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- **Tariff-Driven Pricing**: Mid-single-digit AUR growth in Retail offset $20M Q3 tariff impact. 2026 plans include $200M+ tariff mitigation through pricing and supply chain changes.
- **Cost Savings & Reinvestment**: $45M annual savings from workforce reduction and process improvements will partially fund $16M 2026 marketing increase.
- **Store Restructuring**: 150 store closures to reduce SG&A; remaining fleet focused on high-margin formats and experiential retail.
- **Brand Shift**: Transitioning from Amazon's Simple Joys to core Carter's/OshKosh brands in Wholesale, with 2026 sales growth driven by price increases.
- **Financial Resilience**: $184M cash, new $750M ABL facility, and potential senior note refinancing support liquidity amid macro uncertainty.

**【CEO Summary Section】**
- **Business Transformation Progress**: CEO Doug Palladini highlights acceleration of strategic initiatives, including cost reduction, efficiency improvements, and product assortment rationalization. Consumer engagement is rising, particularly among Gen Z families, though current results fall short of long-term goals.
- **Tariff Mitigation Strategy**: Pricing increases (mid-single-digit AUR growth in Q3 Retail) and supply chain optimization (>$40M duty reductions) are key to offsetting $200M+ annual tariff impact. 2026 plans include further price adjustments and leaner inventory management.
- **Store Restructuring**: Targeting 150 North American store closures (mostly via lease expiration) to reduce SG&A and free up capital. Remaining fleet will focus on high-productivity formats and experiential retail.
- **Brand Reinvestment**: $45M gross savings from cost-cutting will partially fund $16M increase in 2026 marketing spend, emphasizing brand storytelling and demand creation over promotions.

**【CFO Financial Commentary】**
- **Q3 Financials**: Net sales $758M (flat YoY). Adjusted EPS $0.74 vs. $1.64 prior year. Gross margin -180bps to 45.1% due to tariffs ($20M Q3 impact) and product cost inflation. SG&A +8% YoY driven by store expenses, marketing, and variable comp.
- **Tariff Outlook**: 2025 net tariff impact $25-35M; 2026 gross impact $200-250M. CFO estimates 43% Q4 gross margin (vs. 45.1% Q3) as higher tariffs outpace pricing gains.
- **Cost Savings**: $45M annual savings from 15% office workforce reduction and process streamlining. $35M begins in 2026; remaining $10M from SG&A expense reduction.
- **Balance Sheet**: $184M cash, $756M new ABL facility in process. 2026 senior note refinancing under consideration amid favorable high-yield market conditions.

**【Q&A Highlights】**
- **Simple Joys Transition**: Shifting focus from Amazon's private-label Simple Joys to core Carter's/OshKosh brands. Q3 Wholesale sales down low single digits, driven by Simple Joys decline. 2026 plans include higher pricing in Wholesale channel.
- **Sales Growth Expectations**: 2026 sales growth to be price-driven (low unit growth). CFO cautious on consumer demand amid macro uncertainty but optimistic on brand strength and tariff mitigation execution.
- **Store Closures Impact**: 150 closures expected to transfer 20% sales to e-commerce and nearby stores, improving profitability. Q3 closed-store sales $110M, marginally profitable.
- **Tariff Mitigation Progress**: 3-month faster product development cycle, 20-30% product assortment reduction, and AI-driven design tools improving sell-through rates.


Carter's, Inc. (CRI) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CRI

CRI fundamentals

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