The sharp YoY decline in adjusted EPS and weak Q2 guidance ($0.02-$0.06 vs $0.17) point to continued margin compression from tariffs and investment spending. The reiterated full-year outlook for EPS decline confirms the trend is not transitory. Traders should watch for further tariff developments and Q2 results to see if the back-half weighting materializes. The new CEO starts June 15, adding execution risk.
Price Chart
Executive Summary
Carters reported Q1 2026 net sales of $681.1M (+8.1% YoY), beating the $660.8M consensus, but GAAP diluted EPS of $0.39 missed the $0.13 consensus by a wide margin (the $0.13 estimate appears stale/incorrect for this quarter). Adjusted EPS was $0.39 vs $0.66 a year ago, and the company reiterated its full-year outlook for low single-digit to mid-single-digit sales growth but a low double-digit to mid-teens decline in adjusted EPS, signaling persistent margin pressure from tariffs and investment spending. The stock is likely to trade down on the sharp YoY earnings decline and weak forward guidance.
Key Financial Metrics
Key Facts
- Net sales $681.1M vs $629.8M YoY, +8.1%, above $660.8M consensus
- GAAP diluted EPS $0.39 vs $0.43 YoY, a decline of 9.3%
- Adjusted diluted EPS $0.39 vs $0.66 YoY, a decline of 40.9%
- Adjusted operating margin fell to 4.2% from 5.6% YoY due to tariffs and inflation
- Full-year 2026 guidance: low single-digit to mid-single-digit sales growth, but adjusted EPS expected to decline low double-digit to mid-teens vs $3.47 in FY2025
- Q2 2026 guidance: adjusted EPS $0.02-$0.06 vs $0.17 in Q2 2025
- Operating cash flow improved to $6.4M from -$48.6M in Q1 2025
- No share repurchases in Q1; $9.2M in dividends paid
Financial Impact
Adjusted EPS declined 40.9% YoY to $0.39; full-year adjusted EPS guided down low double-digit to mid-teens from $3.47
Risk Factors
- Tariff costs are pressuring gross margins and are expected to persist through H1 2026
- Full-year adjusted EPS guidance implies a significant decline, signaling structural profitability challenges
- CEO transition creates near-term uncertainty; new CEO Sharon Price John starts June 15
- Higher interest expense from refinanced senior notes adds ~$40M in annual net interest costs
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001060822-26-000070 |
| Document: cri-20260506.htm | 0001060822-26-000070 |
| Document: 0001060822-26-000070-index-headers.html | 0001060822-26-000070 |
| Document: 0001060822-26-000070-index.html | 0001060822-26-000070 |
| Document: 0001060822-26-000070.txt | 0001060822-26-000070 |
| 8-K Data (Synthetic) | 0001060822-26-000070 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 22, 2026 4w ago | 25-NSE | $30.86 | awaiting T+60 | — | $31.81 (+3.08%) |
Aug 20, 2026 9w ago | 8-K | $35.77 | awaiting T+60 | — | $31.81 (−11.07%) |
Jul 31, 2026 12w ago | 8-K | $38.57 $31.81 | ▼ −17.53% | ▼ −19.98% | $31.81 (−17.53%) |
May 6, 2026 24w ago | 8-K | $37.23 $38.57 | ▼ −3.60% | ▼ −1.54% | $31.81 (+14.56%) |
May 1, 2026 25w ago | 8-K | $33.17 $38.70 | ▲ +16.67% | ▲ +14.82% | $31.81 (−4.10%) |
Apr 23, 2026 26w ago | Court Ruling | $37.20 $38.29 | ▲ +2.93% | ▼ −1.76% | $31.81 (−14.49%) |
Apr 23, 2026 26w ago | Court Ruling | $37.20 $38.29 | ▲ +2.93% | ▼ −1.76% | $31.81 (−14.49%) |
Apr 1, 2026 29w ago | DEFA14A | $35.91 $41.16 | ▲ +14.62% | ▲ +0.46% | $31.81 (−11.42%) |
Feb 27, 2026 34w ago | 8-K | $33.31 $38.40 | ▼ −15.29% | ▼ −5.90% | $31.81 (+4.50%) |
US Market Status
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