WASHINGTON — Carter’s, one of the most recognizable baby and children’s clothing retailers in the United States, has announced plans to close 150 stores and reduce its workforce by 15% as rising tariffs continue to pressure company finances. The Atlanta-based company outlined its restructuring strategy in its latest earnings report released Monday, citing significant cost increases tied to ongoing trade policies.
The retailer said higher tariffs have had a substantial impact on profitability, estimating that import duties could add between $200 million and $250 million in additional costs. As part of its cost-cutting response, Carter’s will expand the number of planned store closures and streamline its corporate operations. The company expects to eliminate roughly 300 office positions by the end of 2025, a move projected to save $35 million annually beginning in 2026.
According to the company’s report, the store closures will occur gradually across North America over the next three years, as existing leases expire. These stores accounted for approximately $110 million in annual net sales over the past year. Carter’s said the closures would primarily target underperforming locations while maintaining a focus on e-commerce and wholesale operations, which continue to represent strong growth opportunities for the brand.
In addition to the store and workforce reductions, Carter’s announced that its chief executive officer and members of the board of directors will take pay cuts as part of broader cost-saving measures. The company said the leadership team remains committed to protecting long-term shareholder value and maintaining stability through what it described as one of the most challenging periods in recent history for the retail industry.
The financial strain from tariffs has been mounting for months, Carter’s said. “The Administration has implemented significant new tariffs on products imported into the United States from a wide range of countries,” the company noted in its report. “These additional tariffs have begun to add substantially to the approximately $110 million in duties on imported product paid by the company in fiscal 2024.”
The company’s third-quarter financial results underscored the extent of the pressure. Net income fell sharply to $11.6 million, down from $58.3 million during the same period last year. Executives said that the tariff-related expenses, combined with soft consumer demand and ongoing global supply chain challenges, contributed to the decline.
Carter’s has temporarily suspended its financial outlook for 2025, citing “ongoing and significant uncertainty” surrounding trade policy and the potential for further cost escalations. The company indicated that it will continue to evaluate market conditions and government actions before issuing new guidance to investors.
To adapt to the changing business environment, Carter’s plans to implement several strategies aimed at mitigating the financial burden of tariffs. These include diversifying its sourcing by shifting more production to countries with lower trade duties, adjusting its product assortments, and negotiating cost-sharing arrangements with vendor partners. The company also acknowledged that some of the increased costs may ultimately be passed on to consumers through modest price adjustments.
Carter’s leadership expressed confidence that these measures will help stabilize operations and preserve the brand’s market position. Despite the economic headwinds, the company remains the largest branded marketer of baby and young children’s apparel in North America, with strong brand recognition and a loyal customer base built over decades.
Retail analysts say the decision reflects the broader challenges facing the retail sector, where tariffs, inflation, and changing consumer behavior continue to reshape operational strategies. Many companies are reevaluating physical store footprints in favor of digital expansion, and Carter’s is expected to follow that trend by prioritizing online growth and strategic wholesale partnerships with major retailers.
While the coming years will bring significant transition, company officials say Carter’s remains focused on long-term sustainability and customer trust. The upcoming store closures and workforce adjustments, while difficult, are viewed as essential steps toward preserving profitability in an increasingly complex global trade environment.
As the retail industry braces for continued economic volatility, Carter’s restructuring plan underscores a pivotal moment for legacy brands balancing traditional retail operations with the realities of modern global commerce.
