Research · Sep 3, 2026
[CRI] Carter's Thesis 2026: DTC Mix Shift Stabilizes Margins as Birth Rate Headwind Persists
Carter's FY2025 revenue ~$2.85B (declining from $3.49B FY2021 peak) as post-pandemic normalization and US birth rate decline compressed volumes. Adj. EBITDA margins held at ~16.1% as DTC mix shift (47% of US revenue, 58% gross margin) offset wholesale decline. Adj. EPS ~$6.60 on ~38.5M shares (17% reduction from FY2020 via buybacks). FY2026 thesis: DTC loyalty ecosystem (25M+ members) + international licensing (China/Mexico) provide partial offset to structural birth rate decline; dividend (~$3.12) + buyback capital return framework intact at ~16% EBITDA margins.