CRI

CARTERS INC

NYSE · CONSUMER DISCRETIONARY · APPAREL & OTHER FINISHD PRODS OF FABRICS & SIMILAR MATL

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MKT CAP $1.2BP/E 6.1DIV YIELD 3.07%FCF YIELD 24.48%REV TTM $3B +5.2%NET INCOME $195.1M +43.6%NET CASH $319.1M52W 28.54 – 44.37SEC XBRL · TTM TO Invalid Date

How CRI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2026

Text kept

67%

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new sentences

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sentences removed

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+1,516

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RISK FACTORS Risk Factors Summary The following is a summary of the principal risks and uncertainties described in more detail in this Annual Report on Form 10-K for the year ended January 3, 2026 .
Significant political, trade, regulatory developments, and other circumstances beyond our control could have a material impact on our business, financial condition, and results of operations if we are unable to successfully implement various mitigating actions. • We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can. • Financial difficulties for, or the loss of one or more of, our major wholesale customers could result in a material loss of revenues. • Our retail success is dependent upon identifying locations and negotiating appropriate lease terms for retail stores. • Our eCommerce business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability. • Profitability and our reputation and relationships could be negatively affected if we do not adequately forecast the demand for our products and, as a result, create significant levels of excess inventory or insufficient levels of inventory. • Our profitability may decline as a result of lower margins, such as through deflationary pressures on our selling prices and increases in production costs and costs to serve. • We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw materials, labor, and transportation costs, which may impact our expenses and profitability. • Our revenues, product costs, and other expenses are subject to foreign economic and currency risks due to our operations outside of the United States. • Our business could suffer a material adverse effect from unseasonable or extreme weather conditions, or other effects of climate change. • Our failure to appropriately address environmental, social, and governance (“ESG”) matters, or focus on certain ESG matters over others, may adversely impact our business, reputation, financial condition and results of operations.
Risks Related to Executing Our Strategic Plan • We may not fully realize the expected benefits of our restructuring plans or other operating or cost-saving initiatives, which may negatively impact our profitability. • Our failure to properly manage strategic initiatives in order to achieve our objectives may negatively impact our business. • Our success is dependent upon retaining key individuals within the organization to execute our strategic plan. • We may be unable to grow through acquisitions or successfully integrate acquired businesses, and such acquisitions may fail to achieve the financial results we expected.
Risks Related to Financial Reporting, Our Debt, and Taxes • We may not achieve sales growth plans, profitability objectives, and other assumptions that support the carrying value of our intangible assets. • We have substantial debt, which could adversely affect our financial health and our ability to obtain financing in the future and to react to changes in our business. • The terms of our secured asset-based revolving credit facility (the ABL Facility) and the indenture governing our senior notes contain restrictions and limitations that could significantly impact our management’s flexibility or our financial and operational flexibility to operate our business and could adversely affect the holders of our senior notes. • Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. • Fluctuations in our tax obligations and effective tax rate may result in volatility in our operating and financial results and stock price.
General Risks • Quarterly cash dividends and share repurchases are subject to a number of uncertainties, and may affect the price of our common stock. • The market price of our common stock may be volatile. • Our Board authorized our entry into a limited duration stockholder rights agreement, which could delay or discourage a merger, tender offer, or assumption of control of the Company not approved by our Board. • Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
We are subject to general political and economic risks in connection with our global operations, including political instability (both in the United States and globally, including the ongoing conflict between Russia and Ukraine and the related economic and retaliatory measures), frequent hostilities between Israel and Hamas, persistent conflict in the Red Sea region, terrorist attacks, and changes in diplomatic and trade relationships, any of which may have a significant adverse effect on our business, financial condition, and results of operations.
Significant political, trade, regulatory developments, and other circumstances beyond our control, are expected to have a material impact on our business, financial condition, and results of operations if we are unable to successfully implement various mitigating actions.
