Slide 1: First Quarter 2017 Business Update
First Quarter 2017 Business Update APRIL 27, 2017
Slide 2: First Quarter 2017 Highlights
First Quarter 2017 Highlights $ in millions, except EPS Adjusted Net Sales Operating Income* Adjusted EPS* (Adjusted Operating Margin) +1% (8%) (15%) $94.0 $1.05 $724.1 $732.8 $0.97 $80.1 13.0% of Net Sales 10.9% of Net Sales 2016 2017 2016 2017 2016 2017 • Net sales +1% - Strong eCommerce sales (U.
Slide 3: First Quarter 2017 Net Sales
First Quarter 2017 Net Sales $ in millions +1% $724.1 $9.7 $0.5 ($1.5) $732.8 eCommerce $17.6 eCommerce $1.9 Stores (7.9) Stores (0.1) Wholesale (3.3) Q1 2016 U.S. Retail U.S. Wholesale International Q1 2017 Growth vs. 2016 +3% Comparable (2%) +1% Constant Currency (4%) +1% 3
Slide 4: First Quarter 2017 Adjusted Results
First Quarter 2017 Adjusted Results* $ in millions, except EPS Q1 % of Q1 % of Increase / 2017 Sales 2016 Sales (Decrease) Net sales $732.8 $724.1 1% Gross profit 315.8 43.1% 310.9 42.9% 2% Adjusted SG&A* 246.3 33.6% 228.0 31.5% 8% Royalty income (10.6) (1.4%) (11.1) (1.5%) (5%) Adjusted operating i
Slide 5: First Quarter 2017 Adjusted SG&A
First Quarter 2017 Adjusted SG&A* $ in millions +8% $3.3 $1.1 $1.3 $246.3 $12.6 $228.0 33.6% of 31.5% Net Sales of Net Sales Q1 2016 Retail Skip Hop Marketing Other, net Q1 2017 Investments in new Newly Investments stores, eCommerce acquired to support experience, and business growth omni-channel &
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions 2017 2016 • Q1 2017 balance sheet reflects purchase of Skip Hop Cash $154 $395 Balance Sheet Accounts Receivable 207 193 • Inventory +15% vs. LY (at Q1 end) - Excluding Skip Hop acquisition, net Inventory 435 376 inventories +8% vs. LY, driven by Accounts Pa
Slide 7: Business Segment Performance
Business Segment Performance 7
Slide 8: Adjusted Business Segment Performance
First Quarter Adjusted Business Segment Performance* $ in millions Adjusted Operating Adjusted Operating Net Sales Income (Loss)* Margin* $ $ 2017 2016 Growth 2017 2016 Growth 2017 2016 U.S. Retail (a) $ 364 $ 354 $ 10 $ 30 $ 39 $ (10) 8.2% 11.1% U.S. Wholesale (b) 293 292 1 70 68 1 23.8% 23.4% Inte
Slide 9: Highlights – U.S. Wholesale
First Quarter Highlights – U.S. Wholesale $ in millions Segment Net Sales & Operating Income $292 $293 Comparable to LY Segment Segment Margin $68 $70 Margin 23.4% 23.8% Q1 2016 Q1 2017 Operating Income Net Sales • Sales performance reflects benefit of Skip Hop acquisition, offset in part by lower d
Slide 10: Amazon – Simple Joys Launch
Amazon – Simple Joys Launch 10
Slide 11: Amazon – Simple Joys Launch
Amazon – Simple Joys Launch 11
Slide 12: Highlights – U.S. Retail
First Quarter Highlights – U.S. Retail $ in millions Total Q1 retail comp (3.5%); April YTD approximately +2%1 Segment Net Sales • Sales $354 $364 +3% Stores $78 $96 • Net sales (3%) Retail • Store Comp: (10.4%) Comp - Reflects Easter holiday demand shift to Q2 and lost (3.5%) sales from delays in i
Slide 13: Digital Marketing
Digital Marketing ‘s | OSHKOSH carter's Book | carters’ i ALL NEW little baby basics” baby changes everything... sweet style & design details that make every change easy. 13
Slide 14: Co-branded Store – Orchard Park, NY
Co-branded Store – Orchard Park, NY (opened March 2017) 14
Slide 15: Highlights – International
First Quarter Highlights – International $ in millions Segment Net Sales Net Sales Total • International segment net sales declined (2%) on a $78 $76 Sales reported basis and (4%) in constant currency $6 $8 (2%) - Canada Retail comp: (8.0%) - Skip Hop contributed $3.3 million to segment net $33 $30
Slide 16: China Store Opening – Chongqing
China Store Opening – Chongqing (opened March 2017) 16
Slide 17: Skip Hop Update
Skip Hop Update • Acquired in February 2017 • Integration efforts underway • Contributed $10M to Q1 consolidated net sales • Expect Skip Hop to contribute ~$90M in net sales in 2017 • Modest contribution to earnings in 2017 17
Slide 18: 2017 Outlook
2017 Outlook • Net sales growth of approximately 6% to 8% - Forecasting growth in all segments Q2 2017 (inclusive of Skip Hop contribution) • Adjusted EPS approximately $0.65 to $0.70 (vs. $0.72 LY) • Reaffirming full year guidance - Net sales growth of approximately 4% to 6% - Adjusted EPS growth o
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Slide 20: Appendix
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Slide 21: Reconciliation of Net Income Allocable to Common Shareholders
First Quarter Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended April 1, 2017 April 2, 2016 Weighted-av erage number of common and common equiv alent shares outstanding: Basic number of common shares outstanding 48,322,692 51,176,987 Dilutiv e effect of equity aw ard
Slide 22: Reconciliation of Reported to Adjusted Earnings
First Quarter Reconciliation of Reported to Adjusted Earnings $ in millions, except EPS Corporate % of Gross % of % of Operating % of Net Diluted Operating total First Quarter of Fiscal 2017 Margin sales SG&A sales Income sales Income EPS Expenses net sales As reported (GAAP) $315.8 43.1% $247.8 33.
Slide 23: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Quarters Fiscal Quarter Ended Ended April 1, 2017 April 2, 2016 April 1, 2017 Net income $ 46.7 $ 54.0 $ 250.8 Interest expense 7.1 6.7 27.4 Interest income (0.1) (0.2) (0.5) Tax expense 25.2 29.3 133.8 Depreciation and amorti
Slide 24: Store Count Data
Store Count Data Single-brand Dual-brand U.S. Canada U.S. Carter's U.S. OshKosh U.S. Side-by- Co-branded Co-branded Total Retail Stand-alone Stand-alone Side Format Format Format Stores Store count at April 2, 2016 499 144 107 4 149 903 Openings 20 — 26 15 15 76 Closings (6) (7) — — (1) (14) Convers
Slide 25: 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 27, 2017 which is available at www.carters.com. A