Hi, good morning. Thanks, everyone, for joining us. We're very pleased to be joined this morning by the Carter's team. With us today, we have Chairman and CEO, Mike Casey; CFO and COO, Richard Westenberger; Chief Creative and Growth Officer, Kendra Krugman; and Sean McHugh, VP of IR and Treasurer. Just a quick note, if anyone has any questions they'd like to ask, you should see a chat box at the bottom of your screen. We'll take some audience questions here at the end. With that, I'll kick it over to Mike for some opening remarks, and then we'll dive in. Mike?
Okay. Morning, thanks very much. Morning, everybody. Thanks for making time to get together. I've got some brief opening remarks, hopefully helpful to you. We're gonna leave plenty of time for your questions. As you may know, Carter's is the largest branded marketer of young kids' apparel in North America, own two of the iconic brands in kids' apparel, Carter's and OshKosh B'gosh. Both brands have served the needs of multiple generations of families with young children. We own the largest share of a $32 billion market, apparel market for young children. Newborn. Everything you need for a newborn to about a 10-year-old child. We have the number one market share in the United States, number one market share in Canada and Mexico. We have the number one market share in baby apparel in Brazil. It's been a growing, growing business for us.
We sell essential core products, the must-have products that families buy in quantities, multiple quantities, well before a child comes into the world. Bodysuits, washcloths, towels, bibs, blankets, all the essential core products purchased frequently in those early months and years of life. We are the largest specialty retailer focused on young children's apparel, directly managing over 1,000 stores in North America. We're also the largest supplier of young children's apparel to the largest retailers in North America: Target, Walmart, Amazon, Kohl's, Macy's, Penney's, Costco, TJs, TJ Maxx, Ross Stores, Marshalls. So, anywhere kids' apparel is sold in a meaningful way, you'll likely see a strong presentation of our brands. Our brands are sold in over 90 countries and through the most successful websites for kids' apparel throughout the world.
Last year, together with our wholesale customers, we had over $1 billion of online purchases of our, of our brands. Prior to the pandemic, very strong performance. We had 31 consecutive years of sales growth. Long track record of growth, with top quartile operating margins and strong cash flow generation. That strong cash flow profile of our business is what attracted three different, very successful private equity firms to our business over the past 30 years. Over the past 10 years, we've generated nearly $3 billion in free cash flow and returned about $2.5 billion to our shareholders through share repurchases and, and dividends. Last year, sales over $2.9 billion, our operating income over $300 million. We had double-digit operating margins in each of our U.S. wholesale, U.S. retail, and international segments.
Had over $500 million in operating cash flow, and ended the year with over $1 billion in liquidity. So, a financially strong company. In the years ahead, we expect that our growth will be driven by, among other things, store openings. We believe in stores. We like stores. Nearly 70% of kids' apparel is purchased in stores. Our stores are the highest source, our highest source of new customer acquisition and provide a convenient alternative to shopping in the big-box retailers. We believe our stores enable the success of our e-commerce business. When we open up a store, e-commerce in that market goes up. When we close a store, e-commerce in that market goes down. Our highest value customers shop both in our stores and online. It's what we call omni-channel customers. So our omni-channel customers.
The annual spend from omni-channel customers who shop both in stores and online spend more than twice the single-channel customers. We believe our growth in sales going forward will also be driven by our exclusive brands, which are sold through Target, Walmart, and Amazon. We believe our exclusive brands are traffic drivers to these retailers. Wherever you're shopping, you expect to see the national brands, and Carter's is the best-selling national brand in kids' apparel. Our brands provide a product offerings which are complementary to their private label brands.
In international markets, we expect our growth will be driven by our investments in new omni-channel capabilities, technology, which is enabling good growth in Canada and Mexico, expansion through our wholesale partner, Riachuelo, in Brazil, and growth with other wholesale customers who are representing our brands in many parts of the world, including Latin America, the Middle East, and Asia. We expect that our profitability in the years ahead will be driven by a higher mix of margin-rich, omni-channel sales, a better mix of higher-margin stores. We've been closing a lot of low-margin stores in this kind of post-pandemic period. We'll have a greater concentration of our wholesale business with fewer, stronger, and growing retailers. We expect our profitability will also be driven by improved pricing and inventory management capabilities.
