Carter's topped earnings expectations, then guided EPS lower
As seen on the 24/7 Wall St. homepage on October 30, 2026.
Margin work drove the quarter: gross margin expanded to 47.1% from 45.1%. Management still trimmed the full-year sales outlook and guided adjusted EPS to $3.05 to $3.23, below last year's $3.47. The guidance says the consumer has not come back.
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Carter's posted adjusted diluted EPS of $1.03 for Q3 2026, beating expectations on margin expansion as gross margin widened to 47.1% from 45.1% a year earlier.
Revenue edged past expectations, but net sales fell 0.7% year over year, confirming that Carter's is squeezing more profit from a business that is not yet growing.
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Management trimmed the full-year outlook, setting adjusted diluted EPS at $3.05 to $3.23 against last year's $3.47. Q4 guidance sits below the prior-year quarter, which carried an extra week.
CEO Sharon Price John cited ongoing economic and geopolitical uncertainty as persistent pressure on Carter's core consumer, even as the company launched its first brand refresh for the flagship label in 25 years and added a Chief Commercial Officer, Chief Product Officer, and Chief Brand Officer. How quickly those moves translate into demand is the story to follow.
Sources
Mentioned: CRI