US baby clothes retailer Carter’s is to close about 200 stores as leases expire amid a focus on fewer, better, more profitable locations.
Speaking to analysts on the firm’s third-quarter earnings call, chairman and CEO Michael Casey said the company will close about 25% of its 850-strong store base.
“Nearly 60% of those closures may occur by the end of next year. 80% of those closures are planned by the end of 2022. These are generally older, lower margin stores in declining centres and less likely to support our focus on high-value omnichannel customers,” he explained.
The company does, however, plan to continue opening stores located in more densely populated areas with shy of 100 co-branded Carter’s and OshKosh stores due to open over the next five years.
“We’ll open stores closer to the consumer, co-brand stores in better centres with better margins, and we’re going to close when leases either come up for renewal or there’s a kickout provision that gives us an opportunity to make a decision as to whether or not we’re going to reinvest in that center or exit it. And we’re more inclined – in light of everything we’re going through, we’re more inclined to exit some portion of 200 or more stores.
“So, our focus is fewer, better, more profitable stores located close to the consumer that have a higher likelihood of serving those omnichannel consumers, those who love to shop online and swing by the store and pick up the product.”
Casey added going forward, the company expects its stores will play an important role in supporting its e-commerce customers.
“Currently, about 85% of our stores in the United States are located in open-air centres, which we believe gives us an advantage relative to our mall-based competitors. Open-air centres provide a better, more convenient experience for same-day pickup and curbside pickup of online purchases.”
The comments come as the business exceeded its sales and earnings goals for the third quarter ended 26 September, with net income rising 34.8% to US$81.2m from $60.3m a year ago. Net sales, meanwhile, fell 8.3% to $865.1m from $943.3m a year prior.