Carter's Q1 2025 Earnings Call: Unpacking Contradictions in E-Commerce Growth, Pricing Strategies, and Retail Challenges

E-commerce growth and impact, pricing strategy and market aggressiveness, international sales growth and targets, e-commerce sales and growth strategy, retail challenges and strategy are the key contradictions discussed in Carter's latest 2025Q1 earnings call.



Revenue and Earnings Performance:
- Carter's, Inc. reported net income of $46.4 million for Q1 2025, compared to $46.6 million in the prior year, indicating a slight year-over-year decline.
- The revenue for Q1 2025 was $1.4 billion, representing a 2.9% decrease from the previous year.
- The decrease in revenue was primarily due to a decrease in comparable sales and reduced customer traffic in stores.

Comparable Sales and Store Traffic:
- Carter's reported a decline in comparable sales of 2.9% for Q1 2025 compared to Q1 2024.
- The company saw a reduction in customer traffic in its stores, which contributed to the decline in comparable sales.
- These declines were attributed to ongoing macroeconomic challenges and increased promotional activity.

Cost Management and Gross Margin:
- The company's gross margin improved to 45.2% for Q1 2025, compared to 44.4% in Q1 2024.
- The improvement in gross margin was driven by a reduction in promotional activity and the impact of past price increases.
- Despite the margin improvement, Carter's faced higher supply chain and sourcing costs, which offset some of the gains.

Inventory and Asset Optimization:
- Carter's ended the quarter with an inventory balance of $472 million, down 5.6% year-over-year.
- The company continues to focus on optimizing its inventory levels to align with demand, which has led to a reduction in excess inventory.
- This reduction in inventory is part of a broader strategy to improve operational efficiency and profitability.