uncertainties regarding tariffs and consumer response to price increases [45][52] - Management expressed confidence in achieving sales growth in 2026, primarily driven by price increases rather than unit growth [75][76] Other Important Information - The company ended Q3 with $184 million in cash and a strong liquidity position, with net inventories up 8% year-over-year [27][28] - The company is pursuing a new credit facility and evaluating opportunities to refinance existing senior notes [29][30] Q&A Session Summary Question: What is happening with the Simple Joys brand and its future? - Management indicated that Simple Joys will be reduced in significance as the focus shifts to core brands like Carter's and OshKosh, which are expected to grow on platforms like Amazon [61][62] Question: Can you elaborate on the store closures and expected sales transfer? - The company expects a 20% transfer rate of sales to nearby stores and e-commerce channels, with closed stores generating about $110 million in revenue [68] Question: What is the preliminary view on sales growth for 2026? - Management expects sales growth to be higher than typical due to price increases, with a focus on maintaining competitiveness in the market [75][76]

Financial Performance - Net sales remained flat at $758 million in Q3 2025 compared to Q3 2024[2] - Net income decreased significantly by 80% from $58 million in Q3 2024 to $12 million in Q3 2025[2] - Diluted EPS decreased by 80% from $1.62 in Q3 2024 to $0.32 in Q3 2025[2] - For the year-to-date, net sales decreased by 1% from $1,984 million in 2024 to $1,973 million in 2025[3] - Year-to-date net income decreased by 78% from $124 million in 2024 to $28 million in 2025[3] Segment Performance - U S Retail net sales increased by 3% while operating margin decreased by 490 bps to 2 8%[6,8] - U S Wholesale net sales decreased while operating margin decreased by 560 bps to 15 5%[6,10] - International net sales increased by 5% while operating margin decreased by 140 bps to 8 2%[6,13] Strategic Initiatives and Outlook - The company is planning a 15% reduction-in-force of office-based roles, expected to save approximately $35 million annually[27] - The company plans to close 150 low-margin stores to improve store portfolio productivity[28] - The company estimates a $200 million to $250 million annualized pre-tax earnings impact from additional proposed tariffs[33]

Core Viewpoint - Carter's reported quarterly earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.78 per share, and a significant decline from $1.64 per share a year ago, indicating a negative earnings surprise of -5.13% [1] - The company posted revenues of $757.84 million for the quarter ended September 2025, slightly surpassing the Zacks Consensus Estimate by 0.91%, but down from $758.46 million year-over-year [2] Earnings Performance - Over the last four quarters, Carter's has surpassed consensus EPS estimates two times, but the recent earnings report reflects a continued trend of underperformance [2][6] - The company's shares have declined approximately 40.3% since the beginning of the year, contrasting with the S&P 500's gain of 15.5% [3] Future Outlook - The future performance of Carter's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.71 on revenues of $835.15 million, and for the current fiscal year, it is $3.24 on revenues of $2.8 billion [7] Industry Context - The Shoes and Retail Apparel industry, to which Carter's belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, suggesting a challenging environment for the company [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Carter's stock performance [5]

Group 1: Carter's Inc Performance - Carter's reported third-quarter earnings of 74 cents per share, exceeding the analyst consensus estimate of 73 cents per share [1] - Quarterly sales were $757.836 million, falling short of the analyst consensus estimate of $769.763 million [1] - Following the earnings report, Carter's shares fell 14.7% to $27.58 in pre-market trading [2] Group 2: Restructuring and Cost Savings - Carter's announced a restructuring plan that includes a 15% workforce reduction and 150 store closures [2] - The projected annualized savings from this restructuring are estimated to be $45 million, beginning in 2026 [2] Group 3: Other Stocks Movement - United States Antimony Corp shares dipped 15.6% to $10.12 in pre-market trading [4] - Nanobiotix SA shares declined 13.1% to $16.68 following updates to its clinical program [4] - Critical Metals Corp shares slipped 8.2% to $13.80 after a previous gain [4] - American Resources Corp declined 7.8% to $3.57 after a prior increase [4] - Datavault AI Inc fell 7.6% to $3.16 after a significant jump the previous day [4] - USA Rare Earth Inc shares fell 6.3% to $22.09 in pre-market trading [4] - NioCorp Developments Ltd declined 5.1% to $7.84 after a previous gain [4] - Newmont Corporation shares fell 3.8% to $80.21 after announcing commercial production at Ahafo North Project in Ghana [4]

Group 1 - The company, Carter's, announced plans to close approximately 150 stores in North America [1] - The company will also reduce its office workforce by about 15%, resulting in the elimination of roughly 300 positions [1] - These measures are being taken as tariffs negatively impact the company's earnings [1]