We sell products outside the United States through our multichannel global business model, and we rely on a network of global suppliers, primarily located in Asia.
We estimate that Vietnam, Bangladesh, Cambodia, and India will collectively represent approximately 75%, and China less than 3%, of our product sourcing spend in fiscal 2026.
In fiscal 2025, approximately 60% of the fabric that was used in the manufacture of our products was sourced from China; however, the fibers used to produce that fabric were sourced from outside of China.
As a result of the tariffs announced on April 2, 2025 by the Trump Administration, we are anticipating increased supply chain challenges, cost volatility, and consumer and economic uncertainty due to rapid changes in global trade policies.
We continue to analyze the impact of these tariffs on our business and actions we can take to minimize their impact.
We expect these new tariffs to have a material impact on our business and results of operations in fiscal year 2026 and in the longer term if we are unable to successfully implement various mitigating actions noted below.
Uncertainty regarding policies of the Trump Administration with respect to the future of trade partnerships and relations, including as a result of the tariffs announced by the Trump Administration and additional tariffs that may be announced or implemented in the future, are expected to impact our market share, revenue and gross margins and reduce our competitiveness in countries that will be affected by those policies.
In addition, these developments may also negatively impact the carrying value of our reporting units and our indefinite-lived tradename assets.
As a result of the tariffs announced by the Trump Administration or additional tariffs or other restrictions, quotas, embargoes, or safeguards that are placed on goods imported into the United States, or any related counter-measures that are taken by other countries, we expect to take actions which may include, but not be limited to, changes to our product assortments, cost sharing with our vendor partners, changes to the mix of production by country, and raising prices to end consumers and our wholesale customers.
The actions that we take may not fully offset the impact of tariffs and, as a result, our market share, revenue, gross margins, and results of operations may be materially harmed.
As a result, these competitors may be able to adapt to changes in customer requirements and preferences more quickly, take advantage of acquisitions and other opportunities more readily, devote greater resources to the marketing and sale of their products, adopt more aggressive pricing strategies than we can, and more successfully utilize developing technology, including data analytics, artificial intelligence (“AI”), and machine learning.
Additionally, our competitors may outpace us in incorporating new technologies, such as AI, into their product offerings and engagement with customers, which could affect our competitiveness and operational outcomes.
Our efforts to utilize these technological advancements may not be successful, may result in substantial integration and maintenance costs, and may expose us to additional risks.
For fiscal 2025, we derived approximately 35% of our consolidated net sales from our U.S.
Wholesale segment, approximately 34% of our consolidated net sales from our top ten wholesale customers, and approximately 30% of consolidated net sales from our top five wholesale customers, which includes net sales from our exclusive brands sold, in alphabetical order, at Amazon, Target, and Walmart.
Our two largest wholesale customers accounted for 11.0% and 10.3%, respectively, of consolidated net sales in fiscal 2025.
As of the end of fiscal 2025, approximately 83% of our gross accounts receivable were from our ten largest wholesale customers, with three of these customers having individual receivable balances in excess of 10% of our total accounts receivable.
As we have experienced in the past, we face the risk that if one or more of these customers significantly decreases their demand for our products, does business with us on less favorable terms or terminates their relationship with us as a result of financial difficulties (including bankruptcy or insolvency), competitive forces, consolidation, reorganization, changes in merchandising strategies, or other reasons, then we may have significant levels of excess inventory that we may not be able to place elsewhere, a material decrease in our sales, or material impact on our operating results.
Risks associated with our eCommerce business in the United States, Canada, and Mexico include: • the failure of the computer systems, including those of third-party vendors, that support and enable our eCommerce sites and mobile apps, including, among others, inadequate system capacity, service outages, computer viruses, human error, changes in programming, security breaches, system upgrades or migration of these services to new systems; • disruptions in telecommunications services or power outages; • reliance on third parties for computer hardware and software, as well as delivery of merchandise to our customers on-time and without damage; • limitations of shipping volumes which may be imposed by service providers; • rapid technology changes; • the failure to deliver products to customers on-time and within customers’ expectations; • credit or debit card, or other electronic payment-type, fraud, or disruptions in payment systems; • the diversion of sales from our physical stores; • natural disasters or adverse weather conditions; • changes in applicable federal, state and international regulations; • liability for online content; and • consumer privacy concerns and regulation.
