Slide 1: Second Quarter 2023 Results & Business Update
Second Quarter 2023 Results & Business Update July 28, 2023
Slide 2: Second Quarter 2023 Results (GAAP Basis)
Second Quarter 2023 Results (GAAP Basis) $ in millions, except EPS Q2 % of Q2 % of 2023 Sales 2022 Sales Change Net sales $600 $701 (14%) Gross profit 292 48.6% 331 47.3% (12%) Royalty income 4 0.7% 6 0.8% (23%) SG&A 259 43.1% 261 37.3% (1%) Operating income 38 6.3% 75 10.8% (50%) Interest expense a
Slide 3: First Half 2023 Results (GAAP Basis)
First Half 2023 Results (GAAP Basis) $ in millions, except EPS First Half % of First Half % of 2023 Sales 2022 Sales Change Net sales $1,296 $1,482 (13%) Gross profit 601 46.4% 686 46.3% (12%) Royalty income 11 0.8% 13 0.9% (17%) SG&A 518 40.0% 521 35.2% (1%) Operating income 94 7.2% 178 12.0% (47%)
Slide 4: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS Second Quarter 2023 2022 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) $37.6 6.3% $31.3 $23.9 $0.64 $75.4 10.8% $47.1 $37.0 $0.93 Organizational
Slide 5: We Achieved Our Q2 Sales and Earnings Objectives
We Achieved Our Q2 Sales and Earnings Objectives (Adjusted Basis1) $ in millions, except EPS Guidance2 Actual Results Net Sales $590 - $605 $600 U.S. Retail Comparable Sales Down mid-teens Down 16% U.S. Wholesale Down 20% to 25% Down 17% International Down mid-single digits Down 8% Operating Income
Slide 6: Second Quarter 2023 Performance
Second Quarter 2023 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -14% vs. -50% vs. -51% vs. 2022 2022 2022 $701 $75 $1.30 $600 $38 $0.64 10.8% 6.3% of of Net Sales Net Sales 2022 2023 2022 2023 2022 2023 1 Non-GAAP measu
Slide 7: First Half 2023 Performance
First Half 2023 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -13% vs. -46% vs. -46% vs. 2022 2022 2022 $1,482 $178 $2.97 $1,296 $95 $1.62 12.0% 7.4% of of Net Sales Net Sales 2022 2023 2022 2023 2022 2023 1 Non-GAAP meas
Slide 8: Second Quarter 2023 Adjusted Results
Second Quarter 2023 Adjusted Results1 $ in millions, except EPS Q2 % of Q2 % of 2023 Sales 2022 Sales Change Net sales $600 $701 (14%) Gross profit 292 48.6% 331 47.3% (12%) Royalty income 4 0.7% 6 0.8% (23%) Adjusted SG&A 258 43.0% 261 37.3% (1%) Adjusted operating income 38 6.3% 75 10.8% (50%) Int
Slide 9: First Half 2023 Adjusted Results
First Half 2023 Adjusted Results1 $ in millions, except EPS First Half % of First Half % of 2023 Sales 2022 Sales Change Net sales $1,296 $1,482 (13%) Adjusted gross profit 601 46.4% 686 46.3% (12%) Royalty income 11 0.8% 13 0.9% (17%) Adjusted SG&A 517 39.9% 521 35.2% (1%) Adjusted operating income
Slide 10: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow $ in millions Balance Sheet Cash Flow (Q2 End) (First Half) 2023 2022 2023 2022 Operating cash flow $209 ($94) Cash $175 $231 Capital expenditures (26) (16) Accounts receivable 133 184 Free cash flow 2 $183 ($110) Inventory 682 858 2023 2022 Accounts payable 281 408 Share r
Slide 11: Business Segment Performance
Business Segment Performance 11
Slide 12: Second Quarter 2023 Adjusted Segment Performance
Second Quarter 2023 Adjusted Segment Performance $ in millions Adjusted Operating Adjusted Operating 1 1 Net Sales Income Margin 2023 2022 $ Change 2023 2022 $ Change 2023 2022 U.S. Retail $323 $379 ($56) $28 $56 ($27) 8.8% 14.7% U.S. Wholesale 187 224 (37) 29 34 (4) 15.7% 15.0% International 90 98
Slide 13: Second Quarter 2023 Segment Performance
