Slide 1: Fourth Quarter and Fiscal Year 2024 Business Update
FOURTH QUARTER AND FISCAL YEAR 2024 BUSINESS UPDATE FEBRUARY 25, 2025
Slide 2: Fourth Quarter 2024 Results
FOURTH QUARTER 2024 RESULTS GAAP BASIS $ in millions, except EPS Fourth Fourth Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $860 $858 -- Gross profit 411 47.8% 418 48.7% (2%) Royalty income, net 4 0.5% 5 0.6% (11%) SG&A 302 35.1% 287 33.4% 5% Intangible asset impairment 30 - n/m1
Slide 3: Fiscal Year 2024 Results
FISCAL YEAR 2024 RESULTS GAAP BASIS $ in millions, except EPS Fiscal Year Fiscal Year 2024 % of Sales 2023 % of Sales Change Net sales $2,844 $2,946 (3%) Gross profit 1,365 48.0% 1,396 47.4% (2%) Royalty income, net 19 0.7% 21 0.7% (10%) SG&A 1,100 38.7% 1,094 37.1% 1% Intangible asset impairment 30
Slide 4: Non-GAAP Adjustments
NON-GAAP ADJUSTMENTS1 $ in millions, except EPS Fourth Quarter 2024 2023 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) $83.2 9.7% $75.8 $61.5 $1.71 $136.1 15.9% $138.0 $106.5 $2.90 Organization
Slide 5: We Achieved Our Fourth Quarter Sales & Earnings Objectives
WE ACHIEVED OUR FOURTH QUARTER SALES & EARNINGS OBJECTIVES $ in millions, except EPS Q4 Results Guidance1 Net sales $860 ✓ $800 - $840 U.S. Retail Down 3% ✓ Down HSD to LDD U.S. Wholesale Up 7% ✓ Up MSD to HSD International Down 2% ✓ Down MSD to HSD Operating income2 $115 ✓ $70 - $90 Operating margi
Slide 6: Fourth Quarter 2024 Results
FOURTH QUARTER 2024 RESULTS $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -% (15%) (13%) vs. vs. vs. 2023 2023 2023 $858 $860 $136 $2.76 $115 $2.39 15.9% 13.4% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP measur
Slide 7: Adjusted Fourth Quarter 2024 Results
ADJUSTED FOURTH QUARTER 2024 RESULTS 1 $ in millions, except EPS Fourth Fourth Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $860 $858 -- Gross profit 411 47.8% 418 48.7% (2%) Royalty income, net 4 0.5% 5 0.7% (11%) SG&A 300 34.9% 287 33.5% (5%) Operating income 115 13.4% 136 15.9
Slide 8: Fourth Quarter 2024 Segment Results
FOURTH QUARTER 2024 SEGMENT RESULTS $ in millions Net Sales Operating Income Operating Margin 2024 2023 Change 2024 2023 Change 2024 2023 U.S. Retail $466 $480 ($14) $73 $88 ($14) 15.7% 18.2% U.S. Wholesale 265 247 18 54 52 2 20.5% 21.0% International 128 131 (3) 21 22 (1) 16.4% 16.6% Total before 8
Slide 9: Fourth Quarter U.S. Retail Performance
FOURTH QUARTER U.S. RETAIL PERFORMANCE Investments in PRICING, MARKETING, and EXPERIENCES in 2H drove significant trend changes in our U.S. Retail business • Store and eCommerce Conversion Rates U.S. Retail Comparable Sales • Total Unit Sales and 1H Q3 Q4 Units per Transaction -3% • Total Active, Ne
Slide 10: Fourth Quarter U.S. Wholesale & International Performance
FOURTH QUARTER U.S. WHOLESALE & INTERNATIONAL PERFORMANCE 2024 VS. 2023 • Net sales: +7% ― Strong growth with Exclusive Brands (+20%) U.S. ― Lower shipments to Department Stores Wholesale ― Lower Off-Price channel sales due to low excess inventory position • Operating margin 20.5% (-50 bps vs. LY) %
Slide 11: Fiscal Year 2024 Results
FISCAL YEAR 2024 RESULTS $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (3%) (13%) (6%) vs. vs. vs. 2023 2023 2023 $2,946 $328 $6.19 $2,844 $5.81 $287 11.1% 10.1% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP meas
Slide 12: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW $ in millions Balance Sheet (Year End) Cash Flow & Return of Capital (Fiscal Year) 2024 2023 2024 2023 Cash $413 $351 Operating cash flow $299 $529 Accounts receivable, net 195 184 Capital expenditures (56) (60) Inventory, net 502 537 Free cash flow2 $243 $469 Accounts paya
Slide 13: Product & Marketing Initiatives
PRODUCT & MARKETING INITIATIVES 13
Slide 14: Our Customer
OUR CUSTOMER PURCHASE DRIVERS • Moms with 2 young children Quality Style / on trend • $80K average household income • Increasingly Gen Z and Value Comfort Multicultural • Highly engaged and savvy SHOPS OUR BRANDS purchasers, shopping 6+ times ACROSS MULTIPLE per year for kids’ clothes RETAILERS • Us
Slide 15: Our Focus
OUR FOCUS KEY PRODUCT STRATEGIES PRODUCT • Modernize assortments with Elevate Style & Value of relevant style Our Product Offerings • Expand our House of Brands • Increase breadth and depth in strategic categories MARKETING BRAND REACH Deepen Our Customer Leverage Our • Improve operational efficienc
Slide 16: Style Trends for 2025
STYLE TRENDS FOR 2025 16
Slide 17: House of Brands
HOUSE OF BRANDS New Toddler Brand coming Fall 2025 17
Slide 18: PurelySoft Collection
PURELYSOFT COLLECTION < carters) Carter's @ Sponsored - @ Shop dreamy-soft PurelySoft™ styles featuring new prints, colors & more to choose from O08 270 (C) Write a comment...