Our failure to appropriately address ESG matters, or focus on certain ESG matters over others, may adversely impact our business, reputation, financial condition and results of operations.
Over the past few years, the expectations related to ESG matters have rapidly evolved.
Given the current environment, we may evaluate and announce changing goals and initiatives related to our ESG targets, standards, and expectations from time to time.
Although we have announced goals and initiatives with respect to certain ESG topics, including Scope 1 and 2 greenhouse gas emissions, suppliers with science-based sustainability targets, waste, plastic packaging, and water usage, as well as goals with respect to our products and our people, we may be unable to meet them.
Conversely in recent years there has been a rise in the prevalence of anti-ESG sentiment, and we could be criticized for the scope or nature of our ESG initiatives and goals or for any revisions to our goals.
We may not be able to meet the diverging expectations and perspectives on these topics, and we could be subjected to negative responses by consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, results of operations, financial condition and cash flows.
This may also impact our ability to attract and retain talent to compete in the marketplace.
Further, risks related to environmental and sustainability policies, laws and technologies may impact our business in the short-, medium-, and long-term.
Our global supply chain could be negatively affected due to a number of factors, including: • political instability or other global events resulting in the disruption of operations or trade in or with foreign countries from which we source our products; • the occurrence of a natural disaster, unusual weather conditions, or a disease epidemic in foreign countries from which we source our products; • financial instability, including bankruptcy or insolvency, of one or more of our major vendors, including our transportation providers and carriers; • the imposition of new laws and regulations relating to imports, duties, taxes, and other charges on imports, including those that the U.S. government has implemented and may further implement on imports from China, such as the Uyghur Forced Labor Prevention Act and other sanctions and trade regulations issued by the U.S. government related to forced labor in the Xinjiang Uyghur Autonomous Region of China and other regions which may affect our sourcing operations and the availability of raw materials, including cotton, used by the vendors from which we purchase goods; • increased costs of raw materials (including cotton and other commodities), labor, fuel, and transportation; • interruptions in the supply of raw materials, including cotton, fabric, and trim items; • increases in the cost of labor in our sourcing locations; • changes in the U.S. customs procedures concerning the importation of apparel products, durable goods and accessories; • unforeseen delays in customs clearance of any goods; • disruptions in the global transportation network, such as port strikes or delays, work stoppages or other labor unrest, capacity withholding, world trade restrictions, acts of terrorism, war, vessel availability due to longer transit times and/or schedule changes or timing of new vessel commissioning, and ocean container availability; • the application of adverse foreign intellectual property laws; • the ability of our vendors to secure sufficient credit to finance the manufacturing process, including the acquisition of raw materials; • potential social compliance concerns resulting from our use of international vendors, third-party manufacturers, and licensees, over whom we have limited control; • manufacturing delays or unexpected demand for products may require the use of faster, but more expensive, transportation methods, such as air-freight services; and • other events beyond our control that could interrupt our supply chain and delay receipt of our products into the United States, Canada, and Mexico, as well as the 90 additional countries in which our international partners and international wholesale customers operate.
These attacks required us to route shipments around the Cape of Good Hope at the southern tip of Africa, which added an additional seven to ten days of transit time.
Additionally, on December 23, 2021, the Uyghur Forced Labor Prevention Act (the “UFLPA”) was signed into law, addresses the use of forced labor in the XUAR.
Although we do not knowingly source any products from the XUAR and we have no known involvement with XPCC or its affiliates, we could be subject to penalties, fines or sanctions if any of the vendors from which we purchase goods is found or suspected to have dealings, directly or indirectly, with XPCC or entities with which it may be affiliated.
In fiscal 2025, we purchased approximately 63% of our products from ten vendors, with three vendors representing approximately one-half of the purchases made from our top ten vendors.
The ports of entry to which we deliver on the East and West Coasts may also be subject to labor disputes, work slowdowns, lockouts, strikes, or other disruptions.

