Carter’s closed a $575 million senior notes offering on November 13, 2025, issuing 7.375 % notes that mature in 2031. After fees, the company received net proceeds of about $567 million, which it will use to retire its 5.625 % senior notes due 2027, cover related expenses, and fund general corporate purposes.
The company will also draw on its existing cash balance—reported at $1.2 billion at the end of Q3 2025—to complete the debt redemption. By replacing the higher‑coupon 2027 notes with the new 7.375 % notes, Carter’s reduces its interest expense and extends its debt maturity profile, strengthening its balance sheet in a period of tariff‑driven cost pressure.
Carter’s financial performance in the most recent quarter underscores the urgency of the refinancing. Q3 2025 net income fell to $11.6 million from $58.3 million in Q3 2024, and operating margin contracted to 3.8 % from 10.2 % year‑over‑year. The sharp margin squeeze reflects a 62.2 % decline in operating income, largely driven by higher tariff costs that eroded profit margins across the company’s product lines.
In response to the deteriorating profitability, the company is accelerating a restructuring plan that includes closing roughly 150 stores over the next three years and cutting about 300 office jobs. These moves are intended to trim operating costs and improve the efficiency of the remaining retail footprint, while the company continues to invest in digital and technology initiatives to drive long‑term growth.
CEO Douglas C. Palladini said the company is “focused on disciplined cost management and strategic investments that will restore profitable growth.” He highlighted the importance of the debt refinancing in providing the financial flexibility needed to execute the turnaround plan and mitigate the impact of ongoing tariff uncertainty.
Analysts have responded cautiously, citing the company’s suspended 2025 guidance and the significant margin compression. The debt offering is viewed as a necessary step to shore up the balance sheet, but investors remain concerned about the company’s ability to reverse the downward trend in profitability amid persistent tariff headwinds.
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