Slide 1: Second Quarter 2024 Business Update
SECOND QUARTER 2024 BUSINESS UPDATE JULY 26, 2024
Slide 2: Second Quarter & First Half Results
SECOND QUARTER & FIRST HALF RESULTS 2
Slide 3: Second Quarter 2024 Results (GAAP Basis)
SECOND QUARTER 2024 RESULTS GAAP BASIS $ in millions, except EPS Second Second Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $564 $600 (6%) Gross profit 283 50.1% 292 48.6% (3%) Royalty income 4 0.7% 4 0.7% (8%) SG&A 247 43.8% 259 43.1% (4%) Operating income 39 7.0% 38 6.3% 5% Int
Slide 4: First Half 2024 Results (GAAP Basis)
FIRST HALF 2024 RESULTS GAAP BASIS $ in millions, except EPS First Half First Half 2024 % of Sales 2023 % of Sales Change Net sales $1,226 $1,296 (5%) Gross profit 598 48.8% 601 46.4% (1%) Royalty income 9 0.8% 11 0.9% (15%) SG&A 513 41.8% 518 40.0% (1%) Operating income 94 7.7% 94 7.2% 1% Interest
Slide 5: Non-GAAP Adjustments
NON-GAAP ADJUSTMENTS • No adjustments to second quarter and first half 2024 results • Adjustments to second quarter and first half 2023 results are shown below $ in millions, except EPS Second Quarter 2023 Operating % Net Pre-Tax Net Diluted Income Sales Income Income EPS As reported (GAAP) $37.6 6.
Slide 6: We Achieved Our Second Quarter Sales & Earnings Objectives
WE ACHIEVED OUR SECOND QUARTER SALES & EARNINGS OBJECTIVES $ in millions, except EPS Q2 Results Guidance1 Net sales $565 ✓ $560 - $570 U.S. Retail Down 10% ✘ Down MSD to HSD U.S. Wholesale Up 3% ✓ Down LSD to MSD International Down 9% ✘ Down MSD to HSD Operating income $39 ✓ $25 - $30 Operating marg
Slide 7: Second Quarter 2024 Performance
SECOND QUARTER 2024 PERFORMANCE $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (6%) +4% +19% vs. vs. vs. 2023 2023 2023 $600 $39 $0.76 $38 $564 $0.64 6.3% 7.0% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP measure
Slide 8: Second Quarter 2024 Results (Adjusted Basis)
SECOND QUARTER 2024 RESULTS ADJUSTED BASIS1 $ in millions, except EPS Second Second Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $564 $600 (6%) Gross profit 283 50.1% 292 48.6% (3%) Royalty income 4 0.7% 4 0.7% (8%) Adjusted SG&A 247 43.8% 258 43.0% (4%) Adjusted operating income
Slide 9: First Half 2024 Performance
FIRST HALF 2024 PERFORMANCE $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (5%) (1%) +11% vs. vs. vs. 2023 2023 2023 $1,296 $95 $1.80 $1,226 $94 $1.62 7.4% 7.7% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP measur
Slide 10: First Half 2024 Results (Adjusted Basis)
FIRST HALF 2024 RESULTS ADJUSTED BASIS1 $ in millions, except EPS First Half First Half 2024 % of Sales 2023 % of Sales Change Net sales $1,226 $1,296 (5%) Gross profit 598 48.8% 601 46.4% (1%) Royalty income 9 0.8% 11 0.8% (15%) Adjusted SG&A 513 41.8% 517 39.9% (1%) Adjusted operating income 94 7.
