Carter's Inc. (NYSE: CRI) shares are soaring 5.49% in Monday's trading session, despite initially falling in pre-market trading following the release of its third-quarter earnings report. The children's apparel manufacturer's stock rebounded strongly as investors digested the company's aggressive cost-cutting measures and better-than-expected adjusted earnings.

Carter's reported third-quarter adjusted earnings of $0.74 per share, surpassing analysts' expectations of $0.73. However, revenue came in at $757.8 million, slightly below the estimated $772.3 million and down from $758.5 million in the same quarter last year. The company's same-store sales showed a positive trend, rising 2% year-over-year, indicating improved demand in its U.S. retail business.

Investors appear to be focusing on Carter's plans to streamline operations and improve profitability. The company announced it will close approximately 150 stores in North America over the next three years and reduce its office-based workforce by about 300 positions, or 15%, by the end of 2025. These measures are expected to generate annual savings of around $35 million starting in 2026. Additionally, Carter's plans to reduce management compensation for 2026, demonstrating a commitment to cost control at all levels of the organization.

While Carter's faces challenges from increased tariffs, with an expected gross pre-tax earnings impact of $200 million to $250 million annually, the company's proactive approach to mitigating these costs seems to have reassured investors. The stock's significant rebound from its pre-market lows suggests that the market is optimistic about Carter's ability to navigate current headwinds and improve its financial performance in the coming years.