Slide 19: Little Planet Growth
LITTLE PLANET GROWTH • Meaningful growth in 2024 (+19%) • 30 new shop-in-shops in Q1 2025 • Expanding Toddler and Kid size segments • Planning double-digit Retail growth in 2025 19
Slide 20: Kid Fashion
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Slide 21: Carter's Rewards and Personalization
CARTER’S REWARDS AND PERSONALIZATION Personalized Messaging Exclusive Offers Age & Stage Based Content 21
Slide 22: Engaging the Next Generation Consumer
ENGAGING THE NEXT GENERATION CONSUMER NEW YORK FASHION WEEK • First ever New York Fashion Week event focused on trend-driven collections and fashion-forward looks • Attendees focused on media and influencers • Drove 6.6M social impressions INFLUENCERS • Gen Z consumers trust influencers at a higher
Slide 23: Mobile First Innovation
MOBILE FIRST INNOVATION • Strong growth in Mobile communications revenue • New Discover and Deals tabs create engaging experiences • New personalized offer experiences • Omnichannel penetration ~40% of digital orders • Mobile app ~30% of total eCommerce sales 23
Slide 24: Record Year with Exclusive Brands
RECORD YEAR WITH EXCLUSIVE BRANDS 24
Slide 25: Business Assessment & Growth Priorities
BUSINESS ASSESSMENT & GROWTH PRIORITIES 25
Slide 26: Our Competitive Differentiators
OUR COMPETITIVE DIFFERENTIATORS • Carter’s is the most trusted brand in young children’s apparel • History of successful brand creation and product innovation • Unique multi-channel model with 20,000 points of distribution globally • Unequaled relationships with the largest retailers of children’s a
Slide 27: The Performance of Our Business Has Been Challenging in the Post-Pandemic Period
THE PERFORMANCE OF OUR BUSINESS HAS BEEN CHALLENGING IN THE POST-PANDEMIC PERIOD Factors U.S. Retail Comparable Sales • Modest annual growth in U.S. 19% childrenswear market ages 0-10 (<1% CAGR 2019 - 2024) 0% • Changing demographics – decline in birth rate -7% -10% -12% -13% • Strengthening appeal
Slide 28: Going Forward
GOING FORWARD • Appeal to next generation consumer ― Style-oriented & digitally native ― Increasingly multicultural • Increase product & brand relevance ― Modernize style ― Expand our House of Brands ― Invest in strategic categories • Maintain credibility and competitiveness in value • Enhance the p
Slide 29: Outlook
2025 OUTLOOK 29
Slide 30: Fiscal Year 2025 Outlook
FISCAL YEAR 2025 OUTLOOK (53 WEEK YEAR) NET SALES • Net sales: $2.780 billion to $2.855 billion (FY2024: $2.844 billion) U.S. Retail U.S. Wholesale International Comparable to down MSD Up LSD to down LSD Up LSD to comparable Comp sales down LSD to MSD PROFITABILITY & CASH FLOW Adjusted1 Operating In
Slide 31: First Quarter 2025 Outlook
FIRST QUARTER 2025 OUTLOOK NET SALES • Consolidated net sales: $615 million to $625 million (Q1 2024: $661 million) U.S. Retail U.S. Wholesale International Down MSD to HSD Down HSD Down MSD Comp sales down MSD to HSD PROFITABILITY1 Adjusted Operating Income Adjusted Diluted EPS $30 million to $35 m
Slide 32: Thank You
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Slide 33: Supplemental Information
SUPPLEMENTAL INFORMATION 33
Slