Carter's Beats Q2 Forecast, Cites Tariff Refund and Sales Growth

Carter's Inc. reported second‑quarter fiscal 2026 results that topped analysts' expectations. Adjusted earnings per share rose 53% to $0.26, well above the consensus $0.06 estimate. Net sales increased 5% year‑over‑year to $615 million, and adjusted operating income grew 54% to roughly $18 million. The company highlighted a $132 million tariff refund from the U.S. government, which boosted gross profit but was offset by a 180‑basis‑point decline in gross margin to 46.3%. CEO Sharon Price John emphasized continued comparable‑sales growth in U.S. retail and strong performance among Gen Z shoppers. CFO Richard Westenberger noted the tariff recovery was taxable, prompting a $30 million tax provision. Carter's trimmed its full‑year sales‑growth outlook to 2%–3% while maintaining guidance for low‑to‑mid‑single‑digit adjusted operating‑income growth.