For those who have followed us over the years, we've made significant improvement in price realization from prior to the pandemic to through this year, largely through new pricing and inventory management capabilities. Profitability will be driven more effective, more impactful brand marketing, and given the strong cash flow profile of our business, profitability will be driven by the continued return of capital through share repurchases. So just in summary, Carter's is the best-selling brand in kids' apparel. It's the market leader in young kids' apparel. We have unparalleled relationships with the largest retailers of young kids' apparel. Our brands are sold through over 20,000 points of distribution throughout the world. We have multiple brands, multiple distribution channels, multiple levers to enable growth.
We believe we're well-positioned to benefit from the market recovery in the years ahead. Made some forward-looking statements this morning. There are risks inherent in our business, and those risks are disclosed in our SEC filings. Let me pause there, and we'll open up the meeting to your questions.
Thanks, Mike. There's a lot to dig into there. First, maybe let's just start high level. I wanted to start with a diagnostic of the health of your consumer. So your view in April, a little bit different than your view in February. What are the latest thoughts there, and any changes since weather's normalized a little bit since we last spoke in April?
Yeah. So consumer, our target consumer is under pressure. These are young women and men earlier in their careers, late twenties, early thirties. Time in your life is just starting a family. It's a more, at least it was for me, time in your life, you're more paycheck to paycheck, right? Just a typical where you are in your stage of life. That target consumer is under pressure. We have historic inflation, right? You gotta. When these kids were growing up, they're probably as adults now saying, "What's inflation? And why is gas $4.50 a gallon? And why are strawberries $6 a pack?" Again, in recent months, you've heard, you know, this reference. I never in my 30 years with Carter's, never heard references to the cost of shelter.
Cost of shelf, meaning rent's up and housing costs are up. It's like, how does. There was a big headline in The Wall Street Journal in recent months, the American dream of homeownership is kind of elusive to people just starting out. So the consumer's under pressure. Our business is under pressure because the consumer is under pressure. I actually think it's. You know, we referenced weather earlier this year, only in the context of the macro pressure on the consumer. What we're seeing in consumer behavior, they're shopping when needed, and only when it's needed, right? So if it, I remember the April earnings call. I think it was about 40 degrees Fahrenheit that morning in New York, and you're not thinking T-shirts and shorts. Even though you had an early Easter, you always want an early Easter, right?
But if an early Easter coincides with cold weather, you're saying, "I don't need the T-shirts and shorts yet. I'll wait until the weather turns." That's why I think we're seeing a distortion in our performance from stores versus e-commerce. E-commerce used to be, you'd get a text, you'd get an email, you got a good sale, you got pajamas on sale. You're like, "Do I need them?" So I see we're seeing a less response to kind of the marketing stimulus. By comparison, though, when you need the pajamas, you're gonna swing by the store. Stores provide immediacy, right? And we're seeing in, on our, th e average transaction with us online used to be close to $70, right? That's a big stock-up. It's not like Amazon, you're going to get one pair of pajamas there.
But in ours, "I need bodysuits, I need washcloths, towels, bibs, blankets," I'm gonna be loading up. By comparison, the average transaction in our store is closer to $45 bucks versus the $70. Again, because it's Given where our stores are, I'm gonna get it when I need it, and I'm not gonna shop ahead of schedule. And you referenced February versus April. In February, the world looked much different in February. In February, the headlines were, "Hey, well, inflation's under control, gas prices are coming down. Food prices still ele-" But, hey, there was a little bit of optimism, you know, that there might be at least one, two, or more rate cuts. You roll forward just eight weeks to April, it was, "Inflation's unexpectedly went up." There was commentary there may not be any rate cuts this year.
Gas prices were going up in April relative to where. So just those headlines, those experiences, our target consumer, you have a weekly reminder when you go to fill up at the gas tank, that things are not as good as they were before the pandemic period, right? And, and when you go to the grocery store, I mean, even I go walk out and say, "What did I just buy? What, what, what, what." You know, you look at the receipt and say, "Blueberries are $6 a pack. I didn't know they're." But, you know, anyways, whatever you're making, why? Well, even Walmart, Walmart's been talking about they're seeing a higher mix of household incomes over $100,000. Why? People, even if you're making a good buck, you're swinging over to Walmart. Why? It's one-stop shopping. You can get your groceries, diapers, formula, and kids' apparel.
