Carter’s closed 29 stores in the first two quarters of 2026, while Kroger shuttered at least 39 locations across nine banners, citing efficiency and profitability goals. Both moves reflect broader retail sector shifts amid changing consumer habits and financial pressures.
The 161-year-old children’s clothing retailer Carter’s announced the closure of 29 stores in the first two quarters of 2026, according to its SEC filing. The moves come as the company reported a 5.1% rise in U.S. sales for the second quarter of 2026, though its operating income gains were largely driven by a one-time $128 million tariff refund, not improved core profitability. The closures are part of a multiyear strategy to optimize its store fleet, with plans to close 150 lower-margin locations through 2028, as outlined in its 2025 earnings call.
Carter’s Store Closures: Strategy and Financial Context
Carter’s, which operates 1,042 company-operated retail stores in North America as of July 4, 2026, has been systematically reducing its physical footprint. The first two quarters of 2026 saw 29 closures, alongside four new openings, reflecting a broader restructuring effort. The company’s Q2 2026 results showed operating income surged to $139.8 million, up from $4.0 million in the same period in 2025, but this growth was heavily reliant on the $128 million tariff refund. Without the refund, adjusted operating income rose only modestly to $18.1 million from $11.8 million in 2025.
The closures align with Carter’s 2025 plan to streamline operations, including a portfolio optimization strategy to improve fleet productivity. We are addressing our cost structure across several fronts,
stated then-CEO Douglas C. Palladini during the fourth-quarter earnings call. The company also reported net sales of $2.898 billion in 2025, a 2% increase from $2.844 billion in 2024, though this growth was tempered by ongoing tariff costs and a narrowing full-year outlook.
161-year-old kids clothing giant closes 29 more stores
Carter’s has been closing stores as part of a broader restructuring plan initiated in 2025. The company had already announced 150 closures, with the process expected to span through 2028. As of July 4, 2026, Carter’s had 1,042 company-operated retail stores in North America, according to its Form 10-Q filing. The closures are part of a strategy to shed costly real estate and improve profitability, even as the brand maintains a 5.1% rise in comparable U.S. sales for Q2 2026.
Kroger’s Store Overhaul: Closures and Acquisition Plans
Kroger has closed at least 39 stores across nine banners since announcing plans to shutter 60 locations by the end of 2026. The Cincinnati-based company cited delivering sustainable results as a reason for the closures, with some locations replaced by larger Kroger Marketplace stores offering expanded non-grocery merchandise. As of January 2026, Kroger operated 2,697 supermarkets under 20 banners, including Fred Meyer, Harris Teeter, and QFC.
The closures coincide with Kroger’s $1.65 billion acquisition of regional grocery chain Giant Eagle, which would add 197 supermarkets and 11 pharmacies across the Midwest. The acquisition is expected to strengthen Kroger’s presence in key markets. At least three impacted locations are set to become Kroger Marketplace stores, with others consolidated into new formats. For example, two Houston-area stores slated to close in April will be replaced by a new Kroger Marketplace in 2027.
The company emphasized that the closures are part of a broader effort to run more efficiently and ensure the long-term health of our business,
according to FOX 26 Houston, which reported that two Houston-area locations were slated to close in April.
Kroger closes at least 3 dozen stores across 9
Retail Sector Shifts: Consumer Behavior and Competitive Pressures
Retailers like Carter’s and Kroger are navigating a transforming landscape. Carter’s noted that parents increasingly favor big-box retailers like Target and Walmart for back-to-school shopping, with mass merchants capturing 80% of planned spending in the category, according to Deloitte. Meanwhile, Kroger’s closures reflect broader challenges, as traditional shopping malls face potential closures due to declining foot traffic. Capital One Shopping projects up to 87% of malls could shut in the next decade, forcing retailers to adapt.
Carter’s has mitigated some challenges by expanding its reach through exclusive product lines at major retailers. The company, which began collaborating with Walmart and Target in the early 2000s, continues to offer store-exclusive collections, ensuring customer access despite its shrinking physical footprint. Kroger, meanwhile, is leveraging its scale to compete, with its Marketplace stores targeting convenience and diversity.
What’s Next for Retailers?
The closures highlight the ongoing tension between maintaining physical presence and adapting to consumer habits. For Carter’s, the focus remains on optimizing its store fleet while sustaining sales growth. Kroger’s acquisition of Giant Eagle signals a strategic push to consolidate market share, though the success of its Marketplace format will be critical.
As the retail sector continues to evolve, the strategies of Carter’s and Kroger offer a glimpse into the challenges and adaptations required to remain competitive. For consumers, the shifts mean fewer brick-and-mortar options but potentially more curated shopping experiences through partnerships and expanded store formats.