Investing.com -- Moody’s Ratings has revised its outlook on The William Carter Company to stable from negative while affirming its Ba2 corporate family rating. The adjustment reflects recovering sales growth, improved credit metrics, and robust liquidity at the Atlanta-based children’s apparel retailer.

The company’s financial trajectory has gained traction despite persistent value-seeking behavior among consumers and a broader deceleration in birth rates. Operating momentum has benefited from lower average tariff rates following a recent Supreme Court decision alongside internal cost mitigation initiatives.

Liquidity remains a key credit strength, highlighted by a cash reserve of $654 million as of July 2026 that was bolstered by $132 million in tariff refunds. Moody’s projects leverage metrics to settle at a debt-to-EBITDA ratio of 2.5 times over the next 12 to 18 months, supported by an undrawn $750 million revolving credit facility.

Despite these operational gains, Carter’s remains exposed to potential trade policy fluctuations due to its heavy reliance on apparel sourcing across Southeast Asia. Additionally, maintaining market share requires ongoing product adaptation to capture shifting preferences among younger families in a highly competitive market segment.

Moody’s indicated that a rating upgrade would depend on sustained top-line growth, double-digit operating margins, and maintaining leverage below 3.75 times. Conversely, rating pressure could re-emerge if leverage exceeds 4.5 times or if aggressive financial policies erode liquidity reserves.

Original Article