Carter’s met Wall Street’s revenue expectations in Q3 2026, but the market responded negatively given flat year-over-year sales and soft underlying demand trends. Management attributed the quarter’s performance to a successful brand relaunch, targeted marketing efforts, and operational improvements. CEO Sharon Price John highlighted that “strategic investments using marketing insights, crisp promotions, and targeted merchandising” helped reverse early-quarter softness, particularly in September, which is a key month for the company due to elevated birth rates and gifting activity. The team also pointed to productivity initiatives, including store closures and a focus on core product categories, as drivers of operating margin expansion and improved profitability.
Is now the time to buy CRI? Find out in our full research report (it’s free for active Edge members).
Carter's (CRI) Q3 2026 highlights:
- Revenue $752.5 million vs S&P analysts’ estimates of $749.5 million (flat year on year, in line)
- Adjusted EPS $1.03 vs S&P analysts’ estimates of $0.85 (20.9% beat)
- Adjusted EBITDA $69.5 million vs analyst estimates of $61.37 million (9.2% margin, 13.2% beat)
- Revenue guidance $870 million at the midpoint for Q4 2026, below analyst estimates of $924 million
- Adjusted EPS guidance $3.14 at the midpoint for the full year, missing analyst estimates by 0.8%
- Operating margin 7.6%, up from 3.8% in the same quarter last year
- Same-store sales were flat year on year (2% in the same quarter last year)
- Market capitalization $1.16 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Carter's’s Q3 earnings call
- Jay Sole (UBS) asked about the interplay between wholesale and retail channels. CEO Sharon Price John explained that Carter’s is focusing on synergy across channels and plans to drive more integrated experiences, leveraging consumer insights to differentiate products and customer engagement.
- Kelly Crago (BMO Capital Markets) sought clarification on the outlook for the U.S. wholesale business and pricing power. CFO Richard Westenberger noted that most of the reduced guidance relates to retail, with wholesale benefiting from shipment timing and strong spring order books, but acknowledged ongoing pricing discipline.
- Ike Boruchow (Wells Fargo) questioned sustainability of average unit retail (AUR) growth and gross margins. Westenberger responded that low single-digit price increases are planned for Q4, supported by mix and margin initiatives, while tariff relief should provide an additional benefit.
- Jon Keypour (Goldman Sachs) asked about gross margin drivers for next year. Westenberger said that while cotton prices are rising, the major input cost impact is expected later in 2027, and tariff uncertainty remains a risk.
- Tom Nikic (Needham & Company) inquired about the timeline for new leadership structure impact and competitive promotions. John said leadership changes would roll out in phases, with immediate brand benefits already visible, and Chief Commercial Officer Allison Peterson noted anticipation of intensified promotional activity during the holidays.
Catalysts in upcoming quarters
In coming quarters, the StockStory team will watch for (1) execution and consumer response to Carter’s rebranding and expanded marketing efforts, (2) the pace at which new leadership roles drive synergy and operational efficiency, and (3) the company’s ability to sustain pricing and margin improvements amid heightened holiday promotions and shifting consumer demand. Progress on international expansion and asset-light growth strategies will also be key areas of focus.
Carter's currently trades at $31.55, down from $33.38 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free).
The best stocks for high-quality investors
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.