and 56 more.

Gone since FY2024

RISK FACTORS Risk Factors Summary The following is a summary of the principal risks and uncertainties described in more detail in this Annual Report on Form 10-K for the year ended December 28, 2024.
Risks Related to Operating a Global Business • We face risks related to the uncertainty regarding the future of international trade agreements and the United States’ position on international trade. • We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can. • Financial difficulties for, or the loss of one or more of, our major wholesale customers could result in a material loss of revenues. • Our retail success is dependent upon identifying locations and negotiating appropriate lease terms for retail stores. • Our eCommerce business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability. • Profitability and our reputation and relationships could be negatively affected if we do not adequately forecast the demand for our products and, as a result, create significant levels of excess inventory or insufficient levels of inventory. • Our profitability may decline as a result of lower margins, such as through deflationary pressures on our selling prices and increases in production costs and costs to serve. • We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw materials, labor, and transportation costs, which may impact our expenses and profitability. • Our revenues, product costs, and other expenses are subject to foreign economic and currency risks due to our operations outside of the United States. • Our business could suffer a material adverse effect from unseasonable or extreme weather conditions, or other effects of climate change. • Environmental, social, and governance matters and any related reporting obligations may adversely impact our business, financial condition and results of operations.
Risks Related to Executing Our Strategic Plan • Our failure to properly manage strategic initiatives in order to achieve our objectives may negatively impact our business. • Our success is dependent upon retaining key individuals within the organization to execute our strategic plan. • We may be unable to grow through acquisitions or successfully integrate acquired businesses, and such acquisitions may fail to achieve the financial results we expected.
Risks Related to Financial Reporting, Our Debt, and Taxes • We may not achieve sales growth plans, profitability objectives, and other assumptions that support the carrying value of our intangible assets. • We have substantial debt, which could adversely affect our financial health and our ability to obtain financing in the future and to react to changes in our business. • We may experience fluctuations in our tax obligations and effective tax rate.
General Risks • Quarterly cash dividends and share repurchases are subject to a number of uncertainties, and may affect the price of our common stock. • The market price of our common stock may be volatile. • Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
We are subject to general political and economic risks in connection with our global operations, including political instability (both in the United States and globally, including the ongoing conflict between Russia and Ukraine and the related economic and retaliatory measures), the ongoing war between Israel and Hamas, the conflict in the Red Sea region, terrorist attacks, and changes in diplomatic and trade relationships, any of which may have a significant adverse effect on our business, financial condition, and results of operations.
We sell products outside the U.S. through our multichannel global business model, and we source all of our apparel and other products from a global network of third-party suppliers, primarily located in Asia.
Certain policies and statements of the first Trump administration that may continue in the second Trump administration have given rise to uncertainty regarding the future of international trade agreements and the United States’ position on international trade.
For example, the first Trump administration imposed tariffs on a range of products from China, which led China to also impose tariffs on certain U.S. goods in retaliation.
Additionally, actions taken by, and announcements from, the second Trump administration, could result in retaliatory tariffs imposed on U.S. businesses from China and any other countries affected by such tariffs.
Moreover, the uncertainty regarding the policies of the second Trump administration with respect to the future of trade partnerships and relations, including the possibility of additional or increased tariffs, may reduce our competitiveness in countries that may be affected by those policies, whether or not the second Trump administration ultimately takes any such actions.
If increased or additional tariffs or other restrictions, quotas, embargoes, or safeguards are placed on goods imported into the U.S., or any related counter-measures are taken by other countries, we may have to raise our prices or increase inventory levels, or find new sources of products that we import, and our revenue, gross margins, and results of operations may be materially harmed.
