Carter's (CRI) AI Stock Analysis

• Market Cap: $1.50B
• Dividend Yield: 7.67%
• Average Volume (3M): 1.78M
• Price to Earnings (P/E): 8.1
• Beta (1Y): 0.73
• Revenue Growth: -3.45%
• EPS Growth: -18.26%
• Country: US
• Employees: 15,230
• Sector: Consumer Cyclical
• Sector Strength: 51
• Industry: Retail - Discretionary
• EPS (TTM): 5.13
• Shares Outstanding: 36,010,750
• 10 Day Avg. Volume: 2,023,618
• 30 Day Avg. Volume: 1,775,487
• PEG Ratio: 0.54
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.52
• Price to Cash Flow (P/CF): 1.30
• P/FCF Ratio: 1.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $45.00
• Price Target Upside: 7.86% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

Carter's overall score reflects a challenging environment with opportunities for improvement. Key strengths include a strong valuation and positive management changes. However, declining revenues, profitability challenges, and technical weaknesses weigh on the score. Strategic efforts to enhance product offerings and customer engagement are critical to overcoming these challenges.

Positive Factors

Earnings

Carter's reported better-than-expected 4Q earnings due to stronger sales and improved gross margins.

Partnerships

The success of the US wholesale business remains a bright spot due to its high margins and strong partnerships with Target, Walmart, and Amazon.

Premium Offerings

The company's premium price offerings, such as Little Planet and PurelySoft, show positive momentum.

Negative Factors

Macroeconomic Environment

Macro environment remains choppy and geopolitical uncertainty could weigh on sales growth.

Market Share

CRI is losing considerable share in their US DTC channel to the lower-priced mass and online channels in recent years.

Sales Growth

Driving traffic to stores has been a significant issue for the U.S. Retail business, which accounts for 50% of sales.

Carter's Business Overview & Revenue Model

Company Description

Carter's, Inc., together with its subsidiaries, designs, sources, and markets branded childrenswear under the Carter's, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter's My First Love, little planet, and other brands in the United States and internationally. The company operates through three segments: U.S. Retail, U.S. Wholesale, and International. Its Carter's products include babies and young children products, such as bodysuits, pants, dresses, knit sets, blankets, layette essentials, bibs, booties, sleep and play products, rompers, and jumpers; and OshKosh brand products comprise playclothes, such as denim apparel products with multiple wash treatments and coordinating garments, overalls, woven bottoms, knit tops, and bodysuits. The company also provides products for playtime, travel, mealtime, bathtime, and homegear, as well as kid's bags and diaper bags under the Skip Hop brand. In addition, it offers bedding, cribs, diaper bags, footwear, gift sets, hair accessories, jewelry, outerwear, paper goods, socks, shoes, swimwear, and toys. The company operates 18,800 wholesale locations, including department stores, national chain stores, and specialty stores. As of December 31, 2021, it operated 980 retail stores. The company also sells its products through its eCommerce websites, such as carters.com, oshkoshbgosh.com, oshkosh.com, and skiphop.com, as well as other international wholesale accounts and licensees. Carter's, Inc. was founded in 1865 and is headquartered in Atlanta, Georgia.

How the Company Makes Money

Carter's generates revenue through multiple channels, with its primary source being the sale of children's apparel and related products. The company has a diversified distribution strategy, which includes retail sales through its own branded stores, wholesale partnerships with department stores and national retail chains, and direct-to-consumer sales via its e-commerce platforms. Carter's also benefits from licensing agreements, wherein third-party manufacturers produce and distribute products under its brands, providing additional revenue streams. The company's strong brand recognition, strategic partnerships, and broad distribution network are key factors contributing to its financial performance.

Carter's Financial Statement Overview

Summary

Carter's financial health is mixed. Despite a reduction in debt levels and stable gross margins, there are challenges with declining revenues and profitability. The cash flow generation is also declining, posing risks to liquidity.

Income Statement

Carter's income statement shows a declining revenue trend over the years, with a notable decrease from $3.5 billion in 2019 to $2.8 billion in 2024. The gross profit margin has remained relatively stable, though, indicating efficient cost management. The net profit margin has decreased from around 7.5% in 2019 to 6.5% in 2024, reflecting challenges in maintaining profitability amidst declining revenues. EBIT and EBITDA margins have similarly contracted, which may reflect increased competition or cost pressures.

