Carter's to Close 150 Stores, Cut Jobs as Tariffs Weigh on Profits

Weighed down by costs associated with trade tariffs, Carter’s saw its third quarter profits cut by more than half even as sales remained unchanged. Carter’s CEO Douglas Palladini said the company is acting “decisively” to improve the company’s financial performance, including closing approximately 150 low-margin retail stores, reducing its office-based staff by 15 percent by the end of this year, and narrowing its product assortment by up to 30 percent. Furthermore, in response to the challenged financial performance, Palladini said that he and Carter's board of directors will be reducing their 2026 compensation.

Total Retail's Take: With many of its products imported from Asia (Vietnam, Cambodia, Bangladesh, India, and China), Carter's has been forced to absorb rising tariff costs on those goods, which is eating into its profits. The organization has laid out an aggressive cost restructuring plan that is expected to generate approximately $35 million in annual savings starting in 2026. In addition to store closures, job cuts, and a scaling back of inventory, Carter's will be taking other measures to improve its bottom line, including diversifying its product sourcing, negotiating cost-sharing agreements with its vendor partners, and raising prices for both end consumers and its wholesale customers. As tariffs begin to take a greater toll on retailers' earnings, expect similar announcements and moves from other brands within the retail industry.