Carter's Inc. (CRI) experienced a significant pre-market plunge of 9.67% on Friday, following the release of its fourth-quarter earnings and disappointing forward guidance.
The children's apparel retailer reported Q4 adjusted earnings of $1.90 per share, beating analyst estimates, with net sales of $925 million. However, the company issued weak guidance for the first quarter of 2026, expecting adjusted diluted EPS of just $0.02 to $0.08, well below the $0.36 analysts had anticipated. For the full fiscal year 2026, Carter's projected a low double-digit to mid-teens decline in adjusted diluted EPS.
Additionally, the company reported a 43% decline in FY2025 operating income to $144 million, with operating margin contracting by 400 basis points to 5.0%. Management noted that tariff costs and investments weighed on margins, and while they believe recent tariff news will be net positive, their current outlooks do not reflect potential impacts from a recent U.S. Supreme Court decision regarding tariffs.