What Happened?
Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) fell 9.8% in the afternoon session after the company slashed its quarterly dividend to $0.25 from $0.80 in the previous quarter. Management acknowledged that the prior dividend level was unsustainable given current profitability. While painful for investors, the cut was intended to preserve cash and maintain financial flexibility in response to growing macroeconomic uncertainty and the risk of rising costs from potential tariffs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Carter's? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Carter’s shares are somewhat volatile and have had 14 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 26 days ago when the stock dropped 11.5% on the news that 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.
Carter's is down 39.5% since the beginning of the year, and at $32.58 per share, it is trading 54.1% below its 52-week high of $71.04 from September 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $392.57.
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