Should Carter’s (CRI) Lower Q3 Earnings and New Debt Offering Prompt a Review of Its Growth Strategy?

• Carter’s, Inc. recently reported its third-quarter 2025 results, showing sales of US$757.84 million and net income of US$11.59 million, both lower than the previous year.
• The company also completed a US$575 million senior notes offering, with plans to use proceeds to redeem existing debt and for general corporate purposes, against a backdrop of no recent share repurchases.
• We’ll explore how Carter’s decline in quarterly net income alters the outlook for its earnings and growth assumptions.

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Carter's Investment Narrative Recap

To be a Carter’s shareholder today, you need to believe in the company’s ability to reinvigorate earnings through international expansion, product innovation, and operational efficiencies, even as domestic growth slows and competition intensifies. The recent Q3 earnings miss, coupled with the new US$575 million senior notes issuance, does not materially shift the most important near-term catalyst: stabilizing margins and restoring profit growth; however, the pronounced drop in net income adds pressure to Carter’s turnaround story and magnifies earnings risk in the short run.

Of Carter’s recent announcements, the decision not to repurchase shares last quarter stands out, especially as the company completed another round of debt refinancing. Pausing buybacks in favor of debt management brings its own trade-offs, particularly as investors are focused on earnings recovery as the main catalyst for future returns.

By contrast, investors should be aware that Carter’s recent margin compression and net income decline raise new questions about the sustainability of...

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 requires a 0.4% annual revenue decline and a $93.3 million decrease in earnings from $132.5 million today.

Uncover how Carter's forecasts yield a $28.80 fair value, a 10% downside to its current price.

Exploring Other Perspectives

Three fair value estimates from the Simply Wall St Community range from US$17.22 to US$28.80 per share. Given ongoing profit margin pressure highlighted in recent results, your view on Carter’s future earnings recovery may differ significantly from others, consider how these perspectives shape your investment thesis.

Explore 3 other fair value estimates on Carter's - why the stock might be worth 46% less than the current price!

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 2 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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