Carter's Inc. (CRI), the leading North American apparel retailer for babies and young children, saw its shares plummet 8.40% in pre-market trading following the release of its second-quarter fiscal 2025 results. The significant drop comes as the company reported earnings that fell far short of analyst expectations and suspended its fiscal 2025 guidance due to concerns over new tariffs.

The company reported adjusted earnings per share of $0.17 for the quarter, drastically missing the analyst consensus estimate of $0.39 and marking a 77.63% decrease from the $0.76 per share reported in the same period last year. While net sales rose 3.7% to $585.31 million, slightly beating the expected $565.08 million, the bottom line was heavily impacted by increased costs and tariff concerns.

Carter's adjusted operating income for Q2 came in at $11.8 million, less than half of the $23.7 million analysts had estimated. The company also announced it was suspending its fiscal 2025 guidance due to uncertainties surrounding new tariffs. Carter's estimates that the gross pre-tax earnings impact of additional import duties is expected to be about $125 million to $150 million on an annualized basis, with a net additional baseline tariff impact to pre-tax earnings of approximately $35 million in the second half of 2025. This significant financial impact, combined with the earnings miss, has clearly shaken investor confidence, leading to the sharp pre-market decline.