Carters (CRI) risk factors, FY2025 10-K

Risks Related to Global and Macroeconomic Conditions

1. 01Our business is sensitive to overall levels of consumer spending, consumer confidence, and sentiment, particularly in the young children’s apparel market
2. 02Our business could be negatively impacted by political and economic risks that we are exposed to as a result of our global operations
3. 03Public health crises have and may in the future have a significant adverse effect on our business, financial condition, and results of operations

Risks Related to Our Brands and Product Value

1. 04The acceptance of our products in the marketplace is affected by consumer tastes and preferences, along with fashion trends
2. 05We may be unable to protect our intellectual property rights, which could diminish the value of our brand, weaken our competitive position, and adversely affect our reputation and results
3. 06The value of our brands, and our sales, could be diminished if we are associated with negative publicity, including through actions by our employees, and our vendors, marketing partners, third-party manufacturers, and licensees, over whom we have limited control
4. 07Our future growth depends significantly on our branding and marketing efforts, and if our marketing efforts are not successful or if we receive negative publicity, the value of our brands, and our sales, could be diminished
5. 08We may experience delays, product recalls, or loss of revenues or incur additional costs if our products do not meet our quality standards

Risks Related to Operating a Global Business

1. 09We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can35% rewritten
2. 10Financial difficulties for, or the loss of one or more of, our major wholesale customers could result in a material loss of revenues21% rewritten
3. 11Our retail success is dependent upon identifying locations and negotiating appropriate lease terms for retail stores
4. 12Our eCommerce business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability
5. 13Profitability and our reputation and relationships could be negatively affected if we do not adequately forecast the demand for our products and, as a result, create significant levels of excess inventory or insufficient levels of inventory
6. 14Our profitability may decline as a result of lower margins, such as through deflationary pressures on our selling prices and increases in production costs and costs to serve
7. 15We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw materials, labor, and transportation costs, which may impact our expenses and profitability
8. 16Our revenues, product costs, and other expenses are subject to foreign economic and currency risks due to our operations outside of the United States
9. 17Our business could suffer a material adverse effect from unseasonable or extreme weather conditions, or other effects of climate change
10. 18Over the past few years, the expectations related to ESG matters have rapidly evolved. Given the current environment, we may evaluate and announce changing goals and initiatives related to our ESG targets, standards, and expectations from time to timeNew

Risks Related to Our Global Supply Chain and Labor Force

1. 19We source substantially all of our products through foreign-based suppliers and manufacturers. Our dependence on foreign supply sources is subject to risks associated with global sourcing and manufacturing which could result in disruptions to our operations
2. 20A relatively small number of vendors supply a significant amount of our products, and losing one or more of these vendors could have a material adverse effect on our business
3. 21Labor or other disruptions along our supply chain may adversely affect our relationships with customers, reputation with consumers, and results of operations
4. 22Our inability to effectively source and manage inventory could negatively impact our ability to timely deliver our inventory supply and disrupt our business, which may adversely affect our operating results
5. 23Our Braselton, Georgia distribution facility handles a large portion of our merchandise distribution. If we encounter problems with this facility, our ability to deliver our products to the market could be adversely affected

Risks Relating to Litigation

1. 24We are and may become subject to various claims and pending or threatened lawsuits, including as a result of investigations or other proceedings related to investigations

Risks Related to Cybersecurity, Data Privacy, and Information Technology

1. 25Our systems, and those of our third-party vendors, containing personal information and payment data of our retail store and eCommerce customers, employees, and other third parties could be breached, which could subject us to adverse publicity, costly government enforcement actions or private litigation, and expenses
2. 26Failure to implement new information technology systems or needed upgrades to our systems, including operational and financial systems, could adversely affect our business

Risks Relating to Our International Expansion

1. 27We may be unsuccessful in expanding into international markets

Risks Related to Governmental and Regulatory Changes

1. 28Failure to comply with the various laws and regulations as well as changes in laws and regulations could have an adverse impact on our reputation, financial condition, or results of operations

Risks Related to Executing Our Strategic Plan

1. 29We may not fully realize the expected benefits of our restructuring plans or other operating or cost-saving initiatives, which may negatively impact our profitabilityNew
2. 30Our failure to properly manage strategic initiatives in order to achieve our objectives may negatively impact our business
3. 31Additionally, our pricing and other strategies for growing profitability may not achieve their objectives, may adversely affect our business, inventory units sold, results of operations, and cash flows
4. 32Our success is dependent upon retaining key individuals within the organization to execute our strategic plan30% rewritten
5. 33We may be unable to grow through acquisitions or successfully integrate acquired businesses, and such acquisitions may fail to achieve the financial results we expected

Risks Related to Financial Reporting, Our Debt, and Taxes

1. 34We may not achieve sales growth plans, profitability objectives, and other assumptions that support the carrying value of our intangible assets67% rewritten
2. 35We have substantial debt, which could adversely affect our financial health and our ability to obtain financing in the future and to react to changes in our business59% rewritten
3. 36The terms of our ABL Facility and the indenture governing our senior notes contain restrictions and limitations that could significantly impact our management’s flexibility or our financial and operational flexibility to operate our business and could adversely affect the holders of our senior notesNew
4. 37In addition, our ABL Facility includes financial maintenance covenants in respect of our consolidated fixed charge coverage. Our ability to meet those financial covenants can be affected by events beyond our control, and we cannot assure you that we will meet themNew
5. 38Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantlyNew
6. 39Fluctuations in our tax obligations and effective tax rate may result in volatility in our operating and financial results and stock priceNew
7. 40We cannot predict whether quotas, duties, taxes, or other similar restrictions will be imposed by the United States or foreign countries upon the import or export of our products in the future, or what effect any of these actions would have, if any, on our business, financial condition, or results of operations77% rewritten

General Risks

1. 41Quarterly cash dividends and share repurchases are subject to a number of uncertainties, and may affect the price of our common stock
2. 42The market price of our common stock may be volatile76% rewritten
3. 43Our Board authorized our entry into a limited duration stockholder rights agreement, which could delay or discourage a merger, tender offer, or assumption of control of the Company not approved by our BoardNew