Slide 1: Fourth Quarter / Fiscal Year 2022 Results & Business Update
Fourth Quarter / Fiscal Year 2022 Results & Business Update February 24, 2023
Slide 2: Fourth Quarter 2022 Results
Fourth Quarter 2022 Results (GAAP Basis) $ in millions, except EPS Q4 % of Q4 % of 2022 Sales 2021 Sales Change Net sales $912 $1,062 (14%) Gross profit 416 45.6% 493 46.4% (16%) Royalty income 5 0.6% 6 0.6% (11%) SG&A 302 33.2% 361 34.0% (16%) Intangible asset impairment 9 1.0% - N/M Operating inco
Slide 3: Fiscal Year 2022 Results
Fiscal Year 2022 Results (GAAP Basis) $ in millions, except EPS Fiscal % of Fiscal % of 2022 Sales 2021 Sales Change Net sales $3,213 $3,486 (8%) Gross profit 1,472 45.8% 1,662 47.7% (11%) Royalty income 26 0.8% 29 0.8% (10%) SG&A 1,110 34.6% 1,194 34.2% (7%) Intangible asset impairment 9 0.3% - N/M
Slide 4: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS Fourth Quarter 2022 2021 Operating % Net Pre-Tax Net Diluted Operating % Net Pre-Tax Net Diluted Income Sales Income Income EPS Income Sales Income Income EPS As reported (GAAP) $109.5 12.0% $100.5 $80.2 $2.11 $138.0 13.0% $123.5 $97.0 $2.31 Intangible
Slide 5: Fourth Quarter 2022 Performance
Fourth Quarter 2022 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -14% vs. -14% vs. -1% vs. 2021 2021 2021 $1,062 $138 $2.31 $2.29 $912 $119 13.0% 13.0% of of Net Sales Net Sales 2021 2022 2021 2022 2021 2022 1 Certain me
Slide 6: We Achieved Guidance Provided in October
We Achieved Guidance Provided in October (Adjusted Basis) $ in millions, except EPS Guidance1 Actual Results Net Sales $845 - $885 $912 Operating Income $85 - $115 $119 Q4 20222 Operating Margin 10.1% - 13.0% 13.0% Diluted EPS $1.40 - $2.00 $2.29 Fiscal Operating Cash Flow $40 - $50 $88 2022 1 Guida
Slide 7: Fiscal Year 2022 Performance
Fiscal Year 2022 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -8% vs. -22% vs. -12% vs. 2021 2021 2021 $3,486 $501 $7.87 $3,213 $6.90 $388 14.4% 12.1% of of Net Sales Net Sales 2021 2022 2021 2022 2021 2022 1 Certain mea
Slide 8: Fourth Quarter 2022 Adjusted Results
Fourth Quarter 2022 Adjusted Results1 $ in millions, except EPS Q4 % of Q4 % of 2022 Sales 2021 Sales Change Net sales $912 $1,062 (14%) Gross profit 416 45.6% 493 46.4% (16%) Royalty income 5 0.6% 6 0.6% (11%) Adjusted SG&A 302 33.2% 361 34.0% (16%) Adjusted operating income 119 13.0% 138 13.0% (14
Slide 9: Fiscal Year 2022 Adjusted Results
Fiscal Year 2022 Adjusted Results1 $ in millions, except EPS Fiscal % of Fiscal % of 2022 Sales 2021 Sales Change Net sales $3,213 $3,486 (8%) Gross profit 1,472 45.8% 1,662 47.7% (11%) Royalty income 26 0.8% 29 0.8% (10%) Adjusted SG&A 1,110 34.6% 1,190 34.1% (7%) Adjusted operating income 388 12.1
Slide 10: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow $ in millions Balance Sheet Cash Flow (Year End) (Fiscal Year) 2022 2021 2022 2021 Cash $212 $984 Operating cash flow $88 $268 Capital expenditures (40) (37) Accounts receivable 199 231 1 Free cash flow $48 $231 Inventory 745 648 2022 2021 Accounts payable 264 407 Share rep
Slide 11: Fourth Quarter 2022 Results – Inventory
Fourth Quarter 2022 Results – Inventory $ in millions +15% Units +7% $61 ($34) $745 $70 Q4 Net $648 Inventory vs. LY Q4 2021 Pack & Hold Product Cost Other Q4 2022 Increase • Quality of inventory is strong - Less prior season carry over; better mix of new products Focus of • Focused on maximizing re
Slide 12: Business Segment Performance
Business Segment Performance 12
Slide 13: Fourth Quarter Adjusted Segment Performance
Fourth Quarter Adjusted Segment Performance (2022 vs. 2021) $ in millions Maintained strong operating margin of 13.0% in a challenging environment; double-digit operating margin in all segments Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022
Slide 14: Fiscal Year Adjusted Segment Performance
Fiscal Year Adjusted Segment Performance (2022 vs. 2021) $ in millions Achieved double-digit operating margin on a consolidated basis and in all segments in 2022 Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022 2021 U.S. Retail $1,680 $1,899
Slide 15: Fourth Quarter Segment Performance
Fourth Quarter Segment Performance (2022 vs. 2021) U.S. Retail U.S. Wholesale International • Net sales: -13% • Net sales: -18% • Net sales: -12% ― Inflation continued to weigh ― Demand impacted by ― Lower demand in Canada and on consumer demand transportation delays; wholesale ex-North America canc
Slide 16: Little Planet eco-friendly brand
• Carter’s new eco-friendly brand • Accessible premium price point • Planning strong growth in 2023 ̵ Global distribution expansion ̵ Broader product offering In less than 2 years, Little Planet has become a top 3 organic and sustainable children’s clothing brand in the U.S.1 1 Source: Q3 2022 US Co
Slide 17: Partnership With Hilary Duff 'Chief Mom Officer'
Partnership With Hilary Duff ‘Chief Mom Officer’ SPRING 2023 COLLECTION 17
