What Happened?
Shares of children’s apparel manufacturer Carter’s (NYSE: CRI) jumped 3.6% in the afternoon session after UBS analysts suggested the company had a solid first quarter and would likely raise its full-year profit forecast.
The investment firm's checks indicated that Carter's performance would lead to an earnings per share beat of 4 cents. UBS also believed that an improved gross margin outlook, stemming from more favorable tariff rates, would allow the company to lift its fiscal 2026 earnings per share guidance. The firm projected Carter's would move its guidance to a range of $3.20 to $3.40, an improvement from the prior forecast of $2.95 to $3.08. This updated view, if realized, was expected to push Wall Street's average estimate of $3.06 higher and boost the stock.
After the initial pop the shares cooled down to $36.20, up 4% from previous close.
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What Is The Market Telling Us
Carter’s shares are very volatile and have had 27 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 biggest move we wrote about over the last year was 9 months ago when the stock dropped 21.4% on the news that the company reported disappointing second-quarter earnings, missed profit estimates, and suspended its full-year financial guidance.
The children's apparel company posted adjusted earnings of $0.17 per share, falling significantly short of analyst expectations of around $0.37 and marking a steep drop from the $0.76 per share reported a year earlier. While revenue increased slightly by 3.7% to $585.3 million, this was overshadowed by a severe decline in profitability. The company's operating income fell by nearly 90%. Management attributed the poor results to investments in pricing, costs from new stores, and the impact of higher tariffs. Adding to investor concerns, Carter's also slashed its quarterly dividend.
Carter's is up 9% since the beginning of the year, but at $36.20 per share, it is still trading 18.4% below its 52-week high of $44.37 from February 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at only $372.24.
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