CARTERS INCCRI
CARTERS INC Segments Disclosure
SEGMENT INFORMATION
The Company reports segment information based upon a “management approach.” The management approach refers to the internal reporting that is used by management for making operating decisions and assessing the performance of the Company’s reportable segments.
The Company has three operating and reportable segments: U.S. Retail, U.S. Wholesale, and International. The U.S. Retail segment consists of revenue primarily from sales of products in the United States through our retail stores, eCommerce websites, and mobile app. Similarly, the U.S. Wholesale segment consists of revenue primarily from sales in the United States of products to our wholesale partners. The International segment consists of revenue primarily from sales of products outside the United States, largely through our retail stores and eCommerce websites in Canada and Mexico, and sales to our international wholesale customers and licensees. The Company sells similar products in each of its three segments.
The Company’s chief operating decision maker is the Chief Executive Officer. The chief operating decision maker evaluates the operating performance of the segments based upon each segment’s net sales and segment operating income. Segment operating income includes net sales, royalty income, and related cost of goods sold and selling, general, and administrative expenses attributable to each segment. Segment operating income excludes unallocated corporate expenses as well as specific charges that are not directly attributable to segment operations, including restructuring costs, operating model improvement costs, leadership transition costs, and impairment charges related to goodwill and indefinite-lived intangible assets.
In fiscal 2024, the Company changed its measure of segment profitability to segment operating income, which excludes the charges mentioned above to better align with management’s assessment of segment performance and to provide better insights into segment performance.
The chief operating decision maker uses both net sales and segment operating income for each segment predominantly in the annual budget and quarterly forecasting process. On a quarterly basis, the chief operating decision maker considers budget-to-actual variances and a comparison of segment results for evaluating performance of each segment and making decisions about the allocation of operating and capital resources to each segment. The Company does not evaluate performance or allocate resources based on segment asset data, and therefore total segments assets are not presented.
Segment operating income includes the direct costs of each segment and all other costs are allocated based upon detailed estimates and analysis of actual time and expenses incurred to support the operations of each segment or units produced or sourced to support each segment’s revenue. Certain costs, including incentive compensation for certain employees, and various other general corporate costs that are not specifically allocable to segments, are included in unallocated corporate expenses below. The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements.
Segment Performance
The tables below present certain segment information for our reportable segments for the periods indicated:
| Fiscal year ended January 3, 2026 (53 weeks) | |||||||||||||||||||||||
| (dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Total | |||||||||||||||||||
| Net sales | $ | 1,466,128 | $ | 1,001,338 | $ | 430,960 | $ | 2,898,426 | |||||||||||||||
Cost of goods sold(1) | 626,821 | 731,893 | 225,076 | 1,583,790 | |||||||||||||||||||
Selling expenses(2) | 524,955 | 9,598 | 109,538 | 644,091 | |||||||||||||||||||
Distribution expenses(3) | 93,949 | 62,268 | 25,707 | 181,924 | |||||||||||||||||||
Other segment items(4) | 148,026 | 37,115 | 35,688 | 220,829 | |||||||||||||||||||
| Segment operating income | $ | 72,377 | $ | 160,464 | $ | 34,951 | $ | 267,792 | |||||||||||||||
(1)Refer to Note 2, Summary of Significant Accounting Policies, for additional information on the components of Cost of goods sold.
(2)Selling expenses include the costs of operating our retail stores and eCommerce channels, as well as wholesale sales management costs.
(3)Distribution expenses include payments to third-party shippers and handling costs to process product through the Company’s distribution facilities, including eCommerce fulfillment costs, and delivery of product to wholesale customers and to our retail stores.
(4)Other segment items include royalty income and overhead costs that are attributable to our reportable segments and include allocated accounting, finance, human resources, and information technology expenses, occupancy costs, and other benefit and compensation programs, including performance-based compensation.
| Fiscal year ended December 28, 2024 (52 weeks) | |||||||||||||||||||||||
| (dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Total | |||||||||||||||||||
| Net sales | $ | 1,417,108 | $ | 1,021,396 | $ | 405,598 | $ | 2,844,102 | |||||||||||||||
| Cost of goods sold | 567,435 | 705,550 | 205,951 | 1,478,936 | |||||||||||||||||||
| Selling expenses | 489,481 | 9,591 | 103,566 | 602,638 | |||||||||||||||||||
| Distribution expenses | 89,368 | 62,875 | 24,607 | 176,850 | |||||||||||||||||||
| Other segment items | 137,898 | 26,400 | 32,504 | 196,802 | |||||||||||||||||||
| Segment operating income | $ | 132,926 | $ | 216,980 | $ | 38,970 | $ | 388,876 | |||||||||||||||
| Fiscal year ended December 30, 2023 (52 weeks) | |||||||||||||||||||||||
| (dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Total | |||||||||||||||||||
| Net sales | $ | 1,501,780 | $ | 1,014,584 | $ | 429,230 | $ | 2,945,594 | |||||||||||||||
| Cost of goods sold | 602,152 | 717,936 | 229,571 | 1,549,659 | |||||||||||||||||||
| Selling expenses | 506,709 | 8,363 | 95,155 | 610,227 | |||||||||||||||||||
| Distribution expenses | 95,354 | 63,188 | 24,903 | 183,445 | |||||||||||||||||||
| Other segment items | 106,923 | 26,152 | 34,470 | 167,545 | |||||||||||||||||||
| Segment operating income | $ | 190,642 | $ | 198,945 | $ | 45,131 | $ | 434,718 | |||||||||||||||
The table below presents a reconciliation of reportable segment operating income to Income before income taxes:
| Fiscal year ended | |||||||||||||||||
| January 3, 2026 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (53 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||
| Total segment operating income | $ | 267,792 | $ | 388,876 | $ | 434,718 | |||||||||||
| Items not included in segment operating income: | |||||||||||||||||
Unallocated corporate expenses(1) | (91,801) | (102,326) | (106,901) | ||||||||||||||
Operating model improvement costs(2) | (14,182) | — | — | ||||||||||||||
Organizational restructuring(3) | (9,807) | (1,822) | (4,412) | ||||||||||||||
Leadership transition costs(4) | (8,069) | — | — | ||||||||||||||
OshKosh tradename impairment charge | — | (30,000) | — | ||||||||||||||
| $ | 143,933 | $ | 254,728 | $ | 323,405 | ||||||||||||
| Interest expense | 34,227 | 31,331 | 33,973 | ||||||||||||||
| Interest income | (13,474) | (11,039) | (4,776) | ||||||||||||||
| Other (income) expense, net | (1,086) | 2,678 | (8,034) | ||||||||||||||
Pension plan settlement(5) | 8,777 | 949 | — | ||||||||||||||
Loss on extinguishment of debt(6) | 1,655 | — | — | ||||||||||||||
| Income before income taxes | $ | 113,834 | $ | 230,809 | $ | 302,242 | |||||||||||
(1)Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our reportable segments and include unallocated accounting, finance, legal, human resources, and information technology expenses, occupancy costs for our corporate headquarters, and other benefit and compensation programs, including performance-based compensation.
