Carter's Q4 2024: Unpacking Contradictions in Pricing, Wholesale Strategy, and Retail Performance

These are the key contradictions discussed in Carter's, Inc.'s latest 2024 Q4 earnings call, specifically including: Pricing Strategy and Inventory Management, Wholesale Sales and Brand Strategy, and Retail Sales Performance and Channel Shifts:



Fourth Quarter Performance and Outlook:
- Carter's reported consolidated net sales of $860 million for Q4, slightly up over last year, with sales in the fourth quarter being about $100 million more than that in the third quarter.
- The company exceeded sales and earnings expectations for the quarter, but outlook for 2025 profitability is expected to be more challenging due to lower sales and higher costs.

Marketing Initiatives and Consumer Engagement:
- Carter's made investments in pricing to improve competitiveness and drove a stabilization of unit volume, with US retail units up 2% in the second half and up 4% in the fourth quarter.
- These actions were taken in response to market conditions, particularly the increased promotional activity and weak consumer demand.

Wholesale Business Performance:
- The US wholesale business delivered year-over-year sales growth of 7% in Q4, with sales to exclusive brand customers reaching record levels in 2024.
- Despite strong growth in exclusive brands, sales to department store customers continued to decline, reflecting broader challenges in that segment.

Product Assortment and Strategy:
- Carter's plans to modernize its product offerings by focusing on style, expanding its House of Brands, and increasing depth and breadth in strategic segments like kids' apparel.
- The strategy aims to better align with consumer trends, drive customer retention, and attract new segments, with particular emphasis on style-forward categories to compete against more rapidly evolving competition.