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Can Carter's Retail Strength Offset Tariff Pressures in 2026?
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Key Takeaways
Carter's Retail sales rose 9% with comps up 4.7%, driven by strong e-commerce traffic.
CRI faces margin pressure from tariffs and higher product costs despite pricing actions.
Carter's expects 2026 sales growth in low to mid-single digits and plans store closures to boost efficiency.
Carter’s, Inc. (CRI - Free Report) witnessed a strong performance in the U.S. Retail segment in the fourth quarter of 2025. Growth was fueled by robust e-commerce performance, supported by a double-digit increase in traffic. Retail segment delivered net sales growth of 9%, with comparable sales up 4.7%, marking the third straight quarter of gains. Strength was broad-based across Baby, Toddler and Kid categories, with all apparel brands contributing positive comp sales. Baby remained the standout segment, achieving its sixth consecutive quarter of growth and reinforcing its importance within the overall product portfolio.
However, the U.S. Retail segment's profitability declined in the quarter due to higher product costs, driven by tariff pressures and increased investment in products. These impacts were partially offset by higher pricing, which helped mitigate but did not fully absorb the overall cost increases. The company anticipates offsetting increased product costs through higher prices, especially in the retail segment, as well as supply chain mitigation and productivity initiatives.
For 2026, the company expects solid top-line and adjusted operating income growth, with net sales rising in the low to mid-single digits compared with 2025, factoring in the impact of the extra week. Growth is projected across all segments, including low single-digit gains in the U.S. Retail segment, with mid-single-digit comp growth. The company expects mid-single-digit growth in the U.S. Wholesale segment, driven by broad customer demand. Consolidated average unit retail (AUR) is expected to increase in the mid-single digits for 2026.
Additionally, Carter’s is driving productivity to offset cost pressures by closing around 60 lower-margin stores in 2026. It is also simplifying operations by reducing product choices by 20–30% and accelerating its product development cycle by three months to improve efficiency and responsiveness. Overall, strong retail momentum, pricing actions and productivity initiatives will help the company to offset tariff pressures in 2026.
The Zacks Rundown for CRI
CRI’s shares have gained 16.9% in the past six-month period against the industry’s decline of 21.9%. The company currently sports a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
From a valuation standpoint, CRI trades at a forward price-to-earnings ratio of 11.64X, lower than the industry’s average of 22.05X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRI’s current fiscal year earnings implies a year-over-year decline of 24.2%, and the same for the next fiscal year earnings indicates a year-over-year growth of 17.7%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks have been discussed below:
Columbia Sportswear Company (COLM - Free Report) engages in the design, development, marketing, and distribution of outdoor, active, and lifestyle products in the United States, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and Canada. At present, COLM flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for COLM’s current fiscal-year sales implies growth of 2%, and the same for earnings indicates a decline of 6.2% from the year-ago figures. COLM delivered a trailing four-quarter earnings surprise of 25.2%, on average.
Wolverine World Wide, Inc. (WWW - Free Report) designs, manufactures, sources, markets, licenses, and distributes footwear, apparel, and accessories. At present, WWW carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for WWW’s current fiscal-year sales and earnings indicates growth of 5.5% and 9%, respectively, from the year-ago figures. WWW delivered a trailing four-quarter earnings surprise of 31.8%, on average.
Crocs, Inc. (CROX - Free Report) designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and kids. At present, CROX carries a Zacks Rank of 2.
The Zacks Consensus Estimate for CROX’s current fiscal-year sales and earnings implies growth of 0.4% and 7%, respectively, from the year-ago figures. CROX delivered a trailing four-quarter earnings surprise of 16.6%, on average.
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Can Carter's Retail Strength Offset Tariff Pressures in 2026?
Key Takeaways
Carter’s, Inc. (CRI - Free Report) witnessed a strong performance in the U.S. Retail segment in the fourth quarter of 2025. Growth was fueled by robust e-commerce performance, supported by a double-digit increase in traffic. Retail segment delivered net sales growth of 9%, with comparable sales up 4.7%, marking the third straight quarter of gains. Strength was broad-based across Baby, Toddler and Kid categories, with all apparel brands contributing positive comp sales. Baby remained the standout segment, achieving its sixth consecutive quarter of growth and reinforcing its importance within the overall product portfolio.
However, the U.S. Retail segment's profitability declined in the quarter due to higher product costs, driven by tariff pressures and increased investment in products. These impacts were partially offset by higher pricing, which helped mitigate but did not fully absorb the overall cost increases. The company anticipates offsetting increased product costs through higher prices, especially in the retail segment, as well as supply chain mitigation and productivity initiatives.
For 2026, the company expects solid top-line and adjusted operating income growth, with net sales rising in the low to mid-single digits compared with 2025, factoring in the impact of the extra week. Growth is projected across all segments, including low single-digit gains in the U.S. Retail segment, with mid-single-digit comp growth. The company expects mid-single-digit growth in the U.S. Wholesale segment, driven by broad customer demand. Consolidated average unit retail (AUR) is expected to increase in the mid-single digits for 2026.
Additionally, Carter’s is driving productivity to offset cost pressures by closing around 60 lower-margin stores in 2026. It is also simplifying operations by reducing product choices by 20–30% and accelerating its product development cycle by three months to improve efficiency and responsiveness. Overall, strong retail momentum, pricing actions and productivity initiatives will help the company to offset tariff pressures in 2026.
The Zacks Rundown for CRI
CRI’s shares have gained 16.9% in the past six-month period against the industry’s decline of 21.9%. The company currently sports a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
From a valuation standpoint, CRI trades at a forward price-to-earnings ratio of 11.64X, lower than the industry’s average of 22.05X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRI’s current fiscal year earnings implies a year-over-year decline of 24.2%, and the same for the next fiscal year earnings indicates a year-over-year growth of 17.7%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks have been discussed below:
Columbia Sportswear Company (COLM - Free Report) engages in the design, development, marketing, and distribution of outdoor, active, and lifestyle products in the United States, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and Canada. At present, COLM flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for COLM’s current fiscal-year sales implies growth of 2%, and the same for earnings indicates a decline of 6.2% from the year-ago figures. COLM delivered a trailing four-quarter earnings surprise of 25.2%, on average.
Wolverine World Wide, Inc. (WWW - Free Report) designs, manufactures, sources, markets, licenses, and distributes footwear, apparel, and accessories. At present, WWW carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for WWW’s current fiscal-year sales and earnings indicates growth of 5.5% and 9%, respectively, from the year-ago figures. WWW delivered a trailing four-quarter earnings surprise of 31.8%, on average.
Crocs, Inc. (CROX - Free Report) designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and kids. At present, CROX carries a Zacks Rank of 2.
The Zacks Consensus Estimate for CROX’s current fiscal-year sales and earnings implies growth of 0.4% and 7%, respectively, from the year-ago figures. CROX delivered a trailing four-quarter earnings surprise of 16.6%, on average.