Oct 30, 2026 earnings call — Brand relaunch and holiday guidance update
Company reported Q3 net sales of $752 million and adjusted operating income of $57 million, while guiding Q4 net sales to $860 million-$880 million.
Revenue $0.8B (est $0.7B) · EPS $1.03 (est $0.85) · Next-quarter revenue outlook $0.9B–$0.9B
Key quotes
"Importantly, these efforts included the multi-touchpoint introduction of Carter's new comprehensive branding initiative, marking the first reimagination of the look, feel, and promise of the brand in a quarter century."
"One, the launch of our comprehensive Stellar Sleep System, a new approach encompassing all of our ages based on consumer feedback that moms find navigating the pajama purchasing process confusing."
"For the fourth quarter, we're forecasting net sales in the range of $860 million-$880 million, or mid-single digit lower sales than last year's fourth quarter, using the midpoint of the range."
Analyst Q&A 6
wholesale vs retail and store traffic
Q (Jay Sole · UBS): Analyst asked how to balance the wholesale channel and U.S. retail, and how to improve traffic into Carter's stores. He also asked where the brand can expand beyond baby and kids apparel.
A: Management said they combined wholesale, retail, and e-commerce under one commercial leader to drive shared consumer insights and better segmentation. They plan to elevate in-store experiences, integrate digital tools like the Stellar Sleep app, and expand into older kids, higher-end sub-brands, and international markets.
"That segmentation is going to be critical for us to maintain a position that separates us from our own inner brands, including Little Planet," — Sharon Price John (CEO)
U.S. wholesale outlook and pricing
Q (Kelly Crago · BMO): Analyst asked why fourth-quarter wholesale guidance was cut and how order books look for wholesale next year, and asked about pricing outlook given cost pressures.
A: Management said most of the revenue revision came from U.S. retail, not wholesale, and they refined replenishment expectations. They noted wholesale spring 2027 order book looks good but some volume shifted into Q3, and they will sell in fall assortments as the year ends.
"As it relates to the revision in revenue outlook, I would say the majority of that relates more to the U.S. retail business than it does to wholesale." — Richard Westenberger (CFO)
AUR and gross margin expectations
Q (Ike Boruchow · Wells Fargo): Analyst asked about expected AUR and gross margin in the fourth quarter and AUR trajectory into next year, and asked how tariffs affected margins this quarter.
A: Management said AUR rose in Q3 and they expect low-single-digit AUR increases in Q4, though Q4 is more promotional. They said Q3 gross margin expanded about 200 basis points, half from retail mix and the rest largely from pricing, and tariffs give more benefit in Q4.
"I think that's a testament to how the retail team came together and developed that compelling late September promotional drive, which was accretive overall to margins and profitability." — Richard Westenberger (CFO)
marketing spend and ROI
Q (Jim Chartier · Monness, Crespi, Hardt & Company): Analyst asked how this year's marketing spend compares to prior years and whether the company will increase marketing more to drive growth after the brand relaunch.
A: Management said marketing is a clear investment area and they spent about $20 million more on demand creation this year versus last. They see paid media producing good returns, are measuring ROI rigorously, and will likely increase marketing further if efficiency holds.
"So, we're spending about $20 million more on demand creation this year versus a year ago, and that's across a range of areas." — Richard Westenberger (CFO)
same-store sales and cost factors
Q (Jon Keypour · Goldman Sachs): Analyst asked for the quarter-to-date comp and then asked about gross margin drivers like freight, cotton, and tariff lapse for next year.
A: Management said they will stop giving intra-quarter comp updates and are focusing on November and December. They expect fourth-quarter gross margin expansion year-over-year, note cotton is up about 20% which affects second-half 2027 product cost, and said freight and tariff changes are meaningful variables.
"We're actually going to move away from providing the intra-quarter data point." — Richard Westenberger (CFO)
leadership changes and timing
Q (Tom Nikic · Needham & Company): Analyst asked how long the new leadership structure will take to impact the business and whether competitors' promotions worry them for the holidays.
A: Management said many key executives are already in place and some hires (like the new Chief Product Officer) should start around January, so strategic work will happen quickly while execution will roll out in phases. They also said competitors moved from higher prices into deeper discounts around Labor Day and they expect heavier promotional intensity in November and December.
"we are absolutely anticipating the promotional environment will intensify with heavy discounting in November and December," — Allison Peterson