Carter’s Is Winning Over Gen Z — Can It Redefine The Babywear Growth Story?

Carter’s, Inc. reported solid first quarter fiscal 2026 results with net sales of $681 million, representing an 8% increase year-over-year. The company’s earnings surpassed expectations despite facing several headwinds. Adjusted operating income remained stable at $28 million with an operating margin of 4.2%, although this margin contracted compared to the prior year’s performance. Adjusted earnings per share declined to $0.39 from $0.66 in the previous year, impacted notably by higher tariffs, increased interest expenses due to debt refinancing, and elevated selling, general, and administrative (SG&A) costs. The U.S. Retail segment delivered strong growth, with net sales rising nearly 13% and comparable sales increasing by over 10% versus the prior year. This was driven by higher traffic, increased average transaction values, and growth across age categories, particularly in the baby segment. Consumers showed a heightened focus on value, reflected in increased clearance sales and price-sensitive purchasing behaviors.