Carter's, the well-known children's clothing retailer behind brands like OshKosh B'gosh and Skip Hop, announced plans to close 150 stores and lay off about 300 employees over the next three years as part of a major cost-cutting effort.
The Atlanta-based company revealed the changes during its fiscal third-quarter earnings report on October 27, saying most of the closures will affect "low-margin" locations and coincide with expiring leases. About 100 of those stores are expected to shut down by 2026.
According to USA Today, Carter's also plans to pause new store openings under its current model and reduce its product offerings by up to 30%.
Executives said the company's profits have been squeezed by higher tariffs on imported goods, which have driven up costs across nearly all product categories.
"Over the past several months, significantly higher tariffs have been implemented affecting imports from most every country, including those from which we source the majority of our products," said Chief Financial Officer Richard Westenberger.
Carter's reported that the tariff impact has already cut gross margins by about $20 million in the third quarter and could reach $40 million in the fourth quarter.
Westenberger estimated that tariffs will reduce fourth-quarter earnings by $25 million to $35 million.
Carter's, the children's clothing retailer, said higher costs, in part due to tariffs, contributed to lower profit margins, prompting the closures. https://t.co/bfG5oqmyCw
— MontgomeryAdvertiser (@MGMAdvertiser) October 29, 2025
Carter's to Close Stores, Focus on Online Sales
CEO Douglas Palladini said the company is taking "decisive action" to strengthen its financial position.
"It's crucial that Carter's enhance our performance-driven culture in which fewer people have greater ownership and accountability," Palladini said.
"We plan to reduce office-based roles by approximately 15% between now and the end of 2025 to streamline processes and decision-making."
The 300 job cuts are expected to save about $35 million annually once fully implemented, DailyMail reported.
The company will also consolidate its operations and reevaluate its supply chain to offset rising costs tied to tariffs and inflation.
Carter's, which operates nearly 800 stores in North America, said it will focus more heavily on online sales and wholesale partnerships as brick-and-mortar retail continues to struggle.
The stores targeted for closure generated roughly $110 million in annual sales but contributed less to overall profits.
The retailer's leadership declined to issue sales or earnings guidance for 2025, citing "significant uncertainty surrounding tariffs and global trade policy."
Originally published on vcpost.com
