Carter’s, Inc faces a lawsuit in the United States District Court for the Northern District of Georgia on behalf of purchasers of Carter's, Inc. (NYSE: CRI) common stock who purchased between April 27, 2004 and November 10, 2009. Recently a lawsuit on behalf of current long term investors in Carter's, Inc. (NYSE:CRI) against certain current and/or former members of Carter’s board of directors and certain of its current and/or former senior officers was filed.
Carter’s, Inc., located in Atlanta, GA, is a marketer of apparel for babies and young children in the United States. The lawsuit filed in the United States District Court for the Northern District of Georgia on behalf of purchasers of Carter's, Inc. (NYSE: CRI) common stock, who purchased between April 27, 2004 and November 10, 2009, alleges that Carter's Inc. and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between April 27, 2004 and November 10, 2009 statements and that were materially false and misleading. The lawsuit filed on behalf of current long term investors alleges breaches of fiduciary duty by certain current and/or former members of Carter’s board of directors, certain of its current and/or former senior officers and others. On October 26, 2009, Carter's announced that it would postpone its third-quarter results, on the grounds that it needed more time to complete a review of its accounting for discounts offered to some wholesale customers.

On October 27, 2009, Carter’s announced that it was delaying its earnings release for the third quarter of 2009 (ended September 30, 2009) as well as delaying the related investor conference call previously scheduled for October 28, 2009. Carter’s Inc stated as follows in its October 27, 2009 press release: “The Company is delaying its earnings release in order to complete a review of its accounting for margin support to its wholesale customers. A matter arose late in the Company’s preparation for its scheduled earnings release, and more time is required to fully evaluate this matter. The Company anticipates that it will complete its review and report its third quarter earnings by November 12, 2009.” On October 27, 2009, Carter’s common stock declined by $6.78 per share, approximately 23.8%, from $28.44 per share to $21.66 per share on substantially greater than average volume. On November 9, 2009, after the market close, Carter’s announced that as a result of the review disclosed on October 27, 2009, the Company would be restating its financial statements for the fiscal years 2004 through 2008, and the fiscal quarters from September 29, 2007 through July 4, 2009 and the filing of its 10-Q with the SEC for the third quarter of 2009 would be further delayed.

In an 8-K filed with the SEC on November 10, 2009, the Company further stated as follows with regard to the restatement: “ In concluding that the Company needs to restate prior financial statements, management has identified control deficiencies associated with its wholesale margin support payments that constitute a material weakness….The Company has self-reported information concerning its review to the Securities and Exchange Commission and will cooperate with its inquiry into this matter.” On November 10, 2009, in morning trading, Carter’s common stock declined by $3.04 per share, approximately 12.6%, from $24.04 per share to $21.00 per share. Carter's share price has dropped nearly 25% since these accounting issues came to light. Carter's CEO Michael Casey stated that Carter was, improving internal controls and management processes to help reduce risks inherent in this component of our business going forward. Carter's, Inc. shares (CRI) traded recently at $30.25 per share, down from its 52weekHigh of $34.24 per share.