Productivity Improvement Actions

As part of its ongoing transformation efforts, the Company has taken the following actions to right size its cost structure and improve productivity:

• Organizational restructuring: the Company plans to reduce its offices-based roles by approximately 300 positions, or 15%, by the end of 2025. The Company recorded a $6.1 million charge in its fiscal third quarter and expects to incur a $4 million to $5 million charge in the fourth quarter related to severance and outplacement services, to be paid in the first half of 2026. This action is expected to yield annualized savings of approximately $35 million beginning in 2026.
• Other SG&A reductions: the Company is targeting more than $10 million in annual spending reductions across a number of categories, with savings beginning in 2026.
• Store closures: the Company now plans to close approximately 150 stores at lease expiration in North America over the next three years, an increase from its previously-disclosed target of approximately 100 stores, with approximately 100 stores to 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. When considering sales transfer to nearby Carter's stores and online and the elimination of fixed store expenses, the net impact of the closures is expected to be accretive to the Company's profitability.

The Company plans to reinvest a portion of the productivity-related savings described above in high return, growth-driving initiatives, to include demand creation.