US kidswear company Carter’s, Inc. (Carter’s) has reported its financial results for the second quarter of fiscal 2026. Net sales for the Atlanta-based business increased 5.2 percent to 615.50 million dollars compared to 585.30 million dollars in the second quarter of fiscal 2025.
Operating income grew to 139.80 million dollars, up from 4 million dollars in the prior-year period. The expansion was primarily driven by a recovery of previously paid import duties alongside operational productivity benefits, which helped offset net incremental tariff expenses, demand creation investments, and general inflationary pressures. Operating margin expanded to 22.7 percent compared to 0.7 percent in the prior year. On an adjusted basis, adjusted operating income increased 54.1 percent to 18.10 million dollars, while adjusted operating margin rose to 2.9 percent.
Net income reached 105.00 million dollars, or 2.87 dollars per diluted share, compared to 0.40 million dollars, or 0.01 dollars per diluted share, in the second quarter of 2025. Adjusted net income stood at 9.40 million dollars, while adjusted earnings per diluted share, hereafter referred to as adjusted diluted EPS, reached 0.26 dollars.
Carter’s chief executive officer and president Sharon Price John stated: “Demonstrating continued momentum, the Company posted positive results for the second quarter as net sales increased 5% and adjusted operating profit increased 54%, exceeding the prior outlook. While there were a number of moving parts in the quarter, we believe these results are largely reflective of improved marketing efforts, the early benefit of productivity initiatives, and continued progress in the critical Baby segment.”
Segment breakdown and first half performance
During the second quarter, sales expanded across all operating divisions:
US Wholesale: Net sales grew 11.7 percent.
US Retail: Net sales increased 1.7 percent, with US retail comparable net sales up 5.1 percent.
International: Net sales increased 2.7 percent.
For the first half of fiscal 2026, net sales increased 6.7 percent to 1.30 billion dollars compared to 1.22 billion dollars in the first half of fiscal 2025. Operating income reached 168.30 million dollars, up from 30.10 million dollars in the prior-year period. Adjusted operating income fell 1.3 percent to 46.50 million dollars, reflecting higher net incremental tariff costs and inflation. Net income for the six-month period stood at 119.30 million dollars, or 3.26 dollars per diluted share.
Third quarter and full year guidance
For the full 52-week fiscal year 2026, the company expects:
Net sales: Projected to grow 2 percent to 3 percent compared to 2.898 billion dollars in fiscal 2025.
Adjusted operating income: Anticipated low single-digit to mid-single-digit percentage growth compared to 176 million dollars in fiscal 2025.
Adjusted diluted EPS: Projected high single-digit to low double-digit percentage decline compared to 3.47 dollars in fiscal 2025.
Full year expectations include a 132 million dollar duty recovery alongside an estimated 8 million dollar charge for leadership transition and litigation costs.
For the third quarter of fiscal 2026, Carter’s expects net sales of approximately 750 million dollars compared to 758 million dollars in the third quarter of fiscal 2025. Adjusted operating income is forecasted at approximately 50 million dollars, while adjusted diluted EPS is projected at approximately 0.85 dollars.
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