Slide 1: Fourth Quarter / Fiscal Year 2023 Results & Business Update
Fourth Quarter / Fiscal Year 2023 Results & Business Update February 27, 2024
Slide 2: Fourth Quarter 2023 Results (GAAP Basis)
Fourth Quarter 2023 Results (GAAP Basis) $ in millions, except EPS Fourth Fourth Quarter % of Quarter % of 2023 Sales 2022 Sales Change Net sales $858 $912 (6%) Gross profit 418 48.7% 416 45.6% 1% Royalty income 5 0.6% 5 0.6% (12%) SG&A 287 33.4% 302 33.2% (5%) Intangible asset impairment - 9 (100%)
Slide 3: Fiscal Year 2023 Results (GAAP Basis)
Fiscal Year 2023 Results (GAAP Basis) $ in millions, except EPS Fiscal % of Fiscal % of 2023 Sales 2022 Sales Change Net sales $2,946 $3,213 (8%) Gross profit 1,396 47.4% 1,472 45.8% (5%) Royalty income 21 0.7% 26 0.8% (17%) SG&A 1,094 37.1% 1,110 34.6% (1%) Intangible asset impairment - 9 (100%) Op
Slide 4: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS Fourth 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) $136.1 15.9% $138.0 $106.5 $2.90 $109.5 12.0% $100.5 $80.2 $2.11 Benefit f
Slide 5: Fourth Quarter 2023 Performance
Fourth Quarter 2023 Performance Sales Profitability1 Balance Sheet / Cash Flow • Net sales $858M (-6%) • Gross margin 48.7% • Total liquidity $1.2B (+310 bps) • Slow start to quarter • Inventory $537M (-28%) (record warm weather) • Operating income $136M (+15%) ― Profitably sold through substantiall
Slide 6: Fourth Quarter 2023 Adjusted Results
Fourth Quarter 2023 Adjusted Results1 $ in millions, except EPS Fourth Fourth Quarter % of Quarter % of 2023 Sales 2022 Sales Change Net sales $858 $912 (6%) Gross profit 418 48.7% 416 45.6% 1% Royalty income 5 0.6% 5 0.6% (12%) Adjusted SG&A 287 33.5% 302 33.2% (5%) Adjusted operating income 136 15
Slide 7: Fourth Quarter Adjusted Segment Performance
Fourth Quarter Adjusted Segment Performance (2023 vs. 2022) $ in millions Strong consolidated operating margin of 15.9%, +290 bps vs. 2022; margin expansion in each segment Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2023 2022 $ Change 2023 2022 $ Change 2023 2022 U.S. Retail $48
Slide 8: Fourth Quarter Segment Performance
Fourth Quarter Segment Performance1 (2023 vs. 2022) U.S. Retail U.S. Wholesale International • Net sales: -9% • Net sales: -5% • Net sales: +5% ― Slow start to quarter (record ― Conservative inventory ― Strong growth in Mexico warm weather); demand trend commitments by customers, and Brazil improved
Slide 9: Fiscal Year 2023 Adjusted Results
Fiscal Year 2023 Adjusted Results1 $ in millions, except EPS Fiscal % of Fiscal % of 2023 Sales 2022 Sales Change Net sales $2,946 $3,213 (8%) Gross profit 1,396 47.4% 1,472 45.8% (5%) Royalty income 21 0.7% 26 0.8% (17%) Adjusted SG&A 1,090 37.0% 1,110 34.6% (2%) Adjusted operating income 328 11.1%
Slide 10: Fiscal Year Adjusted Segment Performance
Fiscal Year Adjusted Segment Performance (2023 vs. 2022) $ in millions Achieved double-digit operating margin on a consolidated basis and in all segments in 2023 Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2023 2022 $ Change 2023 2022 $ Change 2023 2022 U.S. Retail $1,502 $1,680
Slide 11: Strong Balance Sheet & Cash Flow
Strong Balance Sheet & Cash Flow • Strong liquidity: $1.2 billion • Operating cash flow: ― Cash: $351 million $529 million ― Credit facility availability: ― Improvement vs. LY $846 million Near Record driven by lower Liquidity inventories • No revolver borrowings at Cash Flow year end • No near-term
Slide 12: Carter's is the Market Leader in Young Children's Apparel
Carter’s is the Market Leader in Young Children’s Apparel • #1 share in $32B North American childrenswear market (ages 0-10) Significant ― Carter’s brand #1 (20%) share in Baby (U.S. ages 0 – 2) Brand Equity with Consumers • High consumer sentiment for our brands across multiple generations – qualit
Slide 13: 2024 Outlook
2024 Outlook 13
Slide 14: Multiple Growth Drivers in 2024
Multiple Growth Drivers in 2024 Product Innovation & Brand Marketing • Focus on style and value • Improved marketing effectiveness to • Select price reductions to improve value drive traffic proposition & unit volume − Engaged new media & creative partners • Increasing mix of high-margin, opening −
Slide 15: Driving Growth Through Style and Value
Driving Growth Through Style and Value Deliver Market-Leading Style Enhance Value Proposition • Shifting product mix to lean into style and • Invested in product fits and fabrics to fashion across all categories deliver stronger value • Distort investment in higher-priced special • Select price redu
Slide 16: 2024 Marketing Strategies to Drive Traffic
2024 Marketing Strategies to Drive Traffic Personalization Digital Media Capabilities • Engaged new media & • Drive retention & • Implementing new creative agencies frequency with personalization tools redesigned loyalty powered by AI & • Industry leading program launching machine learning presence