Balance Sheet

The balance sheet reveals a reduction in debt levels from 2023 to 2024, with total debt decreasing significantly. The debt-to-equity ratio improved from 1.28 in 2023 to 0.74 in 2024, indicating a strengthened financial position. The equity ratio improved slightly, suggesting better asset management and reduced leverage risks. However, the return on equity has slightly weakened over the years, which could signal inefficiencies in using shareholders' equity to generate profits.

Cash Flow

Carter's cash flow statement shows a fluctuating free cash flow, with a decline from $469 million in 2023 to $242 million in 2024. The free cash flow to net income ratio indicates a decrease in cash flow generation relative to net income. Despite positive operating cash flow, the decrease in free cash flow growth rate highlights challenges in maintaining liquidity and funding operations without increasing debt or equity.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Income Statement		Total Revenue
2.84B	2.95B	3.21B	3.49B	3.02B
	Gross Profit
1.37B	1.40B	1.47B	1.66B	1.31B
	EBIT
254.73M	323.40M	379.17M	497.08M	189.87M
	EBITDA
320.07M	400.35M	455.01M	592.69M	328.90M
	Net Income Common Stockholders
185.51M	232.50M	250.04M	339.75M	109.72M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
412.93M	351.21M	211.75M	984.29M	1.10B
	Total Assets
2.43B	2.38B	2.44B	3.20B	3.39B
	Total Debt
632.07M	1.08B	1.18B	1.58B	1.73B
	Net Debt
219.14M	730.32M	969.05M	596.47M	626.86M
	Total Liabilities
1.58B	1.53B	1.64B	2.25B	2.45B
	Stockholders Equity
854.56M	845.25M	796.41M	950.19M	938.03M
Cash Flow		Free Cash Flow
242.62M	469.27M	48.00M	230.82M	557.02M
	Operating Cash Flow
298.79M	529.13M	88.36M	268.26M	589.89M
	Investing Cash Flow
-56.16M	-59.86M	-40.36M	-32.44M	-32.87M
	Financing Cash Flow
-174.82M	-332.64M	-819.27M	-352.71M	324.84M

Carter's Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 41.72
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRI, the sentiment is Negative. The current price of 41.72 is above the 20-day moving average (MA) of 41.05, below the 50-day MA of 46.91, and below the 200-day MA of 55.64, indicating a neutral trend. The MACD of -1.46 indicates Negative momentum. The RSI at 41.79 is Neutral, neither overbought nor oversold. The STOCH value of 70.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CRI.

Carter's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
URBN	80 Outperform	$4.91B	12.33	17.56%	―	7.71%	40.01%
TJX	78 Outperform	$134.56B	28.15	61.98%	1.25%	3.95%	―
JWN	66 Neutral	$4.07B	14.00	29.58%	3.11%	2.20%	120.00%
CRI	64 Neutral	$1.50B	8.15	21.39%	7.67%	-3.45%	-18.26%
Sector *	59 Neutral	$12.68B	11.14	0.97%	3.72%	1.33%	-21.21%
KSS	57 Neutral	$996.29M	9.40	2.83%	22.35%	-7.18%	-65.92%
PLCE	33 Underperform	$117.62M	―	-521.67%	―	-10.65%	-129.52%

Carter's Corporate Events

Carter’s Appoints Douglas Palladini as New CEO

On March 26, 2025, Carter’s, Inc. announced the appointment of Douglas C. Palladini as the new Chief Executive Officer and President, effective April 3, 2025. Palladini, who brings extensive experience from his previous role as Global Brand President of Vans, is expected to enhance Carter’s direct-to-consumer and wholesale businesses, drive consumer loyalty, and expand international reach. His leadership is anticipated to foster innovation and customer engagement, strengthening Carter’s connection with families worldwide. The appointment follows a comprehensive search, and Palladini’s strategic vision is seen as pivotal for building upon the company’s strong foundation in providing high-quality, affordable apparel for young children.

Carter’s Announces CEO Transition and Financial Outlook

Carter’s, Inc. announced the retirement of Michael D. Casey as CEO and Chairman, with Richard F. Westenberger appointed as Interim CEO. William J. Montgoris will serve as Non-Executive Chairman. Casey will assist in the transition until February 28, 2025, while the board searches for a new CEO. The company reaffirmed its financial outlook for 2024 and issued retention awards to key employees to secure talent during this leadership transition.