(2)Primarily related to third-party consulting costs to support operating model improvement costs.
(3)Primarily related to charges for severance and other termination benefits as a result of organizational restructuring in fiscal years end January 3, 2026, and December 28, 2024, as well as organizational restructuring and related corporate office lease amendment actions in the fiscal year ended December 30, 2023.
(4)Related to costs associated with the transition of our former CEO, including accelerated vesting of outstanding time-based restricted stock awards, executive recruiting costs, and other related costs.
(5)Pension plan settlement charges for fiscal 2024 have been reclassified to the Pension plan settlement line item. These charges were previously included in Other expense (income), net.
(6)Related to charges associated with the redemption of the $500 million aggregate principal amount of senior notes due 2027 and the refinancing of our secured revolving credit facility.
Additional Data by Segment
The tables below present additional information for our reportable segments for the periods presented:
Depreciation and amortization expense
| Fiscal year ended | |||||||||||||||||
| January 3, 2026 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (53 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||
| U.S. Wholesale | $ | 8,276 | $ | 8,749 | $ | 10,958 | |||||||||||
| U.S. Retail | 34,864 | 35,562 | 38,710 | ||||||||||||||
| International | 10,373 | 11,413 | 11,758 | ||||||||||||||
| Unallocated corporate | 1,750 | 2,202 | 2,713 | ||||||||||||||
| Total | 55,263 | 57,926 | 64,139 | ||||||||||||||
Inventory
| January 3, 2026 | December 28, 2024 | ||||||||||
| Inventory: | |||||||||||
U.S. Wholesale(*) | $ | 397,027 | $ | 374,610 | |||||||
| U.S. Retail | 70,763 | 59,868 | |||||||||
| International | 76,834 | 67,854 | |||||||||
| Total inventory | $ | 544,624 | $ | 502,332 | |||||||
| All other assets | 2,020,846 | 1,930,835 | |||||||||
| Total assets | $ | 2,565,470 | $ | 2,433,167 | |||||||
(*)U.S. Wholesale inventories also include inventory produced and warehoused for the U.S. Retail segment.
Net Sales
The table below represents consolidated net sales by product:
| Fiscal year ended | |||||||||||||||||
| January 3, 2026 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (dollars in thousands) | (53 weeks) | (52 weeks) | (52 weeks) | ||||||||||||||
| Baby | $ | 1,260,611 | $ | 1,139,129 | $ | 1,098,304 | |||||||||||
| Playclothes | 914,690 | 948,602 | 992,726 | ||||||||||||||
| Sleepwear | 351,588 | 373,373 | 411,678 | ||||||||||||||
Other(*) | 371,537 | 382,998 | 442,886 | ||||||||||||||
| Total net sales | $ | 2,898,426 | $ | 2,844,102 | $ | 2,945,594 | |||||||||||
(*)Other product offerings include bedding, outerwear, swimwear, shoes, socks, diaper bags, gift sets, toys, and hair accessories.
Geographical Data
Revenue
The Company’s international sales principally represent sales to customers in Canada. Such sales were 59.5%, 61.3%, and 61.5% of total international net sales in fiscal 2025, 2024, and 2023, respectively.
Long-Lived Assets
The following represents Property, plant, and equipment, net, and Operating lease assets by geographic area:
| (dollars in thousands) | January 3, 2026 | December 28, 2024 | |||||||||
| United States | $ | 622,078 | $ | 614,751 | |||||||
| International | 156,035 | 143,338 | |||||||||
| Total | $ | 778,113 | $ | 758,089 | |||||||
Long-lived assets in the international segment primarily relate to Canada. Long-lived assets in Canada were 49.5% and 53.8% of total international long-lived assets as of January 3, 2026 and December 28, 2024, respectively.
Major Customers
Our two largest U.S. wholesale customers accounted for 11.0% and 10.3%, respectively, of consolidated net sales in fiscal 2025. Our two largest U.S. wholesale customer accounted for 10.9% and 10.1%, respectively, of consolidated net sales in fiscal 2024. Our largest U.S. wholesale customer accounted for 10.4% of consolidated net sales in fiscal 2023.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.