Slide 17: Carter's is the Market Leader in Social Media
Carter’s is the Market Leader in Social Media1 TOTAL INSTAGRAM FOLLOWERS in millions Carter's Gap Kids The Children's Place Disney Baby OshKosh Skip Hop Gymboree Garanimals TOTAL FACEBOOK FOLLOWERS in millions TOTAL TIKTOK FOLLOWERS in thousands Carter's 4.5 Disney Baby 2.8 Carter's 269 The Children
Slide 18: 2024 U.S. Retail Growth & Fleet Optimization Strategies
2024 U.S. Retail Growth & Fleet Optimization Strategies • Side-by-side stores redesigned to differentiate Innovating Baby / Toddler & Kid presentations (~150 doors) Store Formats • Currently testing new formats & Customer ― ‘Best of Baby’ (0 – 5T) Experiences ― Little Planet shop-in-shops • #1 sourc
Slide 19: New Side-by-Side Store Redesign – Baby / Toddler
New Side-by-Side Store Redesign – Baby / Toddler 19
Slide 20: New Side-by-Side Store Redesign – Kid
New Side-by-Side Store Redesign – Kid 20
Slide 21: Testing New Shop-in-Shop Concept
Testing New Shop-in-Shop Concept 21
Slide 22: 2024 U.S. eCommerce Growth Initiatives
2024 U.S. eCommerce Growth Initiatives • Enhancing user experience Personalized Deals Stock Up Focus − Strengthened Mobile App − Personalized homepage & offers − Consolidated deals destination − Always-on gifting • Expanding our capabilities − Optimizing product recommendations & search − Strengthen
Slide 23: 2024 U.S. Wholesale Growth Strategies
2024 U.S. Wholesale Growth Strategies • Largest supplier of young children’s apparel to the largest retailers in the U.S. with over 17,000 points of distribution Unparalleled Market • Strongest relationships with the leading eCommerce retailers Distribution of young children’s apparel Capabilities •
Slide 24: Just One You
Just One You New Spring Fashion at Target 24
Slide 25: Child of Mine
Child of Mine New Baby & Toddler Brand Marketing Launching in >1,600 Walmart stores 25
Slide 26: Simple Joys
Simple Joys Fresh Spring styles for Baby, Toddler and Kids on Amazon 26
Slide 27: International Growth Strategies
International Growth Strategies Canada Mexico Beyond North America • #1 market share • Opening 8 larger co- • Wholesale relationships branded stores in 2024 with ~40 partners in nearly • Benefit from full rollout of 100 countries omnichannel capabilities • Store square footage expected to more than
Slide 28: 2024 Fiscal Year Outlook
2024 Fiscal Year Outlook1 • Net sales: low single-digit growth to ~$3.0 billion ($2.95 billion in fiscal 2023) U.S. Retail U.S. Wholesale International Net Sales +LSD +LSD Comparable to 2023 Comparable sales +LSD Profitability Adjusted Operating Income Diluted EPS Operating Cash Flow CapEx Cash Flow
Slide 29: 2024 Q1 Outlook
2024 Q1 Outlook1 • Net sales: ~$620 – $645 million ($696 million Q1 2023) Net Sales U.S. Retail U.S. Wholesale International Down MSD to HSD Down mid-teens Down LSD to MSD Comparable sales down MSD to HSD (Timing of demand) Adjusted Operating Income Adjusted Diluted EPS Profitability ~$35 to $40 mil
Slide 30: Thank You!
Thank You! 30
Slide 31: Appendix
Appendix 31
Slide 32: 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 30, 2023 December 31, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 35,992,362 37,453,066 Dilutive effect o
Slide 33: 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 30, 2023 December 31, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 36,589,922 38,822,737 Dilutive effect of equi
Slide 34: Reconciliation of Adjusted to Reported Earnings
Reconciliation of Adjusted to Reported Earnings $ 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 Fiscal
Slide 35: 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 36: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Fiscal Quarter Ended Fiscal Year Ended December 30, December 31, December 30, December 31, 2023 2022 2023 2022 Net income $106.5 $80.2 $232.5 $250.0 Interest expense 7.6 9.3 34.0 42.8 Interest income (2.0) (0.4) (4.8) (1.3) Tax expense 31
Slide 37: Net Sales Constant Currency Reconciliation
Net Sales 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 30, Currency December 30, December 31, Net Sales Net Sales 2023 Translation 2023 2022 % Change % Cha
Slide 38: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Operating Cash Flow to Free Cash Flow $ in millions Fiscal Year Cumulative 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (2014 - 2023) Operating Cash Flow $282 $308 $369 $330 $356 $387 $588 $268 $88 $529 $3,507 Capital Expenditures (103) (103) (89) (69) (64) (61) (33) (37) (40)
Slide 39: Planning Continued Store Growth in North America in 2024
Planning Continued Store Growth in North America in 2024 U.S. Canada Mexico Total Store count at December 31, 2022 757 187 49 993 Openings 48 4 13 65 Closings (13) (3) (8) (24) Store count at December 30, 2023 792 188 54 1,034 2024 Forecast Openings 40 7 8 55 Closings (30) (7) (3) (40) Estimated sto
Slide 40: 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