Carter’s to close 150 ‘low-margin’ stores, cut staff
Carter’s Inc. is upping its store closures and reducing staff as part of its ongoing effort to “right size” its cost structure and improve productivity as tariffs weighed on its profitability.
The nation’s largest apparel company dedicated to babies and young children now plans to close approximately 150 stores at lease expiration in North America during the next three years, an increase from its previously-disclosed target of approximately 100 locations. About 100 stores will go dark over the fiscal year 2025 and 2026 periods. The 150 stores collectively represent approximately $110 million in annual net sales on a last 12 months basis.
In addition, Carter’s plans to reduce its offices-based roles by approximately 300 positions, or 15%, by the end of 2025. The cuts are expected to yield annualized savings of approximately $35 million beginning in 2026.
In other SG&A reductions, the company is targeting more than $10 million in annual spending reductions across a number of categories, with savings beginning in 2026.
Third Quarter
For its third quarter, Carter’s net sales fell 0.1% to $757.8 million, which included a decrease of 5.1% in the U.S. wholesale segment. On the more positive side, U.S. retail and international segment sales rose 2.6% and 4.9%, respectively. Retail comparable net sales increased 2%, which included a decrease of 5.1% in the U.S. wholesale segment.
Net income fell to $11.6 million, or $0.32 per share, from $58.3 million, or $1.62 per share, in the year-ago quarter. Carter’s third quarter fiscal 2025 net income included an $8.8 million ($6.7 million net of tax) non-cash charge for settlement of the OshKosh B’Gosh Pension Plan and a $0.8 million tax charge associated with the termination of a deferred compensation plan.
Adjusted net income was $26.8 million, compared to $59.0 million in the third quarter of fiscal 2024. Adjusted earnings per share was $0.74, compared to $1.64 in the prior-year quarter.
“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, president and CEO of Carter's. “However, elevated product costs, in part due to the impact of higher tariffs, as well as additional investment, weighed meaningfully on our profitability.”
Carter’s has more more than 1,000 company-operated stores in the United States, Canada and Mexico.