As a result, these competitors may be able to adapt to changes in customer requirements and preferences more quickly, take advantage of acquisitions and other opportunities more readily, devote greater resources to the marketing and sale of their products, adopt more aggressive pricing strategies than we can, and more successfully utilize developing technology, including data analytics, artificial intelligence, and machine learning.
For fiscal 2024, we derived approximately 36% of our consolidated net sales from our U.S.
Wholesale segment, approximately 35% of our consolidated net sales from our top ten wholesale customers, and approximately 31% of consolidated net sales from our top five wholesale customers, which includes net sales from our exclusive brands sold, in alphabetical order, at Amazon, Target, and Walmart.
Our two largest wholesale customers accounted for 10.9% and 10.1%, respectively, of consolidated net sales in fiscal 2024.
As of the end of fiscal 2024, approximately 83% of our gross accounts receivable were from our ten largest wholesale customers, with three of these customers having individual receivable balances in excess of 10% of our total accounts receivable.
As we have experienced in the past, we face the risk that if one or more of these customers significantly decreases their business, does business with us on less favorable terms or terminates their relationship with us as a result of financial difficulties (including bankruptcy or insolvency), competitive forces, consolidation, reorganization, changes in merchandising strategies, or other reasons, then we may have significant levels of excess inventory that we may not be able to place elsewhere, a material decrease in our sales, or material impact on our operating results.
Risks associated with our eCommerce business in the United States, Canada, and Mexico include: • the failure of the computer systems, including those of third-party vendors, that operate our eCommerce sites and mobile apps, including, among others, inadequate system capacity, service outages, computer viruses, human error, changes in programming, security breaches, system upgrades or migration of these services to new systems; • disruptions in telecommunications services or power outages; • reliance on third parties for computer hardware and software, as well as delivery of merchandise to our customers on-time and without damage; • limitations of shipping volumes which may be imposed by service providers; • rapid technology changes; • the failure to deliver products to customers on-time and within customers’ expectations; • credit or debit card, or other electronic payment-type, fraud, or disruptions in payment systems; • the diversion of sales from our physical stores; • natural disasters or adverse weather conditions; • changes in applicable federal, state and international regulations; • liability for online content; and • consumer privacy concerns and regulation.
Environmental, social, and governance matters and any related reporting obligations may adversely impact our business, financial condition and results of operations.
U.S. and international regulators, customers, and investors are increasingly focused on corporate environmental, social, and governance (“ESG”) practices and disclosures and may evaluate our business or other practices according to a variety of ESG targets, standards, and expectations.
For example, new domestic and international laws and regulations relating to ESG matters have been adopted or are under consideration, including laws and regulations related to disclosure of and risks related to climate-change, extended producer responsibility matters, and sustainability and traceability laws and regulations.
These, and additional legislation which may be passed, have caused and may cause us to incur additional costs of compliance due to the need for expanded data collection, analysis, and certification with respect to greenhouse gas emissions and other climate change related risks, as well as other ESG topics, which may be significant.
Although we have announced goals with respect to certain ESG topics, including Scope 1 and 2 greenhouse gas emissions, suppliers with science-based sustainability targets, waste, plastic packaging, and water usage, as well as goals with respect to our products and our people, we may be unable to meet them, or we may revise our goals or targets, or change our priorities or strategies.
As a result, we may face adverse regulatory, investor, media, or public scrutiny that may adversely affect our business, results of operations, or financial condition.
Furthermore, the criteria by which our ESG practices, including our initiatives and public goals, are assessed may change due to the evolution of the sustainability landscape, which could result in greater expectations of us and may cause us to undertake costly initiatives to satisfy new criteria.
If we are unable to respond effectively to these changes to the sustainability landscape, governments, customers, and investors may conclude that our policies and/or actions with respect to ESG matters are inadequate.
In addition, the methodologies for reporting and measuring ESG metrics may change and may result in adjustments to previously reported information.
