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A falling US birthrate is a negative long-term headwind for baby retailer Carter's.
CRI faces signficant consumer and tariff-related headwinds.
Earnings growth is expected to slow for the forseeable future.
Carter’s Inc. Company Overview
Headquartered in Atlanta, GA, Zacks Rank #5 (Strong Sell) stock Carter’s Inc. ((CRI - Free Report) ) is the largest seller of branded apparel and baby-related products. Notably, the company runs a portfolio of popular brands, including Carter’s, OshKoshB’gosh, Just One You, Child of Mine, Simple Joys, Skip Hop, and Precious Firsts. CRI sells its products through leading department stores, national chains, and specialty retailers, both domestically and internationally. The company sells through retail partners like Amazon ((AMZN - Free Report) ),Walmart ((WMT - Free Report) ),Target ((TGT - Free Report) ), and Macy’s ((M - Free Report) ).
Declining Birthrate is a Long-term Headwind for Carter’s
The US birthrate has been declining consistently for the past seven decades. However, as economic conditions, social, and cultural winds shift, the birthrate in the United States has shrunk even further. Meanwhile, widespread access to contraception has also weighed on the birthrate. Because Carter’s is focused on the baby segment, this is a troubling long-term headwind with no end in sight for CRI investors.
Carter’s, like others in the industry, has been witnessing the impacts of a challenging macroeconomic environment, which is affecting its top-line performance. In addition, the current tariff environment has introduced significant uncertainty, making it difficult to predict the company’s future financial performance. As a result, Carter’s has decided to suspend providing guidance until there is more clarity on the internal operational direction and external market conditions. The company also cited a highly volatile retail landscape, ongoing macroeconomic pressures, and foreign currency headwinds, particularly in its international markets, as added factors contributing to the lack of forward visibility. Zacks Consensus Estimates suggest that EPS growth will continue to plunge into 2026.
Image Source: Zacks Investment Research
Driven by the continuation of these trends, Carter’s first-quarter 2025 sales declined 4.8% from $661.5 million posted in the year-ago period. The decline was due to macroeconomic pressures, including inflation, elevated interest rates, and weakening consumer confidence, which reduced demand across segments. We note that the company’s shares have exhibited relative weakness, losing 49.9% in the past six months compared with the industry’s 43.4% decline.
Image Source: Zacks Investment Research
CRI Faces Tariff Headwinds
Carter’s faces significant tariff pressures, with proposed increases on imports into the U.S. adding to existing duties, which amounted to approximately $110 million in 2024. These rising tariffs, particularly on products manufactured in Asia, are impacting cost structures, especially given that less than 5% of baby apparel is produced in the Western Hemisphere. While the company has actively engaged in lobbying efforts and evaluated nearshoring alternatives in Latin America, high labor costs and limited infrastructure in the region make it challenging to offset the tariff burden effectively.
Bottom Line
A falling birthrate, weak consumer trends, and a negative outlook are all reasons to avoid baby retailer Carter’s.
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Bear of the Day: Carter's Inc. (CRI)
Key Takeaways
Carter’s Inc. Company Overview
Headquartered in Atlanta, GA, Zacks Rank #5 (Strong Sell) stock Carter’s Inc. ((CRI - Free Report) ) is the largest seller of branded apparel and baby-related products. Notably, the company runs a portfolio of popular brands, including Carter’s, OshKoshB’gosh, Just One You, Child of Mine, Simple Joys, Skip Hop, and Precious Firsts. CRI sells its products through leading department stores, national chains, and specialty retailers, both domestically and internationally. The company sells through retail partners like Amazon ((AMZN - Free Report) ), Walmart ((WMT - Free Report) ), Target ((TGT - Free Report) ), and Macy’s ((M - Free Report) ).
Declining Birthrate is a Long-term Headwind for Carter’s
The US birthrate has been declining consistently for the past seven decades. However, as economic conditions, social, and cultural winds shift, the birthrate in the United States has shrunk even further. Meanwhile, widespread access to contraception has also weighed on the birthrate. Because Carter’s is focused on the baby segment, this is a troubling long-term headwind with no end in sight for CRI investors.
CRI Suffers Amid Weak Consumer Trends, Suspends Guidance
Carter’s, like others in the industry, has been witnessing the impacts of a challenging macroeconomic environment, which is affecting its top-line performance. In addition, the current tariff environment has introduced significant uncertainty, making it difficult to predict the company’s future financial performance. As a result, Carter’s has decided to suspend providing guidance until there is more clarity on the internal operational direction and external market conditions. The company also cited a highly volatile retail landscape, ongoing macroeconomic pressures, and foreign currency headwinds, particularly in its international markets, as added factors contributing to the lack of forward visibility. Zacks Consensus Estimates suggest that EPS growth will continue to plunge into 2026.
Image Source: Zacks Investment Research
Driven by the continuation of these trends, Carter’s first-quarter 2025 sales declined 4.8% from $661.5 million posted in the year-ago period. The decline was due to macroeconomic pressures, including inflation, elevated interest rates, and weakening consumer confidence, which reduced demand across segments. We note that the company’s shares have exhibited relative weakness, losing 49.9% in the past six months compared with the industry’s 43.4% decline.
Image Source: Zacks Investment Research
CRI Faces Tariff Headwinds
Carter’s faces significant tariff pressures, with proposed increases on imports into the U.S. adding to existing duties, which amounted to approximately $110 million in 2024. These rising tariffs, particularly on products manufactured in Asia, are impacting cost structures, especially given that less than 5% of baby apparel is produced in the Western Hemisphere. While the company has actively engaged in lobbying efforts and evaluated nearshoring alternatives in Latin America, high labor costs and limited infrastructure in the region make it challenging to offset the tariff burden effectively.
Bottom Line
A falling birthrate, weak consumer trends, and a negative outlook are all reasons to avoid baby retailer Carter’s.