So they're gonna do everything they can to hold on to that better consumer that wasn't shopping there before. So I don't think it's a Carter's issue, I think it's a macro issue. Even, even, Home Depot recently, surprisingly, said, "Hey, there's six consecutive quarters of, of comp decline." And they're saying the consumer, seeing fewer consumers making those big-ticket kitchen remodelings, bathroom remodelings. Because of the weather, you know, people are less inclined to be shopping for the things they'd normally buy in April because, you know, just they're gonna wait. They're gonna wait. They didn't need it. They'll wait until the weather turns. So I think it's more. It's less weather. It's more the macro pressure on the consumer. They're shopping closer to need, and they're buying fewer things because they got other pressure.
Got it. Okay, and that, that's a really good state of the union for the category. If we maybe just focus on retail, you know, I feel like there's more transformation happening in all aspects of the retail business than any time in recent memory. First, can we talk about the Store Reimagined projects? You know, there's a couple new formats you're testing there. How are they different than what we've seen before? Why are these the right formats for today? And then just your latest thoughts on the potential for a broader rollout of those concepts.
Kendra, thoughts?
Sure, yeah. We have a lot of efforts underway, really driving home our value and our style perceptions with our consumer. So one of those initiatives is around our store experience. We have a handful of store tests in progress, and we are seeing a lot of green shoots here. So, almost a year ago now, we flipped all of our side-by-side stores, those are our largest format stores, to be more consumer-centric. So we moved those stores from being kind of brand-oriented to being size/segment-oriented, which is a much better shopping experience for our consumers. Early reads on that are a nice trend change in that store group. It was a store group that was suffering a little bit, and now we are right-sizing that. So that feels really good.
We also are going after a more premium customer. We're seeing a lot of traction on our best consumer, on our best product, on our best store experiences. So we are really leaning in hard now to a better baby experience. We have what we call a Best of Baby store format that we are testing. And the early reads of that are excellent, and we will continue to roll out more of those doors as the year goes on and as we look to the future. In addition to that, we have our Little Planet brand. We have shop-in-shops that we're testing. We are looking at making that even a bigger priority in terms of Little Planet destinations. So we have a few more things cooking that we look forward to sharing with you as the year goes forward.
Great. And then, just following up on that, maybe I'll loop Richard into this one. You've been engaging in this fleet optimization exercise. You've been opportunistically swapping out these weaker traffic locations for stronger. There's only 10 net openings this year, but I think that understates the sales lift from this exercise. How should we think about the new component, sorry, the new store component of the algorithm as we consider both the fleet optimization and these new concepts that you're rolling out?
Sure. Well, I'll start, and Kendra can offer her thoughts as well. We're fans of stores just in general. 70% of the category is purchased in store. So for all of the predictions over the years that e-commerce was gonna take over the world, and stores were gonna become irrelevant, we always thought that that was overdone, that thought. So we have continued to open stores. We've had a store closing program, part of this fleet optimization. Older locations, we very rarely would close a store before it reaches its natural lease expiration. And I think just through the pandemic, we closed around 140 stores. We have plans, to your point, Warren, to close another 30 stores or so this year.
And if you have a store that's kind of had its best day, I think our inclination is to move on, you know, find the center where the consumer has moved to, migrated their shopping behavior. We're still seeing good opportunities, and importantly, we're still seeing good returns on investment on those, in those stores. It's probably the most measurable thing we have to allocate capital to. We know the capital that goes into the stores, we know the operating costs, we know the margin structure. So we're very rigorous in measuring the performance of our new stores, but we're still seeing these good opportunities. So our plans over the next five years, probably inclusive of this year, to open about 280 stores, and over that timeframe, close about 80 stores.
So the net number, inclusive of this year, is to add about 200 stores, to wind up with around 1,000 stores. We're around 800 or so here in the U.S. today. But that's the vision, and that's what we're executing to. And hopefully, we're gonna now incorporate some of these learnings from the Reimagination project that Kendra has been leading for us, 'cause there's always opportunity to improve the productivity of our store base, to try new things. We are spending more on remodels as well, so we'd like to. We're seeing some really green shoots, to use Kendra's term, around increased productivity by doing more remodeling activity, and I think that lessens the need and the dependence on new stores if we can improve the productivity of the existing store base.
