Children’s apparel giant Carter’s Inc. reported its third-quarter 2025 results, noting steady year-over-year gains and strong cash flow. The company also plans to close up to 150 stores and cut about 15% of its office staff, citing higher costs and import tariffs.
Carter’s Plans Store Closures, Layoffs Following a Tough Quarter
Founded in 1865 by William Carter, Carter’s is a major global company with over 1000 stores across the world. The brand is known for its timeless designs and quality apparel for babies and young children. Carter’s is dedicated to offering stylish yet affordable clothing for growing families.
In a recent announcement, the company shared its third-quarter 2025 financial results and plans to enhance its productivity efforts. As part of its ongoing transformation, Carter’s outlined several cost-cutting measures, including:
Layoffs
By the end of 2025, the company will be cutting 300 office-based jobs (almost 15% of the workforce). The move will cost roughly $10–11 million in severance and outplacement expenses, mostly in early 2026, but is expected to save about $35 million a year beginning in 2026.
Store Closures
Apart from the layoffs, the company also plans to close around 150 North American locations over the next 3 years. Of the 150 closures, 100 were already scheduled for 2025 and 2026. These stores make up about $110 million in yearly sales, and their closures are expected to improve profitability as sales shift to nearby stores and online.
Insights From Top Management
CEO and President Douglas C. Palladini said in a statement, “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. However, elevated product costs, in part due to the impact of higher tariffs, as well as additional investment, weighed meaningfully on our profitability.”
He asserted that these decisions aim to reduce expenses and boost long-term growth. Palladini shared, “While we are steadying our business in 2025, there’s still meaningful work to do for Carter’s to unlock its full potential in terms of exceeding both consumer and shareholder expectations. Our team is acting decisively to improve the company’s financial performance: today, we are announcing a significant acceleration of our productivity agenda.”
Additionally, Palladini also expressed confidence that Carter’s strong brand and new initiatives will help the company regain steady, profitable growth. “We are pursuing several initiatives, including closing low-margin retail stores, right-sizing our organization, and honing product choices, which we believe will generate significant savings, improve overall cost structure, and provide investment capacity as we establish the foundation to return to consistent, profitable growth going forward.”
Key Financial Highlights
Beyond the layoffs and store closures, the company also plans to cut annual expenses by over $10 million starting in 2026.
In October 2025, Carter’s secured a new five-year loan of up to $750 million, expected to close by year-end. The company is also in the process of evaluating options to refinance its $500 million debt, which is due in March 2027.
Palladini further shared, “In light of the difficult decisions being made to improve our performance, the Board of Directors and I have also decided to reduce our 2026 compensation.”
The report also noted that Carter’s Board of Directors will decide on future dividends and share buybacks based on the company’s performance, business conditions, and investment plans.
“Our multi-channel business model affords Carter’s brands unparalleled availability and awareness, and deep consumer trust built over our 160-year legacy enables our position as the young children’s apparel market leader. I’m confident our new product, marketing, and consumer experience initiatives, which have begun to bear fruit, will further strengthen our market position in the years ahead,” added Palladini.
With these changes, Carter’s aims to streamline operations and position the brand for renewed profitability.
