A major U.S. clothing store has called out Donald Trump’s sweeping global tariffs as having had a “meaningful” impact on its profits after announcing the closure of 150 stores across the country.
Carter’s, which sells clothes and other essentials for babies and toddlers, said its operating income was down by approximately 62 percent over the first three quarters when compared to the same period last year.
“Elevated product costs, in part due to the impact of higher tariffs, as well as additional investment, weighed meaningfully on our profitability,” CEO Douglas C. Palladini said in a statement accompanying the company’s latest earnings report.
The company now plans to close approximately 150 stores at lease expiration in North America over the next three years, rather than 100, which it previously announced. A hundred stores will be closed over the fiscal year 2025 and 2026 periods.
The 150 stores collectively represent approximately $110 million in annual net sales on a last-12-months basis, according to the earnings report. Carter’s operates around 1,200 stores across the U.S., though it was not specified which locations would be closing down.
Palladini added that Carter’s was pursuing several initiatives, including “closing low-margin retail stores, right-sizing our organization, and honing product choices,” in order to generate “significant savings” and improve “overall cost structure.”
The company’s board of directors would take pay cuts, he added.
The clothing giant is the latest retailer to feel the effects of Trump’s ongoing trade wars, with heavy tariffs slapped on major trading partners including China and other parts of East Asia, following other brands such as Gap Inc. and Macy’s.
Toy makers have warned that the levies are already affecting supplies leading up to Christmas.
“The Administration has implemented significant new tariffs on products imported into the United States from a wide range of countries,” Carter’s noted in its earnings report. “These additional tariffs have begun to add substantially to the approximately $110 million in duties on imported product paid by the Company in fiscal 2024.”
The company estimated that Vietnam, Cambodia, Bangladesh, and India will collectively represent approximately 75 percent of its product sourcing spend in fiscal year 2025, with China accounting for 3 percent.
“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,” Palladini said.
“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.”
