Carter's Plans 1,000 Stores in the U.S. by 2027

Children’s specialty retailer Carter's plans to open over 50 stores in the United States this year and expects to have 1,000 or more stores in the U.S. by 2027.

Carter’s CEO Michael Casey noted on a recent earnings call that the store openings will be focused on high-traffic centers that provide convenience for online shoppers and enable the same-day pickup of digital purchases.

The company has nearly 800 stores now and in addition to the 50 2023 openings, it plans to close around 10 stores upon lease expiration this year. Collectively, the new stores are expected to contribute about $40 million in sales this year.

Casey noted that nearly 70% of children's apparel is purchased in stores.

“We believe our stores provide the very best presentation of our brands and are our highest source of new customer acquisition,” he said. “And when we open stores, we also see a lift in our high-margin e-commerce sales.”

Carter’s e-commerce penetration is forecasted to be 34% of total retail sales this year, compared to 37% last year. But Casey noted that the lower mix of e-commerce sales reflects consumers shifting back to store visits in the post-pandemic period.

“We view the consumers shifting back to stores positively, given the high fixed cost structure of that channel,” he said.

Consumers who shop online and in Carter’s stores are the retailer’s highest value customers, shopping more frequently and spending three times more each year than Carter’s single-channel customers, he noted.

In addition to the store openings, Carter’s is also investing in its mobile app with current efforts focused on building more sophisticated personalization capabilities.

“Increasingly, consumers shop on their mobile devices as opposed to laptops and desktop computers,” he said. “In just a couple of years, sales on our app have grown to represent about 1/4 of all U.S. e-commerce sales. And our data shows that it's our very best and most loyal customers who are using the app.”

Carter’s is also we're testing same-day delivery with Shipt.

“We exceeded our first quarter sales and earnings objectives,” Casey said in a press release. “We saw higher than planned demand from some of our largest wholesale customers eager to receive our new Spring product offerings in preparation for the shift to warmer weather outfitting. Our retail and international sales were in line with our plans.

However, as expected, first quarter sales and earnings were lower than last year.

“Historic inflation began to meaningfully weigh on families with young children and their demand for our brands last year. To mitigate the effects of lower consumer demand, we have focused on reducing discretionary spending and improving price realization, largely driven through better inventory management. As a result, earnings and cash flow from operations exceeded our expectations in the first quarter. With time, we expect inflation will decrease to more acceptable levels, the burden of lower real wages affecting families with young children will moderate, and demand for our brands will improve.”