Carter's Tumbles 11% on FY25 Margin Squeeze and Weak Cash Flow
Tariff and cost pressures drove guidance that points to sales growth alongside a double-digit EPS decline.
Overview
- The stock fell to $37.35 in premarket trading after the report highlighted squeezed profitability and softer cash generation.
- Fiscal 2025 net sales reached $2.898 billion and Q4 sales were $925 million, aided by a 14‑week quarter.
- Operating margin compressed to about 5.0% as tariffs, unfavorable product mix, higher compensation and restructuring weighed on results.
- Cash flow from operations declined to $122 million from $298.8 million, which management linked to higher inventories and lower earnings.
- For fiscal 2026, management expects low‑ to mid‑single‑digit net sales growth and a low double‑digit to mid‑teens decline in adjusted diluted EPS, with liquidity supported by debt refinancing, a new revolver, and $56 million returned to shareholders.