Kids keep growing, even when household budgets are stretched, and that is an unavoidable reality every parent understands.
From replacing outgrown winter clothes to buying holiday pajamas and gifts, families have plenty of reasons to shop. But increasingly, they are becoming more selective about how much they spend.
And most parents, like me, wait for the holiday discounts to kick in before buying, often even in bulk and in larger sizes.
According to Deloitte’s 2026 Holiday Retail Survey, 38% of consumers qualify as value seekers who rely on promotions, rewards, and other savings strategies. Meanwhile, 79% expect higher prices.
This creates a challenge for retailers trying to attract shoppers without giving away too much through discounts.
Carter’s, the 161-year-old children’s apparel giant, is among them. The company has spent much of 2026 revamping its business, introducing a new brand identity, simplifying its merchandise selection, and developing new ways to connect with younger parents.
However, its latest results show that rebuilding shopper loyalty may take longer than expected.
Carter’s faces slowing demand ahead of the holidays
Carter’s reported that comparable U.S. retail sales increased just 0.4% during its third quarter, a considerable slowdown from the 5.1% growth recorded in the second quarter.
This followed a 10.5% increase during the first quarter. The slowdown comes despite the company raising prices on some of its products.
During its Oct. 30 earnings call, management said average prices in its U.S. retail business increased by a low-single-digit percentage, while the number of units sold declined by a similar amount.
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In other words, Carter’s was collecting more per item but selling fewer clothing items. The company also lowered its full-year sales expectations, citing softer demand from U.S. shoppers.
CEO Sharon Price John acknowledged that the retailer had to adjust its marketing and promotional strategy during the quarter to respond to difficult shopping conditions.
September proved particularly important. After a weak start to the back-to-school season, Carter’s shifted its marketing toward clothing customers needed immediately, helping comparable retail sales increase by double digits that month.
Now, the company is preparing for an increasingly competitive holiday season.
Allison Peterson, Carter’s chief commercial officer, told analysts that the retailer expects heavier promotional activity across the industry in November and December.
This could mean more opportunities for shoppers looking to save on children’s clothing.
The Carter’s website is already advertising discounts of up to 60% on selected pajamas and holiday outfits, along with tops and bodysuits starting at $5 and outfit sets starting at $12 as part of its 12 days of under $12 promotion.
The retailer is also promoting matching family Christmas pajamas, holiday outfits, organic cotton sleepwear from Little Planet and baby gifts from Skip Hop.
John also highlighted Carter’s push to appeal to multiple generations, “including a more nostalgic grandparent cohort who are the main drivers of our important gifting segment.”
However, Carter’s still expects average U.S. retail prices to increase by a low-single-digit percentage during the fourth quarter. Shoppers may see attractive discounts on selected merchandise, even as prices on other products remain higher than last year’s.
Carter’s brings in H&M executive as turnaround strategy progresses
The holiday season will also provide an important test of the broader revival strategy the company introduced earlier this year.
In September, Carter’s unveiled its first comprehensive brand makeover in 25 years, introducing a redesigned logo and a new promise to “let every child’s light shine.”
As TheStreet previously reported, the changes extend beyond advertising to include merchandise, store operations, technology, and customer engagement. Management said some of those initiatives are beginning to show results.
During the third-quarter earnings call, John said the new branding campaign generated more than 1.6 billion media impressions within two months. The retailer also reported nearly 20% growth in branded searches compared with the period before the campaign’s launch, alongside improvements in brand awareness and purchase consideration.
One particularly encouraging development has been sleepwear.
Carter’s introduced its Stellar Sleep Shop, along with its Not-So-Scary Monsters collection and an interactive bedtime feature in its app, to make shopping for pajamas and managing bedtime routines more engaging for families.
The company said sleepwear sales increased by double digits in both units and dollars during the third quarter. It also reported double-digit improvements in conversion among app users engaging with its bedtime feature.
Another area where the company is seeing early success is its revamped marketing and social media strategy, designed to reconnect with existing shoppers while attracting younger parents, particularly Gen Z.
“In less than two months, our campaign has generated over 1.6 billion media impressions,” John said during the Oct. 30 earnings call.
She also reported a meaningful improvement in positive sentiment across social media, higher brand awareness and greater purchase consideration. Searches specifically for Carter’s increased nearly 20% compared with the period before the campaign launched.
The results suggest that some of Carter’s newer product and digital initiatives are resonating with customers, even as overall shopping demand remains uneven.
The company is now making additional changes behind the scenes.
On Oct. 30, Carter’s announced a new leadership structure. The retailer announced the appointment of Allison Peterson as chief commercial officer and the hiring of Maria Gemzell from H&M as its incoming chief product officer.
Gemzell is expected to join in early 2027 and oversee product design, merchandising, and development, potentially influencing what customers find in Carter’s stores and online in the coming years.
And while the early response is encouraging, the challenge for Carter’s will be converting that attention into sustained purchases, particularly as parents remain cautious about spending.
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