America's Biggest Baby Clothes Company Is Closing Stores

The American baby clothes company Carter’s has announced that it will be closing over 100 stores as part of its “ongoing transformation efforts” to drive profits and productivity. In its recent third quarter results, Carter’s said it plans to close 150 stores across North America over the next three years, up from its previous target of around 100. In addition, Carter’s said it will be cutting around 300 office-based positions by the end of the year. Newsweek has contacted Carter’s via email outside of regular working hours for comment. Why It Matters With around 1,200 stores across the U.S. as of September, according to data services platform ScrapeHero, Carter’s is the largest baby clothing company in the country. The company says the changes will ultimately enhance its overall profitability, but the closures representing over 10 percent of its footprint could disrupt customer access in certain areas and create short-term operational struggles as remaining stores absorb the displaced demand. What To Know For the three months ended September 27, Carter’s reported $757.8 million in net sales, down slightly from the $758.5 million earned in the third quarter of last year. Operating income fell 62 percent to $29.1 million from $77.0 million year-over-year, while operating margins dropped to 3.8 percent from 10.2 percent in 2024. In the announcement, CEO and President Douglas C. Palladini noted that investments in new stores and product development, as well as “elevated product costs, in part due to the impact of higher tariffs,” had weighed on the company’s profitability in recent months. “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,” he said. Merchandise is on display at a store in North Bergen, New Jersey, on May 28, 2025. The store closures represent an element of the company’s “productivity improvement actions,” alongside the elimination of hundreds of office-based roles by the end of the year. Carter’s now expects to incur charges of between $4 million and $5 million relating to these layoffs in the first half 2026, but said the decision will ultimately result in annualized savings of around $35 million. Of the 150 stores Carter’s plans to close over the next three years, the company said 100 of these closures will take place in the 2025 and 2026 fiscal periods, which run until the Saturday closest to December 31 of each year. The 150 shuttering stores together represent roughly $110 million in annual net sales, but Carter’s said that the transfer of business to nearby locations and online, as well as the “elimination of fixed store expenses,” will prove “accretive to the company’s profitability.” What People Are Saying Douglas C. Palladini, CEO and president, said: “Our team is acting decisively to improve the company’s financial performance: Today we are announcing a significant acceleration of our productivity agenda. 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. 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.” What Happens Next Carter’s said it plans to reinvest some of the savings resulting from the store closures and layoffs in “high return, growth-driving initiatives.”