Carter’s shares fall despite earnings beat on weak outlook

Investing.com -- Carter's Inc. (NYSE: CRI) reported fourth-quarter adjusted earnings per share of $1.90, beating analyst estimates of $1.56, though shares fell 5.3% as the company's fiscal 2026 guidance disappointed investors.

The children's apparel company posted revenue of $925 million for the quarter, up 8% from $860 million in the prior year period and exceeding the consensus estimate of $903.84 million. The fourth quarter included 14 weeks compared to 13 weeks in the prior year, with the extra week contributing approximately $37 million in sales. On a comparable week basis, net sales grew 3.4%.

Carter's fiscal 2026 outlook disappointed investors. The company projects low double-digit to mid-teens decline in adjusted diluted EPS from the $3.47 reported in fiscal 2025. For the first quarter of fiscal 2026, Carter's expects adjusted EPS of $0.02 to $0.08, well below the $0.66 reported in the first quarter of fiscal 2025 and the analyst consensus of $0.36.

"Carter's delivered improved fourth quarter results with each of our business segments posting sales growth over last year," said Douglas C. Palladini, Chief Executive Officer & President. "We see momentum building behind our products and demand creation initiatives, which have driven an improvement in the rate of traffic, new customer acquisition, higher realized pricing, and increased penetration of the best portions of our product assortments."

For fiscal 2026, Carter's projects low single-digit to mid-single-digit percentage growth in net sales and similar growth in adjusted operating income. The guidance excludes potential impacts from recent tariff developments. The company expects a lower gross margin rate due to incremental tariff costs, partially offset by higher pricing and productivity savings.

The company's Board of Directors declared a quarterly dividend of $0.25 per share, payable March 27, 2026.

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