Carter's Inc. (CRI) shares plunged 5.3% on Wednesday after the children's apparel maker reported fourth-quarter earnings that beat analyst estimates, but its fiscal 2026 guidance disappointed investors. The company reported adjusted EPS of $1.90, surpassing the consensus estimate of $1.56, yet the stock slid due to the company's projection of low double-digit to mid-teens declines in adjusted diluted EPS for the full year. Revenue rose 8% to $925 million, exceeding estimates, driven partly by an extra week in the quarter adding $37 million in sales.

However, the weak outlook overshadowed the quarterly success, causing the stock to open sharply lower. Carter's expects low single-digit to mid-single-digit net sales growth for fiscal 2026, a significant downgrade from the $3.47 EPS reported in fiscal 2025. The company also warned of a lower gross margin rate due to tariff costs, though it expects productivity savings to partially offset this. CEO Douglas Palladini emphasized the company's product momentum and traffic growth, but the guidance led to a sell-off.

The Board declared a $0.25 quarterly dividend, payable March 27.