And I would just add, our new stores, not only are they continue to be profitable for us, which we've always realized, they do perform better than our older fleet. So they're outperforming the chain, our new stores as well. So that's an important thing that we continue to look at.
Yep, but part of the strategy, just final thought on that, there's a number of smaller markets where the closest store is, like, 50 miles away. So our real estate team is being very surgical. Where are there certain real estate opportunities that we attract a customer that we didn't have, that with the brand wasn't accessible? So there's a. You'll hear us talking about, going forward, what's the small market strategy? How do we fill in certain gaps in the market? You know, we've got stores from Maine to Hawaii. We're widely distributed up in Canada with number one market share. We're expanding the presence in Mexico. We're in the early days of expanding the presence of the brand in Mexico.
I think you'd be hard-pressed to find another brand. I mean, we had our international partners in here recently, and they're from—you know—Latin America, Middle East. I was sitting between a fellow from Russia and Argentina. They're opening up Carter's stores throughout the world. I'm trying to think, can you think of another brand that you have these people opening up? And some of these are individually small businesses, collectively better part of a $70 million-$80 million business, very high margin business. But there's something about the Carter's store, that what we've learned through these relationships is there is an absence of a brand in baby apparel as strong as Carter's worldwide.
We didn't even when we launched the U.S. website years ago, yet, you have 45% of the demand on our U.S. website came from outside the United States. Number one was China, followed by Brazil, Argentina. From memory, it might have been Mexico before we acquired our licensee in Mexico. So there's something special about the Carter brand, and baby apparel is over 50% of what we do for a living. It's the much more... It's been consistently good for us. It's the more resilient, 'cause you got beautiful babies coming into the world every day, right? And the best-selling brand in baby apparel is Carter. So, so it, and then if you put toddler together, baby and toddler is over 80% of our apparel sales. So it's a...
I think that's why we've weathered the storm. Again, wherever the consumer's going, if more people are going to Target, Walmart, and Amazon, that's okay. We're there. We got the best-selling brands at those retailers, national brands at those retailers. If you are swinging away from specialty retail in this cycle, it's fine. We'll continue. You're in a down cycle. There's good cycles in retailers, down cycles. We're working our way through a down cycle. You take advantage of the down cycle, and you get to certain things, and you're more aggressive in improving things than perhaps you'd otherwise be if we were in a kind of an upcycle of retail.
Thanks. That's really good insight. And maybe just to wrap up the discussion on the retail side before we move to wholesale, this question's probably for Richard again. If I look at the guidance, you know, you're looking for a return to positive comps in the second half. It's a pretty big inflection from where you're at now. I think the first half outlook's around negative mid-singles. We've touched on a lot of these initiatives that are gonna help drive that. Can you just put those in context? How do those layer on? Which are the most material as we get into the second half here?
Well, everything here in the company starts with product, and I think the improved bookings, the higher bookings that we have in hand for the second half of the year, reflects the strong response to the improvements in the product assortment, which Kendra and her team have led for us. So, customers responded very positively. I think also, for the most part, our customers had a fairly strong holiday season in 2023, that the buyers at these retailers tend to be a bit of historians, and so they're basing the future on their most recent season, and so they had a good second half of the year. It starts with the response to the good product that has been developed.
I think coming into the year, and these commitments for the second half of this year were made by these wholesale customers late last year, which I think reflects, to Mike's point, when we came into the year, there was a fair amount of optimism, around that the year would show an improving trend as we moved through 2024. We'll see if that completely plays out. But, we're through the period, I think, of sort of significant destocking that we saw with our wholesale customers. That said, everyone is still being very conservative, very stingy with their inventory commitments. No one wants to get ahead of their skis, in this kind of environment. But given, where they were operating the last couple, few years, I think there was an opportunity to modestly step up their commitments.
The growth will be led for us in the second half by our exclusive brands. That is where the momentum has been within our wholesale segment. Those are the retailers that are winning with consumers, and I think the bookings are kind of tracking to that as well.
Got it. Okay, yeah. So that was the question I had on the wholesale side. There's also a little bit of an inflection in the second half. How much of that is underpinned by order book? And you talked a little bit about last year's destocking exercise. Is there a need for your retailers to restock here? Just any further detail on that second half inflection would be useful.
