Long a Baby’s Brand, Carter’s Grows Into Kids
After 153 years in business, Carter’s Inc. still has some tricks up its sleeve.
The $3 billion all-American baby and kids brand, founded in 1865 by William Carter, an English immigrant, is extending its size range to include 10 to 14, as part of a strategy to boost its volume by $1 billion over the next five years, with e-commerce expected to drive about 40 percent of that growth.
The Carter’s brand entered the kids world in 2015 by extending to size 8, but the full-fledged push into the kids’ market commences in June for back-to-school, with a collection of more than 700 fall and holiday styles.
“We’ve always been primarily a baby business and wanted to stay true to our heritage, but we’ve been getting feedback from parents asking for additional sizes,” Kendra Krugman, senior vice president of Carter’s brands and licensing, told WWD during an exclusive preview of the new products soon to be on the market, along with Maureen Flaherty, Carter’s senior vice president of design.
The collection is colorful, adorned with emojis, images of gaming and food, and positive messages often bearing a touch of attitude, like the sushi T-shirt that says, “Just Roll With it” and the ones with “Girls Rule the Universe” and “I Have to Be So Awesome.”
The collection is also filled with layering pieces, knit denim and accessories including purses, headbands and jewelry, and there’s an obvious emphasis on items that mix and match to create outfits, and to coordinate back to Carter’s baby and toddler lines, so siblings can dress alike.
“Kids is more playful, fun, modern, trendy, but still true to our brand,” explained Flaherty. “When kids get to be a certain age, they start to embrace their own individuality and have their own style.”
Kids’ wear is a highly competitive sector, with Carter’s looking to muscle into territory dominated by players such as The Children’s Place, which continues to gain momentum; GapKids, long a stalwart in the sector, as well as Old Navy, Target and Walmart. Carter’s is considered moderate-priced at a level above The Children’s Place and mass retailers, and a rung below GapKids.
Carter’s Inc., which includes Carter’s, Oshkosh B’gosh and Skip Hop Inc., generated $3.4 billion in sales in 2017, including $3 billion from the Carter’s brand. Carter’s is considered the largest branded marketer of young children’s apparel in North America, with an 18 percent share of the $20 billion U.S. market for children ages 0 to 7.
Extending its sizes is just one of several growth maneuvers by Carter’s Inc. The Carter’s brand is building on categories such as ath-leisure wear and footwear; reconfiguring its 800-unit retail fleet by adding dual-brand stores selling Carter’s and OshKosh B’gosh, reducing its presence in outlets, and testing some other retail formats.
Currently, regular-priced stores represent about 60 percent of the fleet; outlets just under 40 percent. By 2022, the company sees outlets dropping to about 20 percent the fleet. Stores average 4,000 to 5,000 square feet.
Dual-brand stores, offering “the best” of Carter’s and OshKosh B’gosh products, represent about 30 percent of the fleet and are seen hitting 50 percent in the next five years. “Our best-performing stores are co-branded and located closer to the consumer. By comparison, our weakest comp performance is in our legacy outlet locations and stand-alone OshKosh stores,” Carter’s chief executive officer Michael Casey said in a conference call earlier this year.
Over the next five years, the plan is to close 115 underperforming stores, open about 160 new stores and convert about 40 to the co-branded format. “As a result of these actions, our U.S. store portfolio is expected to evolve into a more balanced mix of single and dual-brand locations, with a greater mix of brand stores,” said Casey.
Last year, the Simple Joys brand for Amazon was launched; Skip Hop, which sells durable infant and child products like diaper bags, travel accessories, backpacks and feeding accessories, was bought for about $140 million, and the company’s licensee in Mexico was purchased. OshKosh B’gosh was purchased for $312 million in 2005.
The company is also doing more direct sourcing, with 60 percent of the product now directly sourced from suppliers, to attain higher-quality products and lowering costs.
Asked how Carters is performing, Krugman said the brand has “exceeded the trend of the market. We’re less dependent on fashion trends and more dependent on the birth rate. There’s been a slight decline in the birthrate but our business is strong. We expect it to pick up.” About 4 million babies are born each year in the U.S. giving Carter’s a “natural” source of renewed traffic, said Krugman.