Carter's (CRI) is a company full of challenges that lie ahead and our Retail Team has focused its attention on product differentiation, or lack thereof in the case of Carter's, which impacts the company's ability to command pricing power with wholesale accounts. Going forward, Cater's will find it difficult to justify its EBIT margins with its current setup.
Consider that you can get Carter's products in its own stores, Walmart, Amazon and other places. The same goes for produce from Nike (NKE) and Ralph Lauren (RL) but the difference is in the product stratification by availability and price. For instance, Ralph Lauren and Nike have their own direct channels via Nike and RL stores. Here they sell higher-end products that are priced as such. They can also sell entry-to-mid level product to retailers like department stores, Kohl's, online websites, etc.
Carter's on the other hand just sells the same product at the same price across all channels. 90% of the product hitting the floor on on the first day comes with an average 40% discount. In other words, it has no pricing power. It has 24% market share in its core business, and 12% share in kids - about midway between a NKE and RL.
