Carter’s to Shut 150 Stores, Increase Prices Amid 80% Profit Cut from Tariffs
Carter’s has announced significant changes in its operations as it navigates financial challenges. The company plans to close 150 stores over the next three years while implementing price increases across its product ranges. This decision follows a substantial decline in profitability linked to tariffs imposed during the Trump administration.
Financial Performance Overview
In its third-quarter earnings report for fiscal 2025, Carter’s revealed a modest sales decrease of 0.6% compared to the same period in the previous year. The company reported a drastic 80% drop in profit, falling from $58.3 million in Q3 2024 to just $11.2 million in Q3 2025. For the entire fiscal year, profits have decreased by approximately 77% when compared to 2024.
Impact of Tariffs
The decline in profits has been attributed to increased expenses from tariffs, which are projected to cost the company between $200 million and $250 million annually. Douglas C. Palladini, the CEO and President of Carter’s, stated that while there has been improvement in U.S. retail demand, the burden of higher product costs has significantly affected profitability.
Planned Store Closures
- Carter’s will close 150 stores as part of its restructuring plan.
- About 100 of these closures are expected to take place in fiscal years 2025 and 2026.
- The closures are tied to expiring leases across North America.
- The closed stores represent an estimated $110 million in annual net sales.
Employee Impact and Cost Reduction Strategies
As part of the restructuring, Carter’s will eliminate approximately 300 corporate positions. This workforce reduction accounts for about 15% of the company’s corporate staff and is expected to save around $35 million annually.
Future Cost Management
Carter’s plans to achieve additional cost savings through various strategies. These include adjusting product assortments, collaborating with vendor partners, and modifying production country mixes. Furthermore, the company is targeting over $10 million in spending reductions starting next year.
The company remains focused on managing its financial health while adapting to the challenges posed by increased operational costs. By implementing these measures, Carter’s aims to stabilize its business and improve its overall profitability in the upcoming years.
