North American children’s apparel brand Carter’s has reported a net income drop of $45m, or 42.2%, to $61.5m in the fourth quarter of fiscal 2024, and an adjusted net income decline of $15.3m, or 15.1%, to $85.9m.
The company’s net income followed suit with a drop of 42.2% to $61.5m from the fourth quarter of fiscal 2023’s $106.5m. Its diluted earnings per share (EPS) also declined by 41% to $1.71 from $2.90.
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Net sales of Carter’s increased by 0.2% to $859.71m. However its operating income for the same period took a hit, decreasing by $52.9m to $83.20m with operating margin shrinking 620 basis points to 9.7%.
Carter’s interim chief executive officer, senior executive vice-president, chief financial officer and chief operating officer Richard Westenberger stated: “Our product, pricing and promotional strategies in the fourth quarter drove a continued trend improvement in traffic, conversion and comparable sales in our US retail businesses. We also saw strong demand for our exclusive brands in the wholesale channel and continued momentum in our retail businesses in Mexico and Canada.”
In 2024, consolidated net sales dropped to $2.84bn, a 3.4% decrease from the previous year’s $2.95bn.
The company’s net sales in US retail and international segments fell by 5.6% and 5.5% respectively over the fiscal year.
During the fiscal year ended 28 December 2025, Carter’s operating income fell 21.2% to $254.72m compared to $323.40m in fiscal 2023. Its operating margin declined by 200 basis points to 9%.
The company’s net income posted a steep drop of 20.2% at $185.50m compared to the previous year’s $232.50m. This decline was reflected in diluted earnings per share, which decreased 18% to $5.12 from $6.24.
Gross profit for the fiscal year was $1.36bn, down slightly from $1.39bn the previous year.
Carter’s projects net sales for fiscal 2025 to range between $2.78bn and $2.85bn and adjusted operating income between $180m and $210m.
In the first quarter of FY25, it expects net sales between $615m and $625m and adjusted operating income between $30m and $35m.
“Several factors are expected to weigh on our profitability in 2025, including some residual lower pricing in the first half of the year, higher product costs and the restoration of more normalised variable compensation provisions. In 2025, we intend to rely less on pricing action and lean more into planned improvements in our merchandise assortments and a stronger overall inventory position, particularly in the more significant second half of the year,” Richard Westenberger added.