Slide 11: Business Segment Performance
BUSINESS SEGMENT PERFORMANCE 11
Slide 12: Second Quarter 2024 Segment Performance
SECOND QUARTER 2024 SEGMENT PERFORMANCE $ in millions Adjusted Operating Adjusted Net Sales Income1 Operating Margin1 2024 2023 $ Change 2024 2023 $ Change 2024 2023 U.S. Retail $290 $323 ($33) $18 $28 ($10) 6.2% 8.8% U.S. Wholesale 193 187 6 36 29 7 18.8% 15.7% International 81 90 (9) 6 7 (1) 6.8%
Slide 13: Second Quarter Segment Performance
SECOND QUARTER SEGMENT PERFORMANCE 2024 vs. 2023 | ADJUSTED BASIS U.S. RETAIL U.S. WHOLESALE INTERNATIONAL • Net sales: -10% (units -10%) • Net sales: +3% (units +7%) • Net sales: -10% (units -9%) ― Slow start to quarter ― Earlier and higher than ― High teens growth in Mexico (earlier Easter, late a
Slide 14: First Half 2024 Segment Performance
FIRST HALF 2024 SEGMENT PERFORMANCE $ in millions Adjusted Operating Adjusted Net Sales Income1 Operating Margin1 2024 2023 $ Change 2024 2023 $ Change 2024 2023 U.S. Retail $598 $647 ($49) $32 $55 ($22) 5.4% 8.4% U.S. Wholesale 457 467 (10) 100 81 19 21.8% 17.3% International 171 182 (11) 8 10 (2)
Slide 15: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW $ in millions Balance Sheet (Q2 End) Cash Flow (First Half) 2024 2023 2024 2023 Cash $317 $175 Operating cash flow $92 $209 Accounts receivable, net 132 133 Capital expenditures (24) (26) Inventory, net 599 682 Free cash flow2 $67 $183 Accounts payable 314 281 Dividends $59
Slide 16: Progress with Growth Strategies
PROGRESS WITH GROWTH STRATEGIES 16
Slide 17: Strategic Priorities
STRATEGIC PRIORITIES PRODUCT Elevate Style & Value MARKETING BRAND REACH Deepen Our Customer Leverage Our Relationships Unparalleled Multi-channel Market Presence 17
Slide 18: #1 Best Overall Baby Clothes Brand
#1 BEST OVERALL BABY CLOTHES BRAND1 1 By Reviewed / USA Today (7/22/24). Source: https://reviewed.usatoday.com/parenting/best- right-now/best-baby-clothes-brands-2024#carters-review 18
Slide 19: Carter's Elevated Baby Collection
CARTER’S ELEVATED BABY COLLECTION 19
Slide 20: OshKosh New Back to School Fashion
OSHKOSH NEW BACK TO SCHOOL FASHION 20 20
Slide 21: Growing Our Eco-Friendly Little Planet Brand
GROWING OUR ECO-FRIENDLY LITTLE PLANET BRAND Forecasting double-digit growth in 2024 • Little Planet customers have +78% visit frequency • Expanded Toddler and Kid offerings • Planning 200 additional points of distribution in 2024 21
Slide 22: Strong Consumer Response to New PurelySoft Collection
STRONG CONSUMER RESPONSE TO NEW PurelySoft COLLECTION • Soft, stretchy silhouettes made with eco-responsible materials • ‘Affordable premium’ positioning • PurelySoft consumers spending >2x average transaction • Q2 net sales more than doubled vs. LY 22
Slide 23: Exceptional Value Every Day
EXCEPTIONAL VALUE EVERY DAY 23
Slide 24: Exclusive Brands Assortment
EXCLUSIVE BRANDS ASSORTMENT 24
Slide 25: Market-Leading Loyalty Program
MARKET-LEADING LOYALTY PROGRAM • Relaunch of U.S. Retail loyalty program well-received by customers • Nearly 90% of transactions are with customers in our loyalty program • Reward earnings faster to drive frequency • New VIP tier growing best customers • New technology enables personalized offers 25
Slide 26: Improved Personalization Capabilities
IMPROVED PERSONALIZATION CAPABILITIES A JOURNEY FOR EVERY CUSTOMER INSTAGRAM AD AMY: EXPECTING MOM • Due in 3 months • Searched baby gear • Style Customer PERSONALIZED LANDING PAGE COMMUNICATIONS PERSONALIZED OFFERS 26
Slide 27: Launching New Brand Campaign
LAUNCHING NEW BRAND CAMPAIGN ‘MORE THAN JUST CUTE’ STREAMING TV / ONLINE VIDEO SOCIAL MEDIA SOCIAL MEDIA BILLBOARD ADVERTISING 27
Slide 28: Strengthening the Store Experience
STRENGTHENING THE STORE EXPERIENCE NEW FORMATS AND REMODELS STORES ARE AN IMPORTANT COMPONENT OF OUR GROWTH STRATEGY • Best experience with our brands • #1 source of new customer acquisition • Extend reach of our brands • High return on investment KEY INITIATIVES Optimizing U.S. fleet • Open high-ma
Slide 29: Innovative Flagship Store Opening in Fall
INNOVATIVE FLAGSHIP STORE OPENING IN FALL ATLANTA, GEORGIA Reimagined, elevated shopping experience that showcases our house of brands 29
Slide 30: New Little Planet Store Opening November
NEW LITTLE PLANET STORE OPENING NOVEMBER ANDARES MALL | GUADALAJARA, MEXICO 30
Slide 31: Unparalleled Relationships with the World's Largest Retailers
UNPARALLELED RELATIONSHIPS WITH THE WORLD’S LARGEST RETAILERS 31
Slide 32: Tailoring Our Strategies to Support Unique Needs of Our Wholesale Customers
