Carter's (CRI) has wrapped up FY 2025 with fourth quarter revenue of US$925.5 million and basic EPS of US$1.76, alongside net income of US$64.2 million. This puts a clear spotlight on how effectively it is turning sales into profit. The company has seen quarterly revenue move from US$859.7 million and EPS of US$1.71 in Q4 2024 to US$925.5 million and EPS of US$1.76 in Q4 2025. Trailing twelve month revenue of US$2.9 billion and EPS of US$2.53 set the broader earnings backdrop. For investors, the latest results put the focus squarely on how sustainable these margins look as the business moves through the next phase of its cycle.
See our full analysis for Carter's.With the headline numbers on the table, the next step is to see how this earnings print lines up against the widely held narratives about Carter's growth, risks, and profitability story.
See what the community is saying about Carter's
Margins Under Pressure At 3.2%
- On a trailing basis, Carter's net profit margin sits at 3.2%, compared with 6.3% a year earlier, and trailing twelve month net income is US$91.8 million on US$2.9b of revenue.
- Bears argue that margin pressure will stick because tariffs and cost inflation are lifting the effective duty rate into the high 30% range and Carter's is leaning on broad price increases to offset this, which they see as risky for a price sensitive young family customer base.
- This concern lines up with the drop in trailing margin from 6.3% to 3.2%, as higher duties and input costs can compress earnings even when revenue, at about US$2.9b, remains relatively stable over the last twelve months.
- Critics also point to the plan to close about 150 North American stores and reduce office based roles by roughly 15% as a sign the current store fleet and cost base are under pressure, and they question whether planned US$45 million of savings will be enough to offset those headwinds and support higher profitability.
Revenue Growth Slow, Earnings Forecasts Higher
- Forecasts point to revenue growing around 1.1% per year while earnings are expected to grow about 9.7% per year, compared with five year earnings that have declined roughly 15% per year.
- Supporters of the bullish view think this gap between modest revenue growth and faster earnings growth can hold, because they see several levers working in Carter's favor, including digital channel expansion, store rationalization and product simplification.
- They highlight plans to reposition Carter's, OshKosh, Little Planet and Otter Avenue as primary brands on Amazon and other wholesale platforms, which they believe can lift higher value assortments and support Wholesale segment earnings even if total company revenue climbs only a little above the current US$2.9b level.
- Bulls also point to the planned US$45 million in annual productivity savings and the reduction of 20% to 30% of product choices, arguing that better inventory quality and a more efficient cost base can help translate low single digit revenue growth into the 9.7% earnings growth that is currently projected.
P/E Of 13.3x Versus DCF Value
- Carter's trades on a P/E of 13.3x compared with peers at 27.8x and the US Luxury industry at 21x, while a DCF fair value of US$13.94 sits well below the current share price of US$33.39.
- Consensus style analysis suggests this mix of low relative P/E and a DCF fair value below the market price gives investors two very different signals to weigh, especially when set alongside the long run earnings record.
- On one hand, the 13.3x P/E is lower than both peers and the broader US market at 19.6x, which is consistent with the idea that the stock appears inexpensive compared with similar companies even though trailing twelve month EPS is US$2.53 on net income of US$91.8 million.
- On the other hand, the DCF fair value of US$13.94 and the roughly 15% per year five year earnings decline highlight that, despite the lower P/E, longer term profit trends and cash flow estimates have been weaker, which is why some analysts are more cautious about how much upside is left from here.
Next Steps
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Carter's on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
Mixed messages in the numbers so far? If you want to move quickly and build your own view, start by weighing the company's 3 key rewards and 2 important warning signs.
See What Else Is Out There
Carter's is wrestling with thinner 3.2% margins, a weaker five year earnings record, and a DCF value that sits well below its current share price.
If that mix of margin pressure and valuation gaps feels uncomfortable, you might prefer our 77 resilient stocks with low risk scores to quickly focus on companies with steadier profiles and fewer red flags.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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