Financial Performance - Net sales for Q3 fiscal 2025 were $758 million, comparable to the prior year, with a slight decrease of $0.6 million or 0.1%[5][9] - Diluted EPS for Q3 fiscal 2025 was $0.32, down from $1.62 in Q3 fiscal 2024; adjusted diluted EPS was $0.74 compared to $1.64 in the prior year[5][13][14] - Operating income decreased by $47.9 million, or 62.2%, to $29.1 million, with an operating margin of 3.8%, down from 10.2% in the previous year[11][12] - Adjusted net income for Q3 fiscal 2025 was $26.8 million, down from $59.0 million in Q3 fiscal 2024[14] - The Company reported a net income of $11.6 million for the fiscal quarter ended September 27, 2025, compared to $58.3 million in the prior year[39] - For the fiscal quarter ended September 27, 2025, the net income was $11.6 million, a decrease of 80% compared to $58.3 million for the same quarter in 2024[55] - The diluted net income per common share for the quarter was $0.32, down from $1.62 in the prior year, reflecting a 80% decline[55] - Adjusted EBITDA for the fiscal quarter was $52.3 million, compared to $91.1 million in the same quarter of 2024, representing a 42.6% decrease[57] - For the three fiscal quarters ended September 27, 2025, consolidated net sales totaled $1,973.0 million, down 0.6% from $1,984.4 million in the prior year[62] Segment Performance - U.S. Retail segment net sales increased by 2.6%, while U.S. Wholesale segment net sales decreased by 5.1%[10] - U.S. Retail net sales for the quarter were $362.3 million, representing 47.8% of total net sales, compared to 46.5% in the prior year[42] - U.S. Wholesale net sales decreased to $283.8 million, accounting for 37.4% of total net sales, down from 39.5% year-over-year[42] - International segment net sales for the quarter were $111.7 million, showing a 4.9% increase compared to $106.5 million in the same quarter of 2024[62] Cash Flow and Liquidity - Net cash used in operations in the first three quarters of fiscal 2025 was $136.3 million, compared to net cash provided by operations of $11.3 million in the same period of fiscal 2024[20] - The company reported a net cash used in operating activities of $136,310 thousand for the three fiscal quarters ended September 27, 2025, compared to a net cash provided of $11,319 thousand in the prior year[49] - Cash and cash equivalents decreased to $184,190 thousand from $412,926 thousand, representing a decline of 55.5%[49] Cost Management and Restructuring - The company plans to reduce its office-based roles by approximately 300 positions, or 15%, by the end of 2025, expecting annualized savings of about $35 million starting in 2026[23][24] - The Company is targeting over $10 million in annual SG&A spending reductions, with savings expected to begin in 2026[30] - The company obtained commitments for a new five-year asset-based revolving credit facility with initial borrowing commitments of no less than $750 million[26] - The company reported a total of $19.1 million in adjustments to EBITDA for the fiscal quarter, primarily related to organizational restructuring and pension plan settlements[57] Store Closures and Sales Impact - The Company plans to close approximately 150 stores in North America over the next three years, increasing from a previous target of 100 stores, which collectively represent about $110 million in annual net sales[30] Shareholder Returns - The company returned $47 million to shareholders through dividends in the first three quarters of fiscal 2025[5][21] - The company paid dividends totaling $47,247 thousand during the three fiscal quarters ended September 27, 2025, compared to $87,345 thousand in the prior year, a decrease of 46.0%[49] Guidance and Future Outlook - The Company has suspended its fiscal 2025 guidance due to ongoing uncertainty regarding tariffs and their potential impact on business[31] - The Company will hold a conference call on October 27, 2025, to discuss third quarter results and provide business updates[32] Assets and Liabilities - Total assets increased to $2,469,439 thousand as of September 27, 2025, compared to $2,433,167 thousand a year earlier, reflecting a growth of 1.4%[47] - Total current liabilities slightly decreased to $501,690 thousand from $508,816 thousand, a reduction of 2.2%[47] - Total shareholders' equity increased to $864,642 thousand from $854,562 thousand, a growth of 1.3% year-over-year[47] Capital Expenditures - Capital expenditures for the three fiscal quarters ended September 27, 2025, were $42,662 thousand, up from $39,637 thousand in the previous year, indicating an increase of 5.7%[49]

Core Insights - Carter's, Inc. reported its third quarter fiscal 2025 results, highlighting continued improvement in U.S. Retail business demand with positive comparable sales and improved pricing for the second consecutive quarter [1] Financial Performance - The company achieved positive comparable sales in the third quarter, indicating a recovery in consumer demand [1] - Improved pricing strategies contributed to the positive sales performance for two consecutive quarters [1] Market Position - Carter's, Inc. is recognized as North America's largest and most-enduring apparel company exclusively for babies and young children [1]

Earnings Results - Carter's, Inc. is set to release its third-quarter earnings results on October 27, with analysts expecting earnings of 74 cents per share, a decrease from $1.64 per share in the same period last year [1] - The consensus estimate for quarterly revenue is $773.09 million, compared to $758.46 million a year earlier [1] Stockholder Rights Plan - On September 24, Carter's adopted a limited duration stockholder rights plan after RWWM acquired a 16.86% stake without prior notice [2] - Following this announcement, shares of Carter's increased by 1.8%, closing at $32.35 [2] Analyst Ratings - UBS analyst Jay Sole maintained a Neutral rating and reduced the price target from $32 to $26 [4] - Wells Fargo analyst Ike Boruchow kept an Underweight rating but raised the price target from $25 to $28 [4] - Citigroup analyst Paul Lejuez maintained a Neutral rating and lowered the price target from $50 to $45 [4]

Group 1 - Carter's, Inc. is set to release its third-quarter earnings results on October 27, with expected earnings of 74 cents per share, a decrease from $1.64 per share in the same period last year [1] - The consensus estimate for Carter's quarterly revenue is $773.09 million, which is an increase from $758.46 million a year earlier [1] - On September 24, Carter's adopted a limited duration stockholder rights plan after RWWM acquired a 16.86% stake without prior notice [2] Group 2 - Carter's shares rose by 1.8% to close at $32.35 on the last trading day [2] - UBS analyst Jay Sole maintained a Neutral rating and reduced the price target from $32 to $26 [4] - Wells Fargo analyst Ike Boruchow maintained an Underweight rating and increased the price target from $25 to $28 [4] - Citigroup analyst Paul Lejuez maintained a Neutral rating and cut the price target from $50 to $45 [4]