Carter's, Inc. (CRI) shares plummeted 14.6% in pre-market trading on Tuesday after the children's apparel retailer provided a disappointing profit outlook for fiscal 2025 that overshadowed its better-than-expected fourth quarter earnings.

For the fourth quarter, Carter's reported adjusted earnings per share of $2.39, beating analyst estimates of $1.92. Net sales of $859.7 million also topped expectations of $837.7 million. However, the company's guidance for fiscal 2025 weighed heavily on investor sentiment.

Carter's projected adjusted earnings per share of $3.20 to $3.80 for fiscal 2025, significantly below Wall Street's consensus estimate of $4.87. The company cited several factors expected to weigh on its profitability, including lower pricing in the first half of the year, higher product costs, and increased variable compensation provisions.

Further adding to the pessimism, Carter's forecast fiscal 2025 net sales in the range of $2.78 billion to $2.86 billion, representing a potential decline from the previous year's $2.84 billion. The company expects a challenging first quarter, with net sales guidance of $615 million to $625 million, missing analyst estimates of $653 million.

While Carter's plans to focus on improving merchandise assortments and inventory positions in the second half of 2025, the weak outlook reflects continued headwinds from macroeconomic pressures and elevated costs. The company's shares tumbled in pre-market trading as investors reacted negatively to the disappointing guidance.