Slide 18: Carter's Continues to Lead Children's Apparel in Social Media
Carter's Continues to TOTAL INSTAGRAM FOLLOWERS Lead Children’s Apparel In millions Carter's in Social Media1 2.3 Gap Kids 1.3 Disney Baby 1.0 The Children's Place 1.0 OshKosh 0.8 Skip Hop 0.5 Janie and Jack 0.5 Gymboree 0.4 Garanimals 0.1 TOTAL FACEBOOK FOLLOWERS Carter's 4.6 Disney Baby 2.8 The Ch
Slide 19: Adweek: Carter's Bets on Big Game Baby Making
ADWEEK — , Baby Clothing Company ‘| ron I 4 Carter’s Bets on Big Game Baby Making
Slide 20: Easter Style for the Family
Easter Style for the Family 20
Slide 21: Family Matching Pajamas For Every Holiday
Family Matching Pajamas For Every Holiday 21
Slide 22: New Impactful Brand Marketing at Target and Walmart
New Impactful Brand Marketing at Target and Walmart 22
Slide 23: Spring on Amazon
Spring on Amazon New Baby Gear & Toys Expansion 23
Slide 24: 2023 Outlook
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Slide 25: 2023 Priorities
2023 Priorities • Profitably sell through Pack & Hold inventory • Forecast demand and inventory commitments conservatively Our Focus on Productivity, • Improve price realization Earnings & • Negotiate lower product costs and ocean freight rates Cash Flow • Close low-margin stores; open high-margin s
Slide 26: 2023 Outlook
2023 Outlook Full Year Key Assumptions Trends Expected to Improve • Near term, inflation and rising • Inflation moderating; improving interest rates expected to weigh on consumer demand trend consumer demand • Improved price realization • Wholesale customers approaching 2023 inventory commitments ca
Slide 27: 2023 Outlook: Fiscal Year
2023 Outlook1 • Net sales: ~$3 billion - U.S. Retail: down mid single-digits - U.S. Wholesale: down ~10% - International: comparable Fiscal Year • Adjusted operating income: ~$350 million 2023 - vs. $388 million in fiscal 2022 Objectives • Adjusted diluted EPS: ~$6.15 - vs. $6.90 in fiscal 2022 • Op
Slide 28: 2023 Outlook: Q1
2023 Outlook1 • Net sales: ~$630 – $650 million - U.S. Retail comps down 10% to 15% - Wholesale customers planning Q1 cautiously (U.S. Wholesale sales down 20% to 25%) - International sales down mid-teens • Adjusted operating income: ~$30 – $40 million - vs. $103 million Q1 2022 Q1 • Adjusted dilute
Slide 29: Thank You!
Thank You! 29 29
Slide 30: Appendix
Appendix 30
Slide 31: Fourth Quarter Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Fourth Quarter Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended December 31, 2022 January 1, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 37,453,066 41,335,042 Dilutive effect of
Slide 32: Fiscal Year Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Fiscal Year Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Year Ended December 31, 2022 January 1, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 38,822,737 42,853,009 Dilutive effect of equity
Slide 33: Reconciliation of Adjusted to Reported Earnings
Reconciliation of Adjusted to Reported Earnings1 $ in millions, except EPS Segment Reporting Income U.S. Retail % of U.S. Wholesale % of International % of Corporate % of % of Operating % of Tax Net Diluted Operating segment Operating segment Operating segment Operating total Fourth Quarter of Fisca
Slide 34: Reconciliation of Adjusted to Reported Earnings (Continued)
Reconciliation of Adjusted to Reported Earnings (Continued) (a) In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present gross profit, SG&A, operating income, income tax, net income, and net
Slide 35: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Fiscal Quarter Ended Fiscal Year Ended December 31, January 1, December 31, January 1, 2022 2022 2022 2022 Net income $80.2 $97.0 $250.0 $339.7 Interest expense 9.3 14.5 42.8 60.3 Interest income (0.4) (0.3) (1.3) (1.1) Tax expense 20.3 2
Slide 36: Constant Currency Reconciliation
Constant Currency Reconciliation $ in millions Fiscal Quarter Ended Constant- Reported Impact of Currency Reported Constant- Net Sales Foreign Net Sales Net Sales Reported Currency December 31, Currency December 31, January 1, Net Sales Net Sales 2022 Translation 2022 2022 % Change % Change Consolid
Slide 37: Planning Continued Store Growth in North America in 2023
Planning Continued Store Growth in North America in 2023 U.S. Canada Mexico Total Store count at January 1, 2022 751 186 43 980 Openings 25 2 12 39 Closings (19) (1) (6) (26) Store count at December 31, 2022 757 187 49 993 2023 Forecast Openings 53 5 12 70 Closings (9) (5) (8) (22) Estimated store c
Slide 38: Forward-looking Statements and Other Information
Forward-looking Statements and Other Information This presentation contains forward-looking statements within the meaning of the federal securities laws relating to our future results and performance, including statements with respect to the potential effects of macroeconomic conditions, the COVID-1