If we fail or are perceived to have failed to achieve previously announced public goals or to accurately disclose our progress on such goals or initiatives, our reputation, business, results of operations, and financial condition could be adversely impacted.
Further, risks related to environmental and sustainability policies, laws, technologies, and negative impacts on our reputation, can impact our business in the short-, medium-, and long-term.
Our global supply chain could be negatively affected due to a number of factors, including: • political instability or other global events resulting in the disruption of operations or trade in or with foreign countries from which we source our products; • the occurrence of a natural disaster, unusual weather conditions, or a disease epidemic in foreign countries from which we source our products; • financial instability, including bankruptcy or insolvency, of one or more of our major vendors, including our transportation providers and carriers; • the imposition of new laws and regulations relating to imports, duties, taxes, and other charges on imports, including those that the U.S. government has implemented and may further implement on imports from China, such as the Uyghur Forced Labor Prevention Act and other sanctions and trade regulations issued by the U.S. government related to forced labor in the Xinjiang Uyghur Autonomous Region of China and other regions which may affect our sourcing operations and the availability of raw materials, including cotton, used by the vendors from which we purchase goods; • increased costs of raw materials (including cotton and other commodities), labor, fuel, and transportation; • interruptions in the supply of raw materials, including cotton, fabric, and trim items; • increases in the cost of labor in our sourcing locations; • changes in the U.S. customs procedures concerning the importation of apparel products, durable goods and accessories; • unforeseen delays in customs clearance of any goods; • disruptions in the global transportation network, such as a port strikes or delays, work stoppages or other labor unrest, capacity withholding, world trade restrictions, acts of terrorism, war, vessel availability due to longer transit times and/or schedule changes or timing of new vessel commissioning, and ocean container availability; • the application of adverse foreign intellectual property laws; • the ability of our vendors to secure sufficient credit to finance the manufacturing process, including the acquisition of raw materials; • potential social compliance concerns resulting from our use of international vendors, third-party manufacturers, and licensees, over whom we have limited control; • manufacturing delays or unexpected demand for products may require the use of faster, but more expensive, transportation methods, such as air-freight services; and • other events beyond our control that could interrupt our supply chain and delay receipt of our products into the United States, Canada, and Mexico, as well as the 90 additional countries in which our international partners and international wholesale customers operate.
These attacks required us to route shipments around the Cape of Good Hope at the southern tip of Africa, which has added an additional seven to ten days of transit time.
Additionally, on December 23, 2021, the Uyghur Forced Labor Prevention Act (the “UFLPA”) was signed into law, addresses the use of forced labor in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).
Although we do not knowingly source any products from the XUAR and we have no known involvement with China’s Xinjiang Production and Construction Corporation (“XPCC”) or its affiliates, we could be subject to penalties, fines or sanctions if any of the vendors from which we purchase goods is found or suspected to have dealings, directly or indirectly, with XPCC or entities with which it may be affiliated.
In fiscal 2024, we purchased approximately 62% of our products from ten vendors, with three vendors representing approximately one half of the purchases made from our top ten vendors.
The ports of entry to which we deliver on the East Coast may also be subject to labor disputes, work slowdowns, lockouts, strikes, or other disruptions.
Additionally, the nature of our business requires us to carry a significant amount of inventory, especially prior to the peak holiday selling season when we increase our inventory levels, and to support our retail omni-channel strategies, including our buy on-line and pick-up in store program.
Risk Relating to Litigation We are and may become subject to various claims and pending or threatened lawsuits, including as a result of investigations or other proceedings related to investigations.
However, our IT systems are vulnerable to damage or interruption from a variety of sources, including physical damage, telecommunications or network failures or interruptions, system malfunction, natural disasters, malicious human acts, terrorism, and war, and we have experienced interruptions in the past.
GDPA, CCPA, and the CPRA) or failing to adequately protect such information.

and 14 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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