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Sep 27, 2025
Carter's Q3 2025 Earnings Report
Carter’s reported a sharp decline in profitability in Q3 2025 despite steady revenue, driven by higher costs and restructuring charges.
Key Takeaways
Carter’s posted flat revenue in Q3 2025 but saw a significant drop in earnings due to higher tariffs, restructuring costs, and operational investments. Net income fell substantially, prompting the company to initiate cost-cutting and store closure plans.
Revenue held steady at $757.8 million, nearly unchanged from Q3 2024.
Net income dropped to $11.6 million from $58.3 million a year ago.
Adjusted EPS declined to $0.74 from $1.64 in Q3 2024.
Company announced plans to close 150 stores and cut 15% of office staff to improve productivity.
Revenue by Segment
Forward Guidance
Carter’s suspended its fiscal 2025 guidance due to tariff uncertainties, but outlined a strategy focused on cost reduction and productivity improvements.
Positive Outlook
- Plans to close 150 low-margin stores to boost profitability.
- Annualized savings of ~$35 million expected from workforce reduction.
- Additional $10+ million in SG&A cost cuts planned.
- Increased focus on higher-margin product assortments.
- New $750 million credit facility secured for liquidity and flexibility.
Challenges Ahead
- Elevated tariffs to result in $200–$250 million in added costs annually.
- Anticipated $25–$35 million pre-tax earnings hit in Q4 from tariffs.
- Net income declined 80% YoY in Q3 2025.
- Operating margin dropped to 3.8% from 10.2% YoY.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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