Carter's, Inc. (CRI) is finding that sometimes the best way to deal with tariffs is to simply charge more and stop discounting so aggressively. The children's apparel company released preliminary fourth quarter and fiscal 2025 results on Friday that suggest this strategy is actually working.
The numbers tell an interesting story. Fourth quarter consolidated net sales jumped by a high single-digit percentage year over year. Analyst consensus had been expecting $884.47 million, and while the company didn't provide exact figures yet, that growth rate implies they likely came in around or above expectations.
The real action happened in U.S. Retail, where net sales climbed by high single digits thanks largely to robust online demand. Even brick-and-mortar stores saw comparable sales improve during the quarter. Here's the kicker: average unit retail pricing increased by mid-single digits. Translation? Carter's charged more per item and customers kept buying.
The wholesale business in the U.S. posted more modest low single-digit growth, while the international segment delivered high single-digit gains.
How the Full Year Played Out
Zooming out to the complete fiscal year, Carter's reported preliminary consolidated net sales growth in the low single digits. The U.S. Retail segment mirrored that performance with low single-digit increases, as did comparable U.S. Retail sales. Interestingly, retail store comparable sales stayed essentially flat compared to last year, while average unit retail pricing for the full year remained similar to the prior period.
U.S. Wholesale was the weak spot, declining by a low single-digit rate year over year. International sales picked up some slack with mid-single-digit growth. One technical note: the fiscal year included an extra operating week that added roughly $33 million in sales, so keep that in mind when looking at the numbers.
Carter's plans to release complete audited results in late February 2026.
New Leadership and Investor Spotlight
Beyond the numbers, Carter's announced that David B. Tichiaz is joining as chief brand officer. He'll report directly to CEO and President Douglas C. Palladini and take charge of the product design and merchandising teams.
The company is also scheduled for a fireside chat at the ICR Conference on January 12, 2026. A live broadcast will be available on the company's investor relations website for anyone interested.
Palladini struck an optimistic but measured tone about the results. He said the company is starting to see concrete returns from its turnaround efforts, even though the holiday season was brutally competitive.
"Fourth quarter comparable retail sales grew for the third consecutive quarter, reflecting strong consumer response to product and marketing initiatives, both in store and online," Palladini said.
He went on to explain the pricing strategy: higher average unit retail prices and less promotional activity helped the company absorb tariff costs and protect margins, ultimately driving year-over-year revenue growth in 2025. Management acknowledges there are still execution challenges to work through, but they're viewing these results as early proof that their return-to-growth strategy is on the right track.
Investors seemed to agree. Carter's (CRI) shares climbed 3.81% to $35.96 in premarket trading on Friday.
