What Happened?
Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) fell 3.9% in the afternoon session after 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.
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.
What Is The Market Telling Us
Carter’s shares are very volatile and have had 22 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 1 day ago when the stock gained 3% on the news that optimism surged over a potential trade truce between the U.S. and China. This sector, which includes companies that sell non-essential goods like apparel and entertainment, is particularly sensitive to international trade relations. Many of these businesses rely on China for manufacturing and as a significant consumer market. A favorable trade agreement could lead to lower tariffs, reducing production costs and potentially boosting sales in the region. The easing of trade tensions often improves overall economic sentiment, which can encourage consumers to spend more freely on discretionary items, directly benefiting these companies' revenues and profitability.
Carter's is down 41.8% since the beginning of the year, and at $31.31 per share, it is trading 45.1% 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 $378.69.
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