Carter’s Inc. is permanently shutting down hundreds of stores.
The children’s apparel and accessories retailer announced today that it plans to close 25% of its brick-and-mortar fleet, or about 200 locations, as the leases of those units expire. Speaking to analysts, CEO Michael Casey said that nearly 60% of those outposts will likely be shuttered by the end of next year and 80% will shut down by the end of 2022.
“These are generally older, lower margin stores in declining centers and less likely to support our focus on high-value omni-channel customers,” he explained during the company’s third-quarter earnings and sales call.
Carter’s currently operates about 850 stores in the United States, Canada and Mexico under its namesake banner and OshKosh B’Gosh brand. (Vida Shoes International is the licensor for Carter’s shoes.) As it shutters certain locations, the company said it would continue to open stores in more densely populated cities, where it expects better margins. It announced plans to introduce almost 100 co-branded Carter’s-OshKosh locations over the next five years.
“Our focus is fewer, better, more profitable stores located close to the consumer that have a higher likelihood of serving those omni-channel consumers, those who love to shop online and swing by the store and pick up the product,” Casey said. “Going forward, we expect our stores will play an important role supporting our e-commerce customers.”
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During the recent three-month period, Carter’s reported an 8.3% decline in sales to $78.2 million — reflecting a decrease in traffic to company-operated stores as well as a drop in back-to-school sales, partially offset by e-commerce growth of 17.2%. Adjusted earnings per diluted share, on the other hand, rose 4.8% to $1.96.
At the end of the third quarter, the retailer’s total liquidity amounted to $1.6 billion, comprised of cash and equivalents of $831 million, plus $740 million in available borrowing capacity on its secured revolving credit facility.
“Our brands are viewed as traffic drivers and bring families with young children into the shopping centers,” added Casey. “As other retailers struggle and downsize, new and more attractive real estate opportunities become available to us. It’s a buyer’s market, and we plan to pursue those better opportunities in better centers that provide convenience for our consumers and a high return on investment for our shareholders.”