The company’s US retail comparable sales rose 10.5 per cent, marking the fourth consecutive quarter of comparable sales growth. Net sales in the US retail segment increased 12.8 per cent, while international sales rose 14.3 per cent and US wholesale sales edged up 0.5 per cent.
Carter’s has reported an 8.1 per cent rise in Q1 FY26 net sales to $681.1 million, driven by strong demand across retail, wholesale, and international channels.
US retail comparable sales rose 10.5 per cent.
Operating margin improved slightly to 4.2 per cent, though profitability was pressured by tariffs and inflation.
For FY26, it projects low single-digit to mid-single-digit growth in net sales.
“We saw strong demand for our brands during the first quarter across each of our US retail, US wholesale and International channels,” said Richard F Westenberger, interim chief executive officer & president, chief financial officer & chief operating officer.
The operating income increased 9 per cent to $28.4 million during the quarter ended April 4, 2026, compared to $26.1 million in the same period last year. Operating margin improved slightly to 4.2 per cent from 4.1 per cent, Carter’s said in a press release.
However, adjusted operating income declined 19.6 per cent to $28.4 million from $35.4 million in Q1 fiscal 2025, while adjusted operating margin narrowed to 4.2 per cent from 5.6 per cent due to higher tariff costs, inflationary pressure in store-related expenses, and investment spending.
The net income fell to $14.3 million, or $0.39 per diluted share, compared to $15.5 million, or $0.43 per diluted share, in the prior-year quarter. Adjusted diluted earnings per share declined to $0.39 from $0.66.
“We posted strong results over the Easter holiday selling period which occurred earlier this year and our investments in marketing drove meaningful traffic increases in our US retail store and e-commerce businesses,” added Westenberger.
He noted that profitability was impacted by tariffs and inflationary pressures.
“Our profitability in the quarter was negatively affected by higher tariffs, investment spending and other inflationary cost pressures and higher interest costs. We expect the impact of these items to moderate as we move through the year and today, we have reiterated our full year outlook for both sales and operating profit growth in 2026,” he said.
Net cash provided by operations improved to $6.4 million, compared to net cash used in operations of $48.6 million in Q1 fiscal 2025, supported by stronger inventory sell-through, lower days of supply, and timing of interest payments.
Carter’s expects sales, operating income growth in FY26
For FY26, Carter’s is projecting low single-digit to mid-single-digit growth in net sales and adjusted operating income. The company expects adjusted diluted earnings per share (EPS) to decline by low double-digit to mid-teens percentages from fiscal 2025 levels. it also expects operating cash flow between $110 million and $120 million and capital expenditure of about $55 million.
Westenberger also said that the company looks forward to welcoming Sharon Price John as its new chief executive officer next month. He said her extensive industry experience, particularly in the children’s segment, and proven track record position her strongly to lead the next phase of Carter’s transformation and growth.
Fibre2Fashion News Desk (SG)
