Carter’s to lay off 300, close more stores as tariffs decimate profits

Company Overview - Carter's is undergoing a transformation under new CEO Douglas Palladini, focusing on profitability and growth [3][4] - The company has seen strong consumer response to new products, particularly among young Gen Z families [4] Financial Performance - In Q3, net sales were approximately $758 million, with U.S. retail sales increasing by 2.6% and international sales rising by 4.9% [5] - However, Q2 profits dropped nearly 60%, leading the company to withdraw its annual guidance [4] - Net income for Q3 fell 80% year-on-year to $11.6 million, and operating income decreased over 60% to $29 million [8] Impact of Tariffs - Tariffs have significantly affected the company's profitability, with operating margin contracting to 3.8% from 10.2% a year ago [6] - Gross margin decreased by 180 basis points to 45.1%, with tariffs costing the company $20 million [6] - Tariffs have also negatively impacted wholesale profitability [7] Strategic Changes - Carter's plans to lay off about 300 corporate employees, representing 15% of its workforce, to achieve annualized savings of approximately $35 million starting next year [8] - The company intends to close about 150 North American stores over the next three years, increasing the number of closures from previous plans [8] Challenges in Sales Channels - Sales on Amazon have declined due to changes in the e-commerce giant's sales approach regarding Carter's "Simple Joys" brand [7] - Department store sales also experienced a decline during the period [7]