Carter’s, a leading American brand for children’s clothing, is making big changes to deal with financial challenges and a tougher retail market. The company announced plans to close 150 stores and cut 300 corporate jobs to reduce costs and stay profitable. Rising tariffs, higher supply costs, and changing consumer shopping habits have made it harder for Carter’s to maintain its usual profits.
The decision came after Carter’s reported disappointing financial results in its third-quarter earnings for 2025. Revenue dropped slightly to $757.8 million, but profits fell by 80% to just $11.6 million. CEO Douglas Palladini called this an urgent wake-up call, stressing that the company must act fast to stay competitive. Over the next three years, most store closures will target locations that are underperforming or nearing the end of their leases. Popular stores in large cities and shopping centers will stay open, but smaller towns may lose their local Carter’s or OshKosh B’gosh stores.
As physical stores close, more families will need to shop online or through large retail partners such as Target and Walmart. To prepare, Carter’s is heavily investing in improving its online shopping experience and digital platforms so customers can easily find and buy their products.
Job Cuts and Company Culture Changes
Along with store closures, Carter’s will reduce its corporate workforce by about 15%, cutting 300 office jobs. The move is expected to save the company around $35 million each year. Although Carter’s hasn’t shared details about transition programs for those losing their jobs, employees will receive standard severance packages.
For those staying with the company, leadership is promising a renewed focus on teamwork, accountability, and faster decision-making. CEO Palladini explained that Carter’s wants to build a culture where employees are encouraged to act quickly and deliver strong results. To support that goal, Carter’s is launching new training programs and setting clearer performance expectations for teams.
Reaction to the cuts has been mixed. Some employees have expressed sadness at losing their stores, but also recognize the business reality. Maria Lopez, a longtime Carter’s worker in Michigan, said many stores had seen fewer customers and more people were shopping online instead.
Ultimately, Carter’s hopes these moves will create a leaner, more efficient organization that can respond faster to market changes while continuing to serve families effectively.
Global Pressures and Cost Challenges
One major issue pushing Carter’s to restructure is the impact of trade tariffs. Higher import taxes on materials and finished goods have added between $200 million and $250 million in annual costs. These expenses are largely due to continuing international trade tensions, which have affected many U.S. apparel companies.
The National Retail Federation reports that these additional costs have made it harder for clothing brands to maintain profit margins. Industry expert Rebecca Lin from Retail Insights explained that Carter’s situation reflects a wider global trend. Many children’s clothing companies have also closed stores and shifted their focus online to survive.
In Carter’s case, the company reported a $20 million hit to profit margins in the third quarter alone. Analysts expect that number could double by the end of the year. Because Carter’s depends on a global supply chain, higher costs are hard to absorb without big operational changes. That pressure is driving the company to cut expenses and simplify its business structure.
A Digital-First Future for Carter’s
As part of its restructuring, Carter’s plans to simplify its product lineup by reducing the number of items it sells by 20–30%. The company will focus on its strongest categories, while phasing out slower-selling or seasonal products. This change is designed to streamline operations, reduce storage and supply costs, and make pricing more competitive for customers.
Due to economic uncertainty and unpredictable spending patterns, Carter’s has also withdrawn its financial forecasts for the rest of 2025. Investors initially reacted negatively, sending the company’s stock down, but share prices later recovered as analysts viewed the changes as smart long-term planning. Industry watchers say Carter’s move could set a larger trend as more retail companies face the same pressures.
Current projections show Carter’s annual revenue could fall to around $2.8 billion by 2028, with yearly earnings shrinking to about $39 million. However, executives believe that through cost-cutting, smart digital investments, and consumer confidence returning, Carter’s profits could stabilize by 2029.