What Happened?

Shares of children’s apparel manufacturer Carter’s (NYSE:CRI) fell 11.5% in the afternoon session after the company reported weak first-quarter 2025 results, as a narrow beat on adjusted EPS and stronger-than-expected same-store sales were overshadowed by its suspension of forward guidance amid a CEO transition and tariff uncertainty. 

Revenue fell nearly 5% year over year, with softness across US Retail, Wholesale, and International segments. Comparable sales in US Retail declined 5%, although eCommerce outperformed and March trends showed some improvement after a weak start to the quarter. However, the loss of forward guidance created uncertainty.

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What The Market Is Telling Us

Carter’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Carter's and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 17 days ago when the stock dropped 7.7% on the news that markets gave up early gains with optimism over progress in US-China trade talks quickly fading as the Trump administration pushed tariffs on all Chinese imports to well above 100%. Hopes had been lifted by chatter of constructive negotiations aimed at easing and eventually removing U.S. trade tariffs. But the news confirmed fears of a prolonged trade fight, increasing uncertainty about the direction of economic policy. This left investors grappling with the dual threat of slower growth and higher inflation, both of which could linger if the standoff continues.

Carter's is down 37.4% since the beginning of the year, and at $33.66 per share, it is trading 53% below its 52-week high of $71.56 from April 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $430.80.

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