Carter's Attributes Strong Sales Growth to E-Commerce

Originally published by RIS News.

Children's retailer Carter's achieved its third-quarter 2017 sales and earnings objectives, despite the impact of hurricanes in Texas, Florida, and Puerto Rico.

“Our growth was led by our U.S. retail and international businesses, including the contribution of our Skip Hop brand, which we acquired earlier this year," said chief executive officer Michael Casey.

"Despite the challenging retail market, we believe we are on track to achieve a record level of sales and profitability this year, he said.

E-commerce continues to be Carter's fastest-growing, highest-margin business.

In the third quarter, Carter's U.S. retail sales increased 7.2%. Comparable sales increased 1.7%, with e-commerce growth of 22.5% partially offset by a comp-stores sales decline of 4.3%.

International e-commerce grew 42% in the quarter, driven by comps of 61% in Canada and 23% in China. The company's Canada e-commerce business is growing significantly faster than had been envisioned, Casey noted.

"With the investments we've made in e-commerce capabilities, we believe we are well positioned to benefit from the secular shift to online shopping," said Casey.

The retailer's total e-commerce-related sales this year, including wholesale, are projected to be up about 30% to command 19% of total sales.

Carter's is finding more than 70% of its website traffic coming through mobile devices. Mobile phone demand grew over 45% in the third quarter. To meet demand, Carter's will launch a mobile app prior to this year's holidays. "We believe this app will improve the speed and convenience of shopping with us online," said Casey.

Among its benefits, the app enables in-store barcode scanning to gain access to product reviews, links to the Carter's Rewarding Moments loyalty program, and push notifications for new offers.

Carter's has also launched new technology in stores this year, giving shoppers access to the full scope of product offerings online. If a store is temporarily out of a product, employees are now able to save that sale and ship the product to the shopper's home for free.

In the third quarter, about 15% of online orders were picked up in stores; 30% of those shoppers made additional purchases during their pickup visits.

Carter's plans to open 200 new co-branded stores over the next four years. Co-branded stores sell both the Carter's and OshKosh B'Gosh brands.

"On a combined basis, we expect our e-commerce and retail store growth strategies to contribute over $500 million to our $1 billion growth plan over the next four years," said Casey.

Carter's has invested in new distribution capabilities this year, which it hopes will improve the efficiency and speed of delivering e-commerce orders beginning this holiday season.

Casey also noted that Amazon has been a good source of growth for Carter's this year. The company has four brands selling directly to Amazon: Simple Joys, which is designed exclusively for Amazon Prime customers; Carter's, OshKosh B'Gosh, and Skip Hop.

"We expect that Amazon will grow to be one of our largest customers over the next five years," he said. "Since launching with Amazon, we've seen no negative trend in our e-commerce sales with any other wholesale customer."

In the third quarter, e-commerce sales through other wholesale customers grew over 25%. The company also said it's reaching more consumers globally through its websites and those of its wholesale customers;  25% of the demand on Carter's U.S. website in the third quarter came from international shoppers.