Slide 1: First Quarter 2016 Business Update
First Quarter 2016 Business Update April 28, 2016
Slide 2: First Quarter 2016 Highlights
First Quarter 2016 Highlights $ in millions, except EPS Adjusted Net Sales Operating Income* Adjusted EPS* (Adjusted Operating Margin) +6% +8% +8% $724.1 $94.0 $1.05 $87.3 $0.97 $684.8 12.7% 13.0% of of Net Sales Net Sales 2015 2016 2015 2016 2015 2016 • Net sales +6% driven by growth in our U.S. Re
Slide 3: First Quarter 2016 Net Sales
First Quarter 2016 Net Sales $ in millions Total Carter’s +5% Total OshKosh +5% +6% $8.7 ($4.1) $9.3 $724.1 $14.6 $10.8 $684.8 Stores $5.9 Stores $7.0 eCommerce 2.8 Canada eCommerce 7.6 Retail Comp1,2 Retail1 +14.9% Retail1 Comp Comp +2.7% (0.1%) Q1 2015 Carter's Retail Carter's Wholesale OshKosh Re
Slide 4: First Quarter 2016 Adjusted Results
First Quarter 2016 Adjusted Results* $ in millions, except EPS Q1 % of Q1 % of Increase / 2016 Sales 2015 Sales (Decrease) Net sales $724.1 $684.8 6% Gross profit 310.9 42.9% 284.1 41.5% 9% Adjusted SG&A* 228.0 31.5% 208.4 30.4% 9% Royalty income (11.1) (1.5%) (11.6) (1.7%) (5%) Adjusted operating i
Slide 5: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions 2016 2015 • Strong liquidity Cash $395 $377 • Inventory +5% vs. LY due to business growth Accounts Receivable 193 196 Balance Sheet (at Q1 end) Inventory 376 358 • Returned $89 million to shareholders in Q1 - $72 million in share repurchases Accounts Payable
Slide 6: Business Segment Performance
Business Segment Performance 6
Slide 7: First Quarter Adjusted Business Segment Performance
First Quarter Adjusted Business Segment Performance* $ in millions Adjusted Operating Adjusted Operating Net Sales Income (Loss)* Margin* $ $ 2016 2015 Growth 2016 2015 Growth 2016 2015 Carter's Wholesale (a) $ 280 $ 269 $ 11 $ 66 $ 58 $ 8 23.6% 21.5% Carter's Retail (b) 272 258 15 41 44 (3) 15.1% 1
Slide 8: First Quarter Highlights – Carter's Wholesale
First Quarter Highlights – Carter’s Wholesale $ in millions Segment Net Sales & Operating Income $280 $269 Sales +4% Segment Segment Margin Margin 21.5% $58 $66 23.6% Q1 2015 Q1 2016 Operating Income Net Sales • Net sales +4%, reflecting increased product demand, in part due to timing of orders, and
Slide 9: Introducing Little Baby Basics
Introducing Little Baby Basics 9
Slide 10: Introducing Little Baby Basics
Introducing Little Baby Basics 10
Slide 11: First Quarter Highlights – Carter's Retail
First Quarter Highlights – Carter’s Retail $ in millions Total Stores Segment Net Sales Sales • Net sales +3% $272 +6% - Opened 61 net new stores in last 12 months $258 - New stores achieving ROI > 20% $60 - Q1 ending store count: 610 $53 Retail • 415 Brand (73 Side-by-Side) Comp • 195 Outlet (34 Si
Slide 12: Stronger U.S. Dollar and Lower International Consumer Traffic Affected Q1
We Believe the Stronger U.S. Dollar and Lower International Consumer Traffic Continued to Negatively Affect Our Business in Q1 The USD appreciated against a number of …contributing to declines in traffic from international foreign currencies vs. LY… customers to our U.S. stores and website Estimated
Slide 13: Carter's Summer Direct Marketing
Carter’s Summer Direct Marketing 13
Slide 14: Carter's Summer Direct Marketing
Carter’s Summer Direct Marketing 14
Slide 15: Carter's Summer Direct Marketing
Carter’s Summer Direct Marketing 15
Slide 16: First Quarter Highlights – OshKosh Retail
First Quarter Highlights – OshKosh Retail $ in millions Stores Total Segment Net Sales Net sales: +10% Sales • +12% - Opened 43 net new stores in last 12 months $82 - New stores achieving ROI > 15% $73 - Q1 ending store count: 251 $18 Retail • 93 Brand (73 Side-by-Side) $15 Comp • 158 Outlet (34 Sid
Slide 17: OshKosh Summer Direct Marketing
OshKosh Summer Direct Marketing 17
Slide 18: OshKosh Summer Direct Marketing
OshKosh Summer Direct Marketing 18
Slide 19: First Quarter Highlights – International
First Quarter Highlights – International* $ in millions Net Sales Segment Net Sales Total • Strong double digit sales growth $78 Sales - Reported net sales: +14% $69 $6 +14% - Constant currency net sales: +20% $3 - Canada retail comp +14.9% $33 Constant • Canada Stores $32 Currency - Net sales +17%
Slide 20: Canada New Store Opening – Markville Mall
Canada New Store Opening – Markville Mall (opened April 2016) 20
Slide 21: Canada New Store Opening – Markville Mall
Canada New Store Opening – Markville Mall 21
Slide 22: Outlook
Outlook • Net sales growth of approximately 3% to 4% Q2 2016 • Adjusted EPS decline of approximately 10% to 15% (vs. $0.73 LY) • Net sales growth of approximately 4% to 5% 1H 2016 • 2016 first half adjusted EPS approximately comparable to LY • Net sales increase of approximately 6% to 7% • Raising E
Slide 23: thank you.
thank you. 23
Slide 24: appendix
appendix
Slide 25: First Quarter 2016 Adjusted SG&A
First Quarter 2016 Adjusted SG&A* $ in millions +9% $2.8 ($1.6) $228.0 $18.4 $208.4 31.5% 30.4% of of Net Sales Net Sales Q1 2015 Retail Marketing Other Q1 2016 126 net new stores Investment to Lower HR & performance- (104 U.S., 22 drive traffic based compensation Canada) and expenses; increased eCo
Slide 26: Reconciliation of Net Income Allocable to Common Shareholders
First Quarter Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended April 2, 2016 April 4, 2015 Weighted-av erage number of common and common equiv alent shares outstanding: Basic number of common shares outstanding 51,176,987 52,119,215 Dilutiv e effect of equity aw ard
Slide 27: Reconciliation of Reported to Adjusted Earnings
First Quarter Reconciliation of Reported to Adjusted Earnings $ in millions, except EPS Segment Reporting International % of Corporate % of Gross % of % of Operating % of Net Diluted Operating segment Operating total First Quarter of Fiscal 2016 Margin sales SG&A sales Income sales Income EPS Income
Slide 28: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four fiscal quarters Fiscal Quarter Ended ended April 2, 2016 April 4, 2015 April 2, 2016 Net income $54.0 $49.8 $242.0 Interest expense 6.7 6.7 $27.0 Interest income (0.2) (0.1) ($0.6) Tax expense 29.3 26.2 $133.5 Depreciation and amorti
Slide 29: Forward-looking Statements and Other Information
Forward-looking Statements and Other Information Results provided in this presentation are preliminary and unaudited. This presentation should be read in conjunction with the audio broadcast or transcript of the Company’s earnings call, held on April 28, 2016 which is available at www.carters.com. A