TAILORING OUR STRATEGIES TO SUPPORT UNIQUE NEEDS OF OUR WHOLESALE CUSTOMERS 32
Slide 33: 2024 Outlook
2024 OUTLOOK a Bios) ad t iu 1 ¥ 9 ui #« \ r} owt 33
Slide 34: Market Conditions Have Weakened Since April
MARKET CONDITIONS HAVE WEAKENED SINCE APRIL • Majority of Americans living paycheck to paycheck1 • Cost of living remains elevated1 • Record revolving consumer credit ($1.3T)2 • Mortgage rates remain elevated (6.8% 30-year)3 • Record home prices4 • Declining consumer sentiment University of Michigan
Slide 35: Families Burdened by Meaningful Cost Increases Since 2019
FAMILIES BURDENED BY MEANINGFUL COST INCREASES SINCE 2019 Shelter Food Gasoline +24% +27% +35% Energy Motor Vehicle Day Care & +35% Insurance Preschool +47% +19% Source: U.S. Bureau of Labor Statistics (data.bls.gov) Note: Index change measured June 2024 vs. December 2019 35
Slide 36: Second Half 2024 Guidance Revision
SECOND HALF 2024 GUIDANCE REVISION REVISED vs. APRIL OUTLOOK $ in millions, except EPS Revised Guidance April Guidance Net sales $1,560 - $1,600 $1,729 - $1,769 U.S. Retail -HSD to -LDD +LSD to +HSD U.S. Wholesale + MSD to +HSD +HSD International -MSD to -HSD +LSD Operating income $146 - $166 $248 -
Slide 37: 2024 Fiscal Year Outlook
2024 FISCAL YEAR OUTLOOK NET SALES • Net sales: $2.785 billion to $2.825 billion (FY2023: $2.95 billion) U.S. Retail U.S. Wholesale International Down HSD to LDD +LSD Down MSD to HSD Comp sales down HSD to LDD PROFITABILITY, CASH FLOW & INVESTMENTS Adjusted Operating Income Diluted EPS Operating Cas
Slide 38: 2024 Third Quarter Outlook
2024 THIRD QUARTER OUTLOOK1 NET SALES • Consolidated net sales: $735 million to $755 million (Q3 2023: $792 million) U.S. Retail U.S. Wholesale International Down HSD to LDD Comparable to down Down MSD to HSD Comp sales -9% to -12% LSD (Comp sales Q3 to date -11%; YTD – 10%) PROFITABILITY Adjusted O
Slide 39: Thank You
THANK YOU 39
Slide 40: Supplemental Information
SUPPLEMENTAL INFORMATION 40
Slide 41: Second Quarter Reconciliation of Adjusted Net Income Allocable to Common Shareholders
SECOND QUARTER RECONCILIATION OF ADJUSTED NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS Fiscal Quarter Ended Weighted-average number of common and common equivalent shares outstanding: June 29, 2024 July 1, 2023 Basic number of common shares outstanding 35,688,755 36,824,490 Dilutive effect of equity
Slide 42: First Half Reconciliation of Adjusted Net Income Allocable to Common Shareholders
FIRST HALF RECONCILIATION OF ADJUSTED NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS Fiscal Quarter Ended Weighted-average number of common and common equivalent shares outstanding: June 29, 2024 July 1, 2023 Basic number of common shares outstanding 35,774,748 36,964,509 Dilutive effect of equity awar
Slide 43: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Segment Reporting U.S. % of Income U.S. Retail % of Wholesale % of International % of Corporate % of % of Operating net Tax Net Diluted Operating segment Operating segment Operating segment Operating total Second Quarter of Fi
Slide 44: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Income % of Operating % of Tax Net Diluted Third Quarter of Fiscal 2023 SG&A net sales Income net sales Provision Income EPS As reported (GAAP) $288.7 36.5% $93.4 11.8% $19.2 $66.1 $1.78 Organizational restructuring (b) (2.9)
Slide 45: 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 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 Net income $27.6 $23.9 $65.7 $59.9 $238.3 Interest expense 7.9 8.1 15.8 17.7 32.0 Interest incom
Slide 46: Net Sales Constant Currency Reconciliation
NET SALES CONSTANT CURRENCY RECONCILIATION $ in millions Fiscal Quarter Ended Impact of Constant- Constant- Reported Net Foreign Currency Net Reported Net Reported Currency Sales Currency Sales Sales Net Sales Net Sales % June 29, 2024 Translation June 29, 2024 July 1, 2023 % Change Change Consolida
Slide 47: Store Count Reconciliation
STORE COUNT RECONCILIATION U.S Canada Mexico Total Store count at July 1, 2023 763 186 50 999 Openings 31 4 5 40 Closings (2) (2) (1) (5) Store count at December 30, 2023 792 188 54 1,034 Openings 15 3 1 19 Closings (18) (5) (3) (26) Store count at June 29, 2024 789 186 52 1,027 Balance of 2024 Fore
Slide 48: Forward Looking Statements and Other Information
FORWARD LOOKING STATEMENTS AND OTHER INFORMATION Statements 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 are forwar
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