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Carter's (CRI) is modestly higher after providing its preliminary guide for Q4, in which it expects Q4 revenue growth in the high single digits. This is a notable return to growth after several quarters of flat-to-negative revenue trends, signaling a stronger holiday season. It was also nice to get an early read on the quarter, as earlier in the fiscal year the company withdrew its guidance on tariff uncertainty.

• It expects its U.S. Retail segment to show high single-digit revenue growth, with retail comps up mid-single digits, representing its third consecutive positive comp, and compares to +3% revenue growth and a +2% comp in Q3.
• Across U.S. Wholesale, it sees growth in the low single digits, which is notable after a 5.1% decline in Q3 and after stating on the Q3 call that it expected Wholesale sales down low single digits in Q4.
• Internationally, it expects high single-digit growth, suggesting the segment is building on recent momentum after Q3 sales rose 4.9%.
• Average unit retail (AUR) pricing increased mid-single-digits, including less promotional activity, which is helping offset the impact of higher tariffs that have pressured profitability. Q3 gross margin was down 180 bps to 45.1%.

Briefing.com Analyst Insight

The Q4 guide represents a clear step-up from Q3 and suggests Carter's delivered a better-than-feared holiday season. Most notable is the acceleration in the overall top line, with Q4 revenue now expected to grow at a high single-digit rate, driven by a step-up in U.S. Retail alongside U.S. Wholesale returning to low single-digit growth after management had previously expected low single-digit declines for Q4. The continued lift in AUR on less promotional activity is also encouraging, implying demand has remained resilient enough to support higher realized pricing and a healthier pricing posture. That said, tariffs remain a meaningful headwind, management previously flagged a $25-35 mln headwind in Q4, so its official Q4 report in late-February will be key to confirming whether stronger demand and pricing discipline, alongside ongoing cost actions, translated into improved profitability.