Can Carter's Brand Strength and Omnichannel Strategy Sustain Growth?

Carter's, Inc. CRI continues to leverage its well-established brands to drive customer demand. The company is investing in product innovation, expanding assortments and introducing trend-right designs to keep its brands relevant. Its strong brand equity enables it to attract both value-conscious an…

Carter's, Inc. CRI continues to leverage its well-established brands to drive customer demand. The company is investing in product innovation, expanding assortments and introducing trend-right designs to keep its brands relevant. Its strong brand equity enables it to attract both value-conscious and premium shoppers while supporting pricing actions to offset higher costs.

Carter’s continues to rely on strategic pricing actions, product innovation and productivity initiatives to help offset tariff-related cost pressures and boost profitability. It continues to balance pricing actions with value-oriented offerings to navigate a tough consumer landscape. Carter’s has been undertaking several supply-chain mitigation and productivity initiatives to help offset tariff pressures and improve operational efficiency amid a volatile environment.

The company is enriching customer experience by integrating its physical stores and digital platforms. Investments in e-commerce, mobile commerce, personalization and digital marketing are helping drive direct-to-consumer sales and deepen customer engagement. CRI is also optimizing its store fleet, selectively opening new locations and improving in-store experiences to boost traffic, conversion rates and profitability.

Carter’s delivered strong momentum across its U.S. Retail and International businesses in first-quarter 2026, reflecting healthy consumer demand and improving brand engagement. U.S. Retail net sales increased nearly 13%, driven by comparable sales growth of more than 10%, with strength across stores and e-commerce channels. The Baby assortment remained the primary growth driver, while the Toddler and Kid categories also reflected gains.

For 2026, Carter’s expects net sales growth in the low to mid-single-digit range compared with 2025, supported by growth across all major business segments, including U.S. Retail, U.S. Wholesale and International. Adjusted operating income is also expected to increase in the low to mid-single-digit range, with a larger portion of profit growth anticipated in the second half of the year as tariff pressures moderate and pricing benefits improve. Management maintained its operating cash flow forecast of $110-$120 million and expects capital expenditures of roughly $55 million.

CRI’s Price Performance, Valuation and Estimates

Carter’s shares have surged 35.3% in the past six months against the industry’s 27.6% decline.

From a valuation standpoint, CRI trades at a forward price-to-sales ratio of 0.52X compared with the industry’s average of 1.22X.

The Zacks Consensus Estimate for CRI’s 2026 earnings per share (EPS) indicates a year-over-year drop of 11% while that of 2027 shows growth of 5.3%. The company’s EPS estimate for 2026 and 2027 has been stable in the past 30 days.

Carter’s currently carries a Zacks Rank #2 (Buy).

Other Key Picks in the Consumer Discretionary Space

Columbia Sportswear Company COLM, which engages in the sourcing, marketing and distribution of outdoor and active lifestyle apparel, footwear, accessories and equipment, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

COLM delivered a trailing four-quarter earnings surprise of 44.1%, on average. The Zacks Consensus Estimate for Columbia Sportswear’s current financial-year sales indicates growth of 2.6% from the year-ago number.

Crocs, Inc. CROX, which is a leading footwear company, currently carries a Zacks Rank of 2. CROX delivered a trailing four-quarter earnings surprise of 13.6%, on average.

The Zacks Consensus Estimate for Crocs’ current financial-year EPS indicates a rise of 9.3% from the year-ago number.

Gildan Activewear Inc. GIL, which is a designer and marketer of premium quality branded basic activewear, currently has a Zacks Rank of 2.

GIL delivered a negative trailing four-quarter earnings surprise of 1.1%, on average. The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales indicates growth of 68.3% from the year-ago number.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report