Well, I think a year ago, these retailers were continuing to manage what was going on with consumer demand in response to inflation. I think you can only be a retailer with cutting inventory for so long. At some point, you have to have the newness, the freshness in the assortment. The seasons do change. That's always an inflection point in our business, as it is for them as well. I just think the commitments were made with a rising sense of optimism coming into the year, and they had to refresh their assortments. So, yeah.
I think in total and two-thirds of what we are forecasting in the second half for the fall and winter. Again, for everybody's benefit, we have all the fall and winter bookings in hand. Spring 2025 is still, the bookings are still coming in. We'll give you a good update next month on how Spring 2025 has been booked, and some of that starts to ship at the tail end of the fourth quarter. But the demand for fall and winter has been good, and so we're forecasting mid-single-digit growth kind of in the booking. So two-thirds is the seasonal bookings, the balance is replenishment. So it's the automatic replenishment so that, you know, the fixture fills.
So you want to make sure all those fixtures, whether it's the brand walls in Target and Walmart, or the fixtures at Kohl's, the bodysuits, washcloths, towels, all the everyday essentials, you always want to make sure those things are in stock, 'cause an empty fixture is not a good experience for the consumer. So as the register's ringing, it sends a signal to us, "Send us more five-packs. Send us more four-pack PJs." So the more the auto-replenishment product, which we'll also benefit from in the second half, we expect, is just the timing of shipments. So I think a year ago, you know, because they were so lean, they said, "Hey, have you got product?" I think the first quarter was the sixth consecutive quarter where we saw earlier-than-expected demand from our wholesale customers. Why? They're running lean.
And if you're selling through it, you're saying, "If you got something new, bring it in," 'cause anytime you bring something in new, consumer spots the new color stories, new prints, new fabrications, and it gets the register ringing. What we shared with you in April is we're assuming that some of that kind of early demand might be behind us. It's hard to predict, 'cause we have start ship dates, and because they were running lean for six consecutive quarters, saying, "We need some new product," we're assuming that we'll benefit in the second half, that some of the stuff that came early just not gonna come early. 'Cause they got to a steady state. Everybody in this post-pandemic period started, "Where's the consumer? What do we buy? We don't want to be conservative. We'd rather chase. And when you're chasing, chasing's a much healthier model.
The margins are better, the sell-throughs are better, the price realization's better. You got less on the clearance rack. So we're assuming that some timing of shipments will go into the second half, on top of the really good... I can't remember a quarter where we were talking about mid-single-digit growth in bookings. So it just, it's kind of like, it's a correction period, right? We had the 100-year storm in 2020. Everybody came roaring back in 2021, and then the consumer hit the brakes mid-2022 with inflation. So again, you had this little bit of a rollercoaster in consumer behavior, and I think what we're sensing is perhaps we're getting to a little bit of a more stable environment. Not a robust environment. Perhaps the best you can describe is maybe it's a more stable environment going forward, starting in the second half.
Thanks. That's really useful insight. Speaking of stabilization, your AUR is stabilizing a little bit this year. You had some really strong increases the last four years. You've made the decision to invest a little bit in sharper price points on some key, key items.
Yep.
Can you talk a little bit about what drove that decision, the impact it's having? And then as we look forward at AUR, what's the outlook for AUR going forward?
Sure. Kendra, happy to take it? You want to.
Sure, sure. So, driving improved price messaging, I would say, to ultimately get more price clarity with our consumer is really an important aspect of our value equation. And I think we've done that a few ways. One of them was through an everyday value program, so we rolled that out in February. It is going to the right price in a clearer, more concise way, and hitting it earlier on in the season, so that was a new strategy. It's comping up against a more high-low strategy on the same item. So on the half, in the first half, that had an impact to our AUR. But really, we hope that that is ultimately going to drive, and the intention of it is to drive unit velocity and credibility over time in our pricing strategy.
Additionally, we have a percent off our typical ticket, which is our traditional model and a high-low model. We are hitting the right price sooner, meaning we're gonna go to a slightly deeper discount earlier on, so ultimately you sell through more of the product and avoid more units going to clearance. So both of the everyday value program and kind of hitting the right price sooner with a percent off are intended to drive more price clarity, but also get credibility in our value equation with our consumers as you move forward.
