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Carter's Battles Declining Birthrate and Tariff Pressures in 2025
6 Aug
Summary
- Carter's, a leading baby apparel brand, faces long-term headwinds from declining US birthrate
- Challenging macroeconomic environment, including inflation and weak consumer confidence, impacts Carter's sales
- Rising tariffs on imports, especially from Asia, add significant cost pressures for the company
As of August 6th, 2025, Carter's Inc., the leading seller of branded baby apparel and products, is facing significant headwinds. Headquartered in Atlanta, GA, the company operates a portfolio of popular brands, including Carter's, OshKoshB'gosh, and Skip Hop, selling through major retailers like Amazon, Walmart, and Macy's.
However, the company is struggling with a troubling long-term trend - the consistent decline in the US birthrate over the past seven decades. This decline has accelerated due to factors like widespread access to contraception and shifting economic and social conditions. As a baby-focused brand, this declining birthrate poses a significant challenge for Carter's.
Adding to the company's woes, Carter's has been impacted by the broader macroeconomic pressures affecting the industry. Factors like inflation, elevated interest rates, and weakening consumer confidence have reduced demand across Carter's segments, leading to a 4.8% decline in first-quarter 2025 sales compared to the previous year.
Furthermore, the current tariff environment has introduced substantial uncertainty for Carter's. Rising import duties, particularly on products manufactured in Asia, have added approximately $110 million in costs in 2024. Despite the company's efforts to lobby and explore nearshoring alternatives, the high labor costs and limited infrastructure in regions like Latin America make it difficult to offset the tariff burden effectively.
Faced with these challenges, Carter's has decided to suspend providing financial guidance until there is more clarity on the internal operational direction and external market conditions. The company cited the highly volatile retail landscape, ongoing macroeconomic pressures, and foreign currency headwinds as contributing factors to the lack of forward visibility.
