Carter’s, a major brand for children’s clothes in the U.S., has announced big changes that will reshape its future. The company plans to close 150 stores and cut 300 office jobs, marking one of the biggest restructurings in the retail world.
The goal? To survive rising tariffs, higher costs, and a changing customer base. Industry experts say this move reflects broader shifts in how families shop for children’s clothing. The next few years will test whether the company can cut costs while keeping its loyal customers happy and engaged.
What’s Behind the Announcement
Carter’s revealed the news during its third-quarter 2025 earnings call, noting shrinking profit margins as a key reason. Prices are rising faster than the company can keep up, leaving less profit on every sale.
With more shoppers turning to online brands and discount stores, Carter’s must slim down and refocus its efforts. The restructuring isn’t just about downsizing, it’s about survival in a retail sector undergoing massive transformation.
Where the Closures Are Happening
Over the next three years, Carter’s will shut down 150 stores across North America, an increase from its earlier plan to close 100. Most of the closures will affect locations with low sales or outdated leases.
Bigger cities may lose fewer stores, while smaller markets could be hit harder. Carter’s says it will focus its presence in high-performing areas.
Brands That Will Be Affected
Both Carter’s and its popular sister brand, OshKosh B’gosh, will feel the impact of closures. Stores with low profit margins are typically at the top of the list. Flagship stores and high-traffic outlets are expected to remain open to preserve brand visibility.
While some parents may miss their local stores, many of Carter’s best-selling products will continue to be available online. The company believes a smaller number of high-performing stores can bring better results than a large network of struggling locations.
The Job Cuts Explained
In addition to store closures, Carter’s will reduce its corporate workforce by about 15%, cutting 300 office-based jobs. These cuts are expected to save approximately $35 million annually.
While the loss is substantial, Carter’s insists these moves will help create a leaner, stronger company ready for future challenges.
How Tariffs Shaped the Decision
Higher import tariffs on raw materials and finished goods played a key role. These tariffs, largely from ongoing international trade pressures, have cost the company an estimated $200–$250 million a year.
According to the U.S. Retail Federation reports, these costs have reduced profit margins across many clothing brands. Carter’s leadership stated that these expenses made the current store model unsustainable, necessitating major restructuring to protect long-term stability.
Carter’s Q3 Financial Snapshot
Carter’s third-quarter 2025 reported net sales reached $757.8 million, slightly lower than last year. But the bigger issue is net income, which dropped 80% to just $11.6 million.
The company’s leaders described this drop as an urgent wake-up call. It reflects the tough economic climate and highlights the need for serious structural changes to stay competitive in the market.
No More 2025 Guidance
Uncertainty around costs and consumer spending has led Carter’s to withdraw its 2025 financial guidance. That means the company isn’t giving profit or revenue forecasts for the rest of the year.
Industry watchers view this as a sign of deep caution. The move also reassures investors that Carter’s is focused on stabilizing before setting new targets.
CEO’s Message on Change
Carter’s CEO, Douglas Palladini, said these steps are essential for building a culture of performance and accountability. The goal is to streamline operations, make faster decisions, and keep teams accountable.
Employees who remain will face higher expectations but also more opportunities to influence the brand’s future success.
Closure Timeline
Most store closures will align with lease expirations through 2028, with the majority expected to be completed by 2026. This phased approach allows Carter’s to manage costs and avoid expensive early lease terminations.
Customers can expect local sales and clearance events as stores prepare to close for the season. By planning, the company hopes to minimize disruption to shoppers and employees while achieving steady progress toward its new structure.
What About the Employees?
Unfortunately, Carter’s has not announced detailed support or relocation programs for affected workers, focusing primarily on cost reduction. Employees who lose their positions will receive standard severance packages, but the details vary by location and tenure.
A Ripple Across Retail
Carter’s move sets a strong precedent in the retail industry. As tariffs and costs rise, other brands could follow. Analysts say this marks the new normal for clothing retailers.
Shrinking portfolios, job cuts, and digital transformation will define the next era of retail. Carter’s actions will be closely watched by competitors facing similar financial pressures.
The Tariff Toll on Profits
Tariffs have deeply affected Carter’s bottom line. The company reported a $20 million hit to profit margins in Q3 alone, expected to double to $40 million by Q4.
For a company dependent on global supply chains, these increases are hard to absorb. By restructuring early, Carter’s hopes to keep pace with costs and rebuild a healthier margin over time.
Investors React
Investors are split. Some see the potential for long-term savings, while others fear lost revenue and brand damage due to reduced store locations and staff.
Carter’s stock price initially dipped after the announcement, but later stabilized as analysts called the move strategic and forward-looking.
What This Means for Shoppers
Families who rely on Carter’s stores might find fewer locations near them. The company expects customers to shift toward online shopping and major retail partners such as Target and Walmart.
Despite fewer in-person options, Carter’s promises the same quality online experience. The company is investing heavily in e-commerce platforms to ensure easy accessibility and faster delivery.
Smaller Product Selection
Carter’s also plans to reduce its product range by 20–30%. That means fewer designs and seasonal items, but better focus on top-performing categories like babywear.
Less is more, according to the company’s strategy team. Carter’s expects this move to simplify operations, reduce inventory waste, and keep prices competitive as supply chain costs rise.
Changing Office Culture
Office staff who remain will take on expanded roles and greater accountability. Leaders want to create a faster, more results-driven work environment.
The company is introducing new training programs and clearer performance metrics. It’s a big shift from Carter’s more traditional model.
Looking Toward 2028
Financial projections up to 2028 show Carter’s revenue potentially falling to $2.8 billion, with earnings shrinking to $39.2 million. That’s a steep drop from historic levels.
While challenging, the company sees this as a manageable reset. Analysts believe the right cost-cutting and digital strategies could stabilize profits by 2029 if consumer confidence rebounds.
Competitors Take Note
Carter’s strategic pivot is likely to influence competitors. Brands like The Children’s Place and Gymboree face similar pressures. Analysts predict more retailers will trim store counts and bolster e-commerce as global trade and consumer behavior continue to evolve.
Carter’s bold decision may set the tone for how other family apparel brands reshape their futures.
The Road Ahead
Carter’s faces one of the toughest tests in its long history. Its success will depend on how well it controls costs, innovates digitally, and retains loyal customers.
The brand’s next chapter will reveal whether this transformation restores its leadership in children’s apparel or marks a difficult turning point in retail evolution.