Is Aristotle’s Exit From Carter’s Amid AI Rotation Altering The Investment Case For CRI?

• Earlier this year, Aristotle Capital Boston, LLC exited its position in Carter’s, Inc., citing deteriorating fundamental performance and an uncertain strategic direction for the childrenswear retailer.
• The move highlights how some institutional investors are reallocating capital from traditional apparel names like Carter’s toward AI-focused companies they view as offering a more attractive balance of potential upside and downside risk.
• We’ll now examine how Aristotle Capital Boston’s decision to liquidate its Carter’s stake, citing weaker fundamentals, could influence the company’s investment narrative.

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Carter's Investment Narrative Recap

To own Carter’s today, you need to believe its core baby and childrenswear brands can stabilize after a tough stretch for profits and share price, and that new leadership can refocus the business. Aristotle Capital Boston’s exit underscores near term concern about weaker fundamentals and strategy clarity, but it does not materially change the key catalyst: whether the new CEO can improve execution while addressing the immediate risk of pressured margins and declining earnings.

The most relevant recent announcement here is Carter’s Q3 2025 earnings, where sales were flat year on year but net income and margins compressed sharply, partly reflecting a US$43.6M one off loss. That weakening profitability profile sits squarely behind concerns that prompted some institutions to rotate into AI stocks, and it will likely frame how investors judge any early moves by the new CEO as they look for signs of earnings stabilization or recovery.

Yet the bigger issue investors should be aware of is how sustained margin pressure could...

Read the full narrative on Carter's (it's free!)

Carter's narrative projects $2.8 billion revenue and $39.2 million earnings by 2028. This implies a 0.4% yearly revenue decline and an earnings decrease of about $93 million from $132.5 million today.

Uncover how Carter's forecasts yield a $29.50 fair value, a 9% downside to its current price.

Exploring Other Perspectives

Three fair value estimates from the Simply Wall St Community cluster between about US$17.49 and US$29.50, underlining how far views can diverge. Against that backdrop, Carter’s recent margin compression and earnings decline give you strong reasons to compare several of these perspectives before forming your own view.

Explore 3 other fair value estimates on Carter's - why the stock might be worth as much as $29.50!

Build Your Own Carter's Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Carter's research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Carter's research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Carter's overall financial health at a glance.

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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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