What Happened?
Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) jumped 6.5% in the afternoon session after strong earnings from a peer retailer signaled robust consumer spending in the apparel sector. Fellow apparel company Abercrombie & Fitch reported record third-quarter net sales, with 7% growth from the previous year. The company's earnings per share also exceeded its own outlook. This news appeared to boost investor confidence in the broader apparel industry, suggesting that shoppers continued to spend on clothing. The positive industry-specific news overshadowed broader economic data that showed a sharp decline in overall consumer confidence in November, providing a specific reason for optimism for clothing retailers like Carter's.
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What Is The Market Telling Us
Carter’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 28 days ago when the stock dropped 3.9% on the news that the company reported weak third-quarter results and announced significant restructuring plans, including store closures and job cuts, in response to rising costs and tariffs. The children's apparel maker's third-quarter profit fell significantly to $11.6 million. On a per-share basis, earnings dropped to $0.32 from $1.62 in the same period a year ago. While revenue of about $758 million was comparable to the prior year, it missed expectations. Management pointed to elevated product costs, partly from higher tariffs, which hurt profitability. In response, Carter's announced plans to close 150 stores and cut 300 corporate jobs. Due to the uncertainty surrounding tariffs, the company also suspended its fiscal 2025 guidance.
Carter's is down 41.3% since the beginning of the year, and at $31.58 per share, it is trading 44.6% below its 52-week high of $57.01 from December 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $331.72.
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