Major children’s clothing retailer, Carter’s Inc., plans to eliminate 300 office positions and close approximately 150 North American stores over the next three years as the company grapples with sharply declining profits.
The Atlanta-based company announced these “productivity improvement actions” in its third-quarter fiscal 2025 results, despite sales remaining relatively stable compared to the previous year.
The job cuts represent about 15% of the company’s office-based workforce and are expected to be completed by the end of 2025, while store closures will continue through the next three years.
Carter’s reported third-quarter net sales of $757.8 million for the period ending Sept. 27, 2025, a minimal decrease of 0.1% from the same quarter last year.
However, operating income plummeted 62.2% to $29.1 million, down from $77.0 million in 2024’s third quarter.
This resulted in diluted earnings per share dropping to 32 cents from $1.62 a year ago.
“Our third quarter performance reflected continued improvement in U.S. Retail business demand as we achieved positive comparable sales and improved pricing for the second consecutive quarter,” said Douglas C. Palladini, Carter’s chief executive officer and president.
“However, elevated product costs, in part due to the impact of higher tariffs, as well as additional investment, weighed meaningfully on our profitability.”
The planned store closures exceed the company’s initial expectations of closing only 100 stores. Instead, the company is eyeing 150 store closures.
Carter’s announced it will shutter stores as leases expire — a move executives expect will help boost profitability.
As for workforce reductions, the cost cuts are projected to generate approximately $35 million in annualized savings beginning in 2026, with an additional $10 million in annual spending reductions planned.
Carter’s CEO Palladini and its board of directors announced they will also reduce their 2026 salaries in light of these measures.
The company estimates new import duties will have a gross pre-tax earnings impact of $200 million to $250 million on an annualized basis and has suspended its fiscal 2025 guidance due to uncertainty around incremental tariffs.
“While we are steadying our business in 2025, there’s still meaningful work to do for Carter’s to unlock its full potential in terms of exceeding both consumer and shareholder expectations,” Palladini added.
Generative AI was used to draft story, based on data provided by Carter’s. It was reviewed and edited by MassLive staff.
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