Carter’s, Inc. (NYSE:CRI), the leading company in North America focused exclusively on apparel for babies and young children, today reported its first quarter fiscal 2025 results.

“I am very proud to join Carter’s as its new CEO,” said Douglas C. Palladini, Chief Executive Officer & President. “Carter’s is one of America’s most iconic companies and I am sincerely grateful to our Board of Directors for the faith it has placed in me to return Carter’s to consistent, profitable growth. I very much look forward to earning the trust of all our valuable stakeholders, including consumers, employees, key accounts, and investors.

“I believe the potential of Carter’s is tremendous. The strength of our brand assets, broad market distribution, substantial equity with generations of consumers, and our talented team represent significant advantages to drive long-term growth. As someone who wore Carter’s and OshKosh B’gosh as a kid and dressed his own children in our brands as well, I understand the special bond we have with families and the honor we have in being part of such a remarkable time in peoples’ lives.

“Our teams delivered a good first quarter. Our U.S. Retail business achieved its sales and earnings plans in the quarter. Trends in March, the most significant month of the quarter, improved meaningfully from performance in January and February driven by the effectiveness of our product and promotional strategies. In March, we saw improved traffic, conversion, and comparable sales trends while continuing to add new customers and improve customer retention. Sales in our U.S. Wholesale business exceeded our forecasts due to higher demand from several customers. Demand outside the United States was also strong in the first quarter, particularly in our Canada and Mexico retail businesses.

“As I get up to speed on the business and assess what is required to return to growth, we are suspending forward-looking guidance at this time. I strongly believe in the tenet that we ‘do what we say’ and I intend to spend the time required to be able to meet that commitment. In addition, the current tariff situation has introduced substantial uncertainty, greatly complicating our ability to accurately predict Carter’s financial outlook.”

Adjustments to Reported GAAP Results

In addition to the results presented in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements, as presented below. The Company believes these adjustments provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company’s underlying performance. These measures are presented for informational purposes only. See “Reconciliation of Adjusted Results to GAAP” section of this release for additional disclosures and reconciliations regarding these non-GAAP financial measures.

First quarter fiscal 2025 results included pre-tax expenses of $6.1 million related to the retirement of the Company’s previous CEO and $3.2 million related to operating model improvement initiatives. There were no adjustments in the first quarter of fiscal 2024.

Consolidated Results

First Quarter of Fiscal 2025 (13 weeks) compared to First Quarter of Fiscal 2024 (13 weeks)

Net sales decreased $31.7 million, or 4.8%, to $629.8 million, compared to $661.5 million in the first quarter of fiscal 2024. Macroeconomic factors, including inflation, elevated interest rates, and declining consumer confidence, contributed to lower demand. U.S. Wholesale, U.S. Retail, and International segment net sales declined 5.3%, 4.3%, and 4.9%, respectively. U.S. Retail comparable net sales declined 5.2%, with eCommerce outperforming stores. Changes in foreign currency exchange rates used for translation in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, had an unfavorable effect on consolidated net sales of approximately $6.4 million, or 1.0%.

Operating income decreased $28.9 million, or 52.6%, to $26.1 million, compared to $55.0 million in the first quarter of fiscal 2024. Operating margin decreased to 4.1%, compared to 8.3% in the prior year period, reflecting investments in pricing, fixed cost deleverage, and costs related to leadership transition and operating model improvement initiatives.

Adjusted operating income (a non-GAAP measure) decreased $19.6 million, or 35.7%, to $35.4 million, compared to $55.0 million in the first quarter of fiscal 2024. Adjusted operating margin decreased to 5.6%, compared to 8.3% in the prior year period, principally due to pricing investments and fixed cost deleverage, partially offset by lower product costs.

Net income decreased $22.5 million to $15.5 million, or $0.43 per diluted share, compared to $38.0 million, or $1.04 per diluted share, in the first quarter of fiscal 2024.

Adjusted net income (a non-GAAP measure) decreased $14.3 million to $23.8 million, compared to $38.0 million in the first quarter of fiscal 2024. Adjusted earnings per diluted share (a non-GAAP measure) was $0.66, compared to $1.04 in the first quarter of fiscal 2024.

Net cash used in operations in the first quarter of fiscal 2025 was $48.6 million, compared to $25.6 million in the prior year period. The change in net cash from operating activities was primarily driven by lower earnings.

See the “Reconciliation of Adjusted Results to GAAP” sections of this release for additional disclosures regarding non-GAAP measures.

Return of Capital

In the first quarter of fiscal 2025, the Company paid a cash dividend of $0.80 per common share totaling $29.0 million. No shares were repurchased in the first quarter.

The Company’s Board of Directors will evaluate future distributions of capital, including dividends and share repurchases, based on a number of factors, including business conditions, the Company’s future financial performance, investment priorities, and other considerations.

Leadership Transition

On January 3, 2025, Michael D. Casey retired as Chief Executive Officer and Chairman of the Board of the Company. Mr. Casey continued to serve in an advisory capacity through February 28, 2025.

Effective January 5, 2025, Richard F. Westenberger, then serving as Senior Executive Vice President, Chief Financial Officer & Chief Operating Officer, was appointed as Interim Chief Executive Officer.

On March 26, 2025, the Company announced the appointment of Douglas C. Palladini as Chief Executive Officer & President and a member of the Board of Directors, effective April 3, 2025. Mr. Palladini succeeded Mr. Westenberger, who continues to serve as Senior Executive Vice President, Chief Financial Officer & Chief Operating Officer.

2025 Business Outlook

Given the Company’s recent leadership transition and significant uncertainty surrounding proposed new tariffs and potential related impact on the business, the Company is suspending its forward guidance.

Conference Call

The Company will hold a conference call with investors to discuss first quarter fiscal 2025 results and provide an update on its business on April 25, 2025 at 8:30 a.m. Eastern Daylight Time. To listen to a live webcast and view the accompanying presentation materials, please visit ir.carters.com and select links for “News & Events” followed by “Events.” To access the call by phone, please preregister on https://register-conf.media-server.com/register/BIa9905a7906854eb1863d5668318514d5 to receive your dial-in number and unique passcode.

A webcast replay will be available shortly after the conclusion of the call at ir.carters.com.