Atlanta-based baby and children’s apparel maker Carter’s plans to cut 300 jobs, or 15% of its office workforce, and slash retail locations as the company contends with cost increases from new tariffs.
The company said Monday it expects to close about 150 stores in North America over the next three years as the leases expire. That is an increase from the 100 store closures announced last quarter.
The measures come as new tariffs weigh on the company’s profitability.
“We’re actively managing Carter’s in a highly uncertain world and marketplace, particularly as it relates to tariffs,” Carter’s CEO and President Douglas Palladini said Monday on the company’s third-quarter earnings call.
“We’re trying to take cost out of the business and have a meaningful impact on our near-term profitability,” he added later in the call.
During his second term, President Donald Trump has implemented a series of new tariffs on countries across the world. Tariffs are taxes on goods imported into the country, typically paid by the entity or person who imports the product.
Carter’s said Monday it estimates the pretax earnings impact of additional tariffs to be about $200 million to $250 million per year. The four top countries of origin for its products are Vietnam, Cambodia, Bangladesh and India, which now have import duties that range from 19% to 50%, according to the Tax Foundation.
Carter’s said in the release it plans to offset these costs “through a combination of changes to its product assortments, cost sharing with its vendor partners, changes to the mix of its production by country, and raising prices to end consumers and its wholesale customers.”
In 2024, the company said it had paid about $110 million in duties on imported products.
“The tariff rates now in effect bring our effective duty rate into the high 30% range, versus about 13% historically,” Richard Westenberger, Carter’s chief financial officer and chief operating officer, said on the Monday call.
Carter’s reported net sales of $757.8 million in the third quarter, down 0.1% from the same period in 2024. Its net income was $11.6 million, down from $58.3 million a year ago.
Carter’s expects the workforce reduction to save about $35 million a year, beginning in 2026. The company also said it is targeting more than $10 million in spending reductions across other categories.
“These savings will help offset the significant impact of the higher tariffs, other inflationary pressures across the business and will help fund investments we’re planning, including marketing,” Westenberger said on the call.
Carter’s has its Atlanta headquarters at Phipps Tower, an office building at the upscale Phipps Plaza mall in Buckhead.
As of late June, Carter’s operated 1,065 company-owned retail stores in North America.
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