Carter's (CRI) Goldman Sachs 31st Annual Global Retailing Conference summary

Business overview and market position

• Holds the largest share of the $32 billion North American children's apparel market, serving newborns to 10-year-olds.

• Operates over 1,000 stores in the US, Canada, and Mexico, and sells through major retailers and online channels.

• Brands are present in over 90 countries, with a $100 million international wholesale business.

• Achieved 31 consecutive years of sales growth through 2019, with strong pre-pandemic performance.

• 2023 sales exceeded $2.9 billion, with over $300 million in operating income and $500 million in operating cash flow.

Recent performance and outlook

• Saw mid-single digit growth in wholesale bookings at the start of 2024, but consumer confidence and store traffic declined in Q2.

• Announced a $50 million investment in price reductions and brand marketing to boost traffic and sales.

• Forecasts risk of continued slow trends in the second half of 2024 but expects improvement from investments.

• Wholesale business, especially with Target and Walmart, remains strong, while direct-to-consumer sales have softened.

• Expects both seasonal and replenishment wholesale business to grow in the second half.

Consumer trends and merchandising strategy

• Observes a barbell trend: strong demand for both premium and opening price point products, with weakness in the middle.

• Shifting merchandising mix: moving 10 points up to premium and 10 points down to opening price, doubling premium product mix.

• Premium products average $12 per unit, still positioned as a value in the market.

• Promotions are targeted, focusing on key shopping events and opening price items, with selective price reductions.

• Market remains highly promotional, with expectations for continued discounting through the holidays.