8-K: Carters Reports Strong Q4 Sales, Appoints New Brand Officer

Carters, Inc. announced preliminary high single-digit consolidated net sales growth for Q4 2025 and low single-digit growth for fiscal year 2025, alongside the appointment of David B. Tichiaz as Chief Brand Officer.

Summary

• Preliminary fourth quarter fiscal 2025 consolidated net sales increased by a high single-digit percentage over the prior year period.
• Preliminary fiscal year 2025 consolidated net sales increased by a low single-digit percentage over the prior year.
• U.S. Retail segment net sales grew in the high single-digits for Q4 2025 and low single-digits for FY 2025.
• U.S. Retail comparable sales increased in the mid-single-digits for Q4 2025 and low single-digits for FY 2025, primarily driven by strong eCommerce channel demand.
• Average Unit Retail (AUR) pricing increased in the mid-single-digits for Q4 2025 and was comparable to the prior year for FY 2025.
• U.S. Wholesale segment net sales grew in the low single-digits for Q4 2025 but declined in the low single-digits for FY 2025.
• The International segment achieved high single-digit growth for Q4 2025 and mid-single-digit growth for FY 2025.
• The additional 53rd week in fiscal year 2025 contributed approximately $33 million in consolidated net sales.
• David B. Tichiaz has joined Carters as Chief Brand Officer, responsible for leading product design and merchandising teams.
• The company is scheduled to participate in a fireside chat at the ICR Conference 2026 on January 12, 2026.

Sentiment

Score: 7

Explanation: The preliminary results show positive revenue growth and strong retail comparable sales, indicating business stabilization and momentum. The new Chief Brand Officer appointment is a strategic positive. However, the decline in U.S. Wholesale for the full year and ongoing challenges like tariffs temper the overall sentiment, suggesting continued effort is needed.

Positives

• Consolidated net sales grew by a high single-digit percentage in Q4 2025 and a low single-digit percentage for the full fiscal year 2025.
• Fourth quarter comparable retail sales grew for the third consecutive quarter, reflecting strong consumer response to product and marketing initiatives.
• Strong eCommerce channel demand contributed significantly to U.S. Retail comparable sales growth in both Q4 and FY25.
• Average Unit Retail (AUR) pricing increased in the mid-single-digits in Q4, indicating successful pricing strategies and less promotional activity.
• The International segment demonstrated robust growth, with high single-digit increases in Q4 and mid-single-digit increases for the full fiscal year.
• The appointment of David B. Tichiaz as Chief Brand Officer brings nearly two decades of global lifestyle brand experience to the management team.

Negatives

• The U.S. Wholesale segment experienced a low single-digit decline in net sales for the full fiscal year 2025.
• Management noted that 'much work to do' remains, despite forward momentum, indicating ongoing challenges.
• Higher tariffs continue to impact profitability, requiring ongoing efforts to offset their effects.

Risks

• The preliminary financial and operational information is unaudited and may change materially as financial closing procedures and the independent audit are not yet complete.
• The company operates in a 'highly competitive holiday sales period' and broader market, which can impact performance.
• Ongoing efforts are required to offset the impact of higher tariffs and improve profitability, indicating a persistent cost pressure.

Future Outlook

The company expects to report full results for the fourth quarter and fiscal year 2025 in late February 2026. Management indicates an ongoing focus on business stabilization and returning to growth, with continued efforts to offset higher tariffs and improve profitability.

Management Comments

• "As we consistently focus on business stabilization and returning to growth, I am pleased to see the impact our many actions are having, especially considering the highly competitive holiday sales period." Douglas C. Palladini, Chief Executive Officer & President.
• "Fourth quarter comparable retail sales grew for the third consecutive quarter, reflecting strong consumer response to product and marketing initiatives, both in store and online." Douglas C. Palladini, Chief Executive Officer & President.
• "We also continue to grow average unit retail pricing as we price up, including less promotional activity, an important element of ongoing efforts to offset the impact of higher tariffs and improve profitability." Douglas C. Palladini, Chief Executive Officer & President.
• "The end result was year-over-year overall revenue growth in 2025. While there remains much work to do, this is an important proof point of our forward momentum." Douglas C. Palladini, Chief Executive Officer & President.

Industry Context

The company's preliminary results demonstrate resilience and strategic effectiveness in a highly competitive retail environment, particularly during the holiday sales period. The growth in comparable retail sales and Average Unit Retail (AUR) pricing suggests successful product and marketing initiatives and a focus on profitability amidst broader industry challenges like tariffs. The appointment of a Chief Brand Officer with extensive experience in global lifestyle brands signals a strategic emphasis on brand strength and product innovation, aligning with evolving consumer preferences in the children's apparel market.

Management Changes

Stakeholder Impact

• Shareholders: Positive preliminary sales results and a strategic management addition could lead to increased investor confidence and potential share price appreciation.
• Employees: The appointment of a new Chief Brand Officer may introduce new strategic directions and opportunities within the product design and merchandising teams.
• Customers: Strong consumer response to product and marketing initiatives, reflected in comparable sales growth, indicates continued positive engagement and brand loyalty.
• Suppliers: Sustained revenue growth could lead to stable or increased demand for supplier services and products.
• Creditors: Improved financial performance and ongoing efforts to enhance profitability could positively impact the company's creditworthiness.

Next Steps

• Participate in a fireside chat at the ICR Conference 2026 on January 12, 2026, at 11:30 a.m. Eastern time.
• Report full results for the fourth quarter and fiscal year 2025 in late February 2026.

Key Dates

Recommendation

The preliminary results indicate positive momentum with overall revenue growth and strong comparable retail sales, suggesting effective strategies in a competitive market. The appointment of a seasoned Chief Brand Officer is a strategic positive for brand and product development. However, the decline in U.S. Wholesale for the full year and the ongoing impact of tariffs present areas for continued focus. Given that these results are preliminary and unaudited, a 'hold' recommendation is prudent for a seasoned investor awaiting the full audited financials and clearer future guidance, as management also noted 'much work to do' remains.

Keywords

Carters, CRI, Preliminary Sales, Q4 2025 Results, Fiscal Year 2025, Retail Apparel, Children's Apparel, eCommerce Growth, Management Appointment, Chief Brand Officer, ICR Conference, Financial Results, Earnings