Carter's (CRI) stock plummeted 15.81% in pre-market trading 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, but issued weak guidance for the first quarter of 2026. The company expects 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 significant margin pressures, with FY2025 operating income declining 43% to $144 million. Management cited tariff costs and investments as factors weighing on margins, and noted that while they believe recent tariff developments could be net positive, their current outlooks do not reflect potential impacts from a recent U.S. Supreme Court decision regarding tariffs.