Carter's Inc (CRI)

A. Company Overview

Carter's Inc. stands as the largest branded marketer of young children's apparel in North America, boasting a well-established reputation with two of the most recognized brands in the industry: Carter’s and OshKosh B’gosh. The company’s extensive portfolio also includes Skip Hop, a distinctive lifestyle brand for young children, Little Planet — an eco-conscious brand focused on organic fabrics — and a selection of exclusive brands tailored for retail giants like Amazon, Target, and Walmart. Founded in 1865, the Carter's brand has garnered trust for its high-quality clothing and accessories targeting children from newborns to age 14. OshKosh B’gosh, established in 1895 and acquired by Carter's in 2005, is synonymous with durable playclothes for toddlers and young children. Skip Hop, which joined the company in 2017, specializes in reimagined everyday essentials for parents and children alike, while Little Planet, launched in 2021, prioritizes sustainable and organic apparel.

The company's mission focuses on serving families with young children, aspiring to be the foremost choice worldwide for children's apparel and related products. Carter's Inc. holds significant market presence, commanding over 9% of the $28 billion U.S. baby and young children's apparel market as of December 2023. The OshKosh brand commands an additional approximate 1% market share.

Carter’s Inc. operates a multichannel global business model that includes over 1,000 retail stores, a robust eCommerce presence, and extensive wholesale distribution, facilitating access to numerous consumers across domestic and international markets.

B. Business Segments

Carter's Inc. organizes its operations into three main segments: U.S. Retail, U.S. Wholesale, and International.

• U.S. Retail: This segment encompasses revenue generated through retail stores and eCommerce platforms in the United States. As of fiscal 2023, the company operated 792 retail stores in the U.S., strategically located in high-traffic areas such as malls and shopping centers, alongside a user-friendly online shopping experience.
• U.S. Wholesale: Through this segment, the company supplies products to major wholesale partners, including large retailers like Costco, JCPenney, and Walmart. The U.S. Wholesale segment leverages established relationships and a varied product mix to drive growth.
• International: This segment includes sales made in Canada and Mexico through company-operated stores and eCommerce platforms, along with wholesale operations that reach several international retailers and licensees across more than 90 countries.

C. Strategy

Carter's Inc. employs a comprehensive strategy concentrating on three strategic pillars:

1. Providing Value and Experience: The company's historic brands, Carter's and OshKosh, boast over a century of credibility, anchoring the firm in a competitive marketplace. Their omnichannel strategy integrates physical stores and eCommerce, enhancing consumer accessibility via various purchasing options, including curbside pickup and same-day shipping.
2. Leveraging Distribution Capabilities: Carter's Inc. stands as the largest specialty retailer in North America for children's apparel, with a unique blend of wholesale, retail, and online capabilities that strengthen its market position.
3. Driving Shareholder Value: The emphasis on profitability and cash flow, alongside managing capital returns through dividends and share repurchases, reinforces a commitment to sustainable financial health.

D. Products and Brands

Carter's Inc. includes a diverse selection of apparel products for various age groups. The product offerings under the Carter’s and OshKosh brands cater specifically to newborns, toddlers, and young children, comprising essentials like bodysuits, sleepwear, and playclothes.

• Carter's: This brand focuses on essential and fashionable apparel items, commanding a significant market share with a strong value proposition and broad distribution channels. The product assortment extends to exclusive lines like Child of Mine (at Walmart), Just One You (at Target), and Simple Joys (available on Amazon).
• OshKosh B’gosh: Known primarily for its durable denim and playclothes, OshKosh is a trusted choice among parents for everyday wear designed for toddlers.
• Skip Hop: This brand appeals to young families, featuring multifunctional bags, home gear, and products spanning various childhood activities, all underscored by stylish design.
• Little Planet: As a newer brand, it emphasizes eco-friendly materials and manufacturing practices, responding to the growing consumer demand for sustainable products.

E. Distribution and Sales Channels

Carter's Inc. utilizes a multifaceted approach to distribution, with strong emphasis on retail stores, eCommerce, and wholesale channels.

• U.S. Retail: The U.S. retail architecture includes both physical stores and online shopping platforms, aiming to provide seamless customer experiences across channels. Each retail outlet typically carries a variety of branded products, with inventory extending from Carter's and OshKosh to Skip Hop and Little Planet.
• Wholesale: The company collaborates with major U.S. retailers and wholesale partners, facilitating extensive distribution and reach across the market.
• International Sales: Through both direct retail presence in Canada and Mexico and international wholesale operations, Carter's Inc. expands its global footprint significantly.

F. Marketing Strategy

Carter's Inc. focuses its marketing initiatives on increasing brand awareness and consumer engagement, particularly targeting first-time parents and gift-givers. The integrated marketing approach hinges on digital channels, social media presence, and personalized customer experiences, emphasizing the importance of brand loyalty.

The "My Rewarding Moments" loyalty program plays a crucial role in fostering customer relationships, alongside the Carter’s credit card program which offers additional benefits to loyal customers.

G. Global Sourcing Network

Carter's Inc. operates through a global sourcing network, primarily sourcing products from Asian manufacturers while also leveraging resources from North America, Africa, and Central America. The company maintains quality control and compliance through a stringent oversight system that ensures adherence to ethical manufacturing standards.

The sourcing office located in Hong Kong streamlines operations and oversees production, while additional offices in manufacturing countries bolster compliance monitoring and quality assurance.

H. Sustainability and Corporate Social Responsibility

Carter's Inc. is committed to sustainability efforts, emphasizing environmentally responsible practices in its sourcing and product development. The company has made advancements in the use of sustainable cotton and other materials, in alignment with its broader Corporate Social Responsibility strategy concerning product, planet, and people.

Regular audits and assessments of manufacturing partners reflect the brand's commitment to ethical practices and operational transparency.

I. Competition

The apparel sector for young children’s products is characterized by intense competition, encompassing both national brands and private labels. Major competitors include Gap, Old Navy, The Children’s Place, and various private-label offerings from large retailers. With a competitive landscape underscored by price, quality, and style, Carter's Inc. leverages its strong brand recognition and diverse product range to maintain a leading market position.

J. Seasonality and Weather

Carter's Inc. experiences seasonal sales fluctuations tied to retail cycles and environmental conditions, with sales tending to rise during significant shopping seasons and holidays. Variations in weather can also impact consumer purchasing behaviors, adding a layer of unpredictability to sales forecasting.