Second Quarter 2023 Segment Performance U.S. Retail U.S. Wholesale International • Net sales: -15% • Net sales: -17% • Net sales: -8% ― Macroeconomic factors ― Wholesale customers buying ― Lower demand in Canada adversely affected demand inventory conservatively ― Growth in Mexico (comparable ― Sale
Slide 14: First Half 2023 Adjusted Segment Performance
First Half 2023 Adjusted Segment Performance $ in millions Adjusted Operating Adjusted Operating 1 1 Net Sales Income Margin 2023 2022 $ Change 2023 2022 $ Change 2023 2022 U.S. Retail $647 $745 ($98) $55 $106 ($51) 8.4% 14.2% U.S. Wholesale 467 531 (64) 81 94 (13) 17.3% 17.7% International 182 205
Slide 15: Carter's is the Leader in Young Children's Apparel
Carter’s is the Leader in Young Children’s Apparel Carter’s Brand Attributes Ranked #1 by Consumers1 • Brand I would recommend • Trustworthy • Most top-of-mind brand • Comfortable • Proud to give as a gift 1 Based on Carter’s Q3 2022 – Q2 2023 survey of children’s clothing buyers in the U.S. 15
Slide 16: Social Followers
Carter's leads the category in TOTAL INSTAGRAM FOLLOWERS in millions Social Followers on TikTok1 Carter's 2.2 Gap Kids 1.3 The Children's Place 1.1 Disney Baby 1.1 OshKosh 0.8 Skip Hop 0.5 Gymboree 0.4 Garanimals 0.1 TOTAL FACEBOOK FOLLOWERS in millions Carter's 4.6 Disney Baby 2.7 The Children's Pl
Slide 17: Good Start to Back-to-School Selling
Good Start to Back-to-School Selling 17
Slide 18: New Back-to-School Brand Campaign
New Back-to-School Brand Campaign 18
Slide 19: OshKosh Collaboration With Gucci
OshKosh Collaboration With Gucci 19
Slide 20: Skip Hop Leads the Market in Multiple Categories
Skip Hop Leads the Market in Multiple Categories #1 in Diaper Bags #1 Portable #3 Car Seat & 4 of the top 5 Changing Pad Cover/Protector2 diaper/travel bags1 #1 Bath Product #10 Top Selling Infant Top Selling Infant Toys Line3 Toy under $10 2 of the top 10 preschool musical instruments #2 Changing P
Slide 21: ~70 Store Openings Planned in North America
~70 Store Openings Planned in North America in 2023 United States Canada Mexico Macon, Georgia Woodstock, Ontario Tijuana 21
Slide 22: Little Planet Continued Strong Growth
Little Planet Continued Strong Growth • Eco-friendly, accessible premium brand • Sales doubled in Q2 vs. LY • New category launches • Expanding from 785 to over 2000 doors in 2023 22
Slide 23: New Fall Fashion Just One You
New Fall Fashion Just One You 23
Slide 24: Rolling out Fall & Holiday Product Offerings at Walmart
Rolling out our Fall & Holiday Product Offerings at Walmart 24
Slide 25: Modern Digital Experience Simple Joys
Modern Digital Experience Simple Joys 25
Slide 26: Continued Expansion in Mexico
Continued Expansion in Mexico • ~$3 billion market • Plan to open 12 co-branded stores in 2023 (53 stores by year end) 26
Slide 27: Expansion in Brazil with Riachuelo
Expansion in Brazil with Riachuelo • Largest Carter’s market outside of North America • Carter’s shop-in-shops in 260+ Riachuelo stores • Opening 14 free-standing Carter’s specialty stores in 2023 (62 by year end) 27
Slide 28: New Market Expansion: Ecuador & Vietnam
New Market Expansion Ecuador & Vietnam Ecuador Vietnam 28
Slide 29: 2022 CSR Report
2022 CSR Report OUR ESG STRATEGY @vsaropay AMERICA'S CLIMATE LEADERS 2023 statistas our world” faise future = Our Commitments Product Grow Our Sustainable Offerings Planet Reduce Our Carbon Footprint People Uplift Our Workers and Communities Forbes 12) AMERICA'S BEST LARGE EMPLOYERS YEAR CHAMPION ™
Slide 30: 2023 Outlook
2023 Outlook 30
