Carter’s(CRI) - 2026 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company has experienced three consecutive quarters of comparable store growth, maintaining higher average unit retail prices (AUR) without the typical unit degradation associated with price increases [11][12] - The wholesale business in the U.S. represents approximately $1 billion of the company's $3 billion in revenue, with a significant portion attributed to exclusive brands [35] Business Line Data and Key Metrics Changes - The direct-to-consumer (DTC) business showed strong performance, with the wholesale business exceeding expectations during the holiday period [11] - The company has identified around 150 stores for closure, primarily those that are lower margin, which collectively represent about $110 million in revenue [22][26] Market Data and Key Metrics Changes - The company has diversified its market approach, performing well across wholesale, international, and retail channels, with all age categories exceeding expectations [11] - The shift in consumer behavior towards online shopping has been significant, with e-commerce now accounting for about one-third of U.S. retail revenue [29] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers, particularly Gen Z parents [6][8] - There is a focus on enhancing brand identity for each product line, allowing brands like Oshkosh and Carter's to develop their unique identities [41] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for reinvestment in marketing and product quality to attract new consumers and regain the trust of lapsed customers [6][16] - The expectation for growth in sales and earnings remains for 2026, with a focus on sustainable and profitable growth rather than growth driven by discounts [39][40] Other Important Information - The company is transitioning its Amazon business from a private label to core flagship brands, which is expected to drive future growth [36] - The supply chain team has successfully diversified sourcing to mitigate tariff impacts, resulting in meaningful cost savings [20] Q&A Session Summary Question: What are the biggest challenges faced since the new CEO took over? - The CEO highlighted the need for investment in product design and demand creation to align with consumer expectations [6] Question: Can you elaborate on the holiday performance? - The CEO noted strong performance across all channels, with the ability to maintain higher prices without losing unit sales [11] Question: What is the strategy for store closures? - The company plans to close 150 stores identified as lower margin, with expectations that some revenue will transfer to nearby locations [22][26] Question: How does e-commerce fit into the overall strategy? - E-commerce is a significant part of the business, expected to grow as physical store closures occur, with a focus on omnichannel capabilities [29] Question: What is the outlook for the wholesale business? - The wholesale business is expected to evolve, focusing on exclusive brands and adapting to changes in retail environments [36][37]