Yeah, so it's trying to be responsive to the high, high percentage of the people in the country... You've seen the studies. Two-thirds of American adult Americans are living paycheck to paycheck, so it's trying to be responsive to that more price-sensitive consumer. So, and just to give you a tangible example, typically, if we brought a T-shirt in, it would say $10, and you'd sell, you'd sell a certain amount at $10. And then you go, "It's now, next stage is 25% off," right? And so you'd be selling for $7.50. Then you'd go 40% off, it would be $6. But Kendra and her team said, "Why don't we just get to.
Why don't we just, why don't we just, instead of going to this kind of steady, you know, promotion level, establishing price, then having some level of promotion, then the next level, wh at's the right volume price? If it's $6, say it's $6. If you have a sale, go to $5." And the objective is sell more at that high-volume price, and you have less on the clearance rack at the end of the season, right? And so, just to be responsive, we're seeing this kind of barbell kind of approach to demand for our brands. Again, we sell all the essentials. You know, the milk and eggs, right? The bodysuits, washcloths, towels, all those essentials that you have to buy in multiple quantities in those early months of life.
We just want when she comes in, you just wanna make sure that the value equation is crystal clear, that you've gotten to the, to the market price, and it's a basket starter. And when she fills out that basket, she says, "What else do you got?" She says, "I feel like I've got a good, good deal." And see it at $10, then $7.50, then, "Hey, I see it at $6 or $5. What else do you have here?" The barbell is, interestingly, that is the, the highest price point products we have are some of our best selling. So Kendra and team launched this beautiful brand, Little Planet. Better fabrications, better textures. Doesn't have a big fire engine across the front of it, right? So we have plenty of that.
But if you want something a bit more elevated, something more special, so our collections, Purely Soft's another beautiful brand, and baby, kind of a baby sleepwear, and we've got new textures coming. These things are priced significantly, either double 50%-100% more than everything else we do for a living. But what we realize, we have a much less price-sensitive consumer as well. So what Kendra and her team are doing, more so in going either was talking about in the second half, we'll have a higher mix of, of, more of the elevated product, more, more, you know, I, I, I hate to use words, words like fashion forward, because we've always played fashion with risk, right? But it's, it's, it's tasteful. It's, it's not like bling. It doesn't have. You know, it's not the next shade of blue.
It's just, it's tasteful. It's consistent with the brand point of view for both Carter's and OshKosh. How do we turn that dial, understanding that there is a consumer looking for something better? And so Kendra will be sharing with you in July some good work we've done in some of our stores, where we're not only elevating the product offering but also elevating the brand experience. We have a store that Kendra and our head of Canada saw recently, very good-performing Carter's store. We're also saying, "Should we put a Little Planet store in here?" Because that brand is doing so well, and we've expanded the product offering. We're, "What's the very best of Carter's?
What's the very best of our brands?" So we're testing and learning new store models, because although the vast majority of the country is under some financial pressure, there is a percentage of the consumer who's looking for a better experience and a better, better product offering. And we're encouraged that some of our highest price point product offerings are some of our best-selling product offerings.
I would say on that extreme end, we are able to probe on price a little bit there. Where we're getting more value conscious and very clear, crystal clear on the price/value equation on the good product. On that best product, we are able to probe a little bit more, lean our mix that way, and also charge a little bit more for those products.
Got it. Great. That's very exciting. So maybe just another higher level question, Mike. If I just look at the retail mix, it continues to shift back, away from store... Sorry, away from e-com back to stores. I know that's not specific to you. Do you think that's just some more post-COVID normalization that's still lingering? Is it new competition or new consumer behavior? Maybe just the, the shift away from e-com, how persistent you think that'll be?
Yeah, so e-com, e-commerce continues to be. It used to be our fastest-growing, highest-margin business, still is one of our highest-margin business. It's a margin-rich business. And our penetration, e-commerce penetration in total retail is about 33%. The market's only at 28%, and so we're far outperforming the market. It's just not the 36% or 37% it was last year. And so, you know, stores provide immediacy. If the consumer is shopping closer to need and only buying what's needed, not as responsive as they were in years past to some of the marketing stimulus, stores provide convenience. At the end, you could put your hands on it. You could see, "Hey, do I like the fabric? Do I like the color?
Do I like the fit?" Again, those are some things that you can't fully appreciate. Again, if you're gonna be spending money, you wanna make sure you know exactly what you're getting. The beauty of our e-commerce business, our return rates are, like, 4%. 'cause no one gets a white body suit and says, "Geez, this isn't what I thought it was," right? I mean, so the fit, you know, the fit's probably been the same fit for the past 50 years. So you have multiple generations very familiar with the quality of the brand, the value of the brand. The snaps don't fall off. You put it through the washer and dryer. I've had people write me letters to say they bought a Carter's sweater 40 years ago, and they got multiple generations of the family that enjoyed that pink sweater.
I don't know how many brands get those kind of letters, so it just... That, you know, I think we're gonna weather the storm better than most, but we're actually okay with the mix. It's under pressure, e-commerce is under pressure. If we were looking at that Citi credit card data where they publish those spending categories every week, and they got dog food on there, they got cosmetics, but they also have a line item called online pure-play apparel, all ages, including kids, our performance is fully aligned with what's going on in the market. You know, and if there was a distortion, I'd say, "Hey, there's something fundamentally wrong." That said, we've had no shortage of people inside the company, outside of the company, "Is there something wrong with the plumbing?
Are we competitive? Is the experience. And what, when you dig deeper in these down cycles, it's gonna. The experience is gonna be far better than it would otherwise been, if business conditions were better. But we're okay with the consumer. We used to say, "Where do you want the next incremental dollar? You want it in the stores?" Given the high fixed cost, right? And again, you can't fully appreciate why the stores. You know, we are often asked, "Why has Carter's done so well, and one of your nearest competitors called Children's Place is a fraction of what they used to be?" All you gotta do is go in our stores. Go in our stores, go in their stores. That answers most of the questions.
It's a fundamentally different, far superior shopping experience, and we love our big box retailers. So it's a beautiful business for us, right? We wanna be the alternative. We wanna provide an alternative. You go into our store, someone's greeting you: "What are you looking for? Who are you shopping for? Age, gender of the child. What's the occasion? Let me show you all the best thing. A nd you get it. And most of our stores are in open-air strip centers. You can get in, get out, convenience. It's convenience. It's convenience. The very best experience you'll have with our brands will be in our stores.
It makes a lot of sense, right? Out of all the companies I cover, I think it makes a lot of sense for Carter's to be a holistic ecosystem with both retail, a strong retail and wholesale presence. I know we're on our last couple minutes here. I just want to throw one audience question in: Is there a need to further invest in price here? What's the outlook for AUR, and is there a view on who's taking share in the category on the retail side?
Yeah, so on pricing, we have in the first quarter, with this everyday value strategy, I think the pricing was down about 4%. Very good response in the store, less so online, but very good, particularly in babies, so we did make some investment in price. Gotta keep in mind, our primary competitor is private label. As we moved up on price, private label moved up on price. We have good people every day looking, "Are we competitive? Are we competitive?" We get a view on it every week. You know, pandemic, no pandemic, for all of our years working together, we are always, "Are we competitive?
Where are we?" We are the leader, and the consumer expects to pay a reasonable premium for the national brand, whether it's paper towels or bottled water. You will pay more for the national brand, and Carter's is the best best-selling national brand. So we'll continue to make sure that we are competitive on price. We have made investments where we need. And even with the product cost reductions this past year, we took some of that product cost reduction, elevated the benefits, and got and are getting paid for it. Again, we got good bookings for the second half from wholesale. This is from Walmart, Target. I mean, these people are very savvy. They're the best in the business. If our pricing wasn't right, they wouldn't buy it, right? So we. The beauty of our business, we do business with everybody.
We got a book of business nobody's got. With Walmart, Target, Amazon, no one's got these relationships, so we have more insight on what are the winning strategies in kids' apparel, far more so than anybody. So we'll. Our number one objective is to provide the best value and experience in kids' apparel, and that's been the strategy for many years.
Great. Thanks. I think we're up on time here. Super insightful as always, Mike, Richard, Brian, Kendra. Thanks everyone for taking the time to speak with us. Thanks, everyone in the audience, for listening. We'll end it there. Thank you.
Our pleasure. Thanks for joining us, Warren, thanks for hosting us. Thank you. Thank you all very much.