Slide 31: 2023 Second Half Sales & Earnings Drivers
2023 Second Half Sales & Earnings Drivers Sales Earnings • Strength of product offering • Higher mix of omni-channel sales • Inflation moderating; improving trend in • Contribution from new high-margin stores consumer demand • Closure of low-margin stores • Contribution of new stores in North Americ
Slide 32: Outlook for Fiscal Year 2023
Outlook for Fiscal Year 20231 • Net sales: ~$2.95 to $3.00 billion ($3.21 billion FY 2022) - U.S. Retail: down high single-digits (comparable sales down low double-digits) - U.S. Wholesale: down high single-digits - International: comparable Fiscal Year • Adjusted operating income: ~$325 to $340 202
Slide 33: Third Quarter 2023 Outlook
Third Quarter 2023 Outlook1 • Outlook assumes: - Continued macroeconomic pressure on consumer demand & cautious wholesale customer inventory commitments - Better price realization and lower ocean freight & product costs driving improved gross margin - SG&A rate deleverage on lower sales - Comparable
Slide 34: Planning a Strong Second Half
Planning a Strong Second Half $ in millions First Half Second Half Year Net Sales (vs. 2022) U.S. Retail (13%) Down HSD to MSD Down HSD U.S. Wholesale (12%) Down MSD to LSD Down HSD International (11%) Up HSD Comparable $1,296 $1,654 - $1,704 $2,950 - $3,000 Consolidated Net Sales (13%) (4%) to (2%)
Slide 35: Thank You!
Thank You! Pa a
Slide 36: Appendix
Appendix 36
Slide 37: Second Quarter 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Second Quarter 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended July 1, 2023 July 2, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 36,824,490 39,344,834 Dilutive effect of equ
Slide 38: First Half 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders
First Half 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders Two Fiscal Quarters Ended July 1, 2023 July 2, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 36,964,509 39,807,354 Dilutive effect of eq
Slide 39: Reconciliation of Adjusted to Reported Earnings
Reconciliation of Adjusted to Reported Earnings1 $ in millions, except EPS Segment Reporting U.S. Retail % of U.S. Wholesale % of International % of Corporate % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Second Quarter of Fiscal 20
Slide 40: 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 SG&A, operating income, income tax, net income, and net income on a di
Slide 41: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Two Fiscal Quarters Ended Quarters Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 July 1, 2023 Net income $23.9 $37.0 $59.9 $104.9 $205.0 Interest expense 8.1 8.7 17.7 23.8 36.7 Interest income
Slide 42: 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 July 1, Currency July 1, July 2, Net Sales Net Sales 2023 Translation 2023 2022 % Change % Change Consolidated net sale
Slide 43: 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 July 2, 2022 738 185 43 966 Openings 24 2 7 33 Closings (5) - (1) (6) Store count at December 31, 2022 757 187 49 993 Openings 17 - 8 25 Closings (11) (1) (7) (19) Store count at July 1, 2023 763 186 50
Slide 44: Forward-looking Statements and Other Information
Forward-looking Statements and Other Information Statements contained in this presentation that are not historical fact and use predictive words such as “estimates”, “outlook”, “guidance”, “expect”, “believe”, “intend”, “designed”, “target”, “plans”, “may”, “will”, “are confident” and similar words