Analyst: Carter's may see long-term revenue growth

An analyst said Monday that Carter's Inc. has a chance for long-term revenue growth as it repositions its OshKosh brand and works on its shop-in-shops strategy.

Howard Tubin of RBC Capital Markets said that Carter's expects a better performance from OshKosh during the second half of the year because of a better denim assortment, improved marketing and better product.

"While we do not believe that OshKosh volume will reach that of Carter's, we do believe there is significant opportunity for growth based on Carter's existing relationships and reputation with department store buyers," he wrote in a client note.

The analyst is also optimistic about the potential for Carter's shop-in-shops at Kohl's Corp. and Macy's Inc. The company has been testing 0-24 months shops in some of the department stores, paying for fixtures and supplying merchandise that is set up in one section of the stores.

"These shops offer a more cohesive presentation of the assortment while saving the shopper time as she/he no longer needs to visit multiple departments," Tubin explained.

The analyst did, however, cut his price target to $18 from $19, citing concerns about economic conditions.

Apparel retailers and many other industries have been pressured as consumers tighten spending due to the ongoing housing slowdown, eroding credit, rising food and gas costs and recession fears.

Shares of Atlanta-based Carter's added 18 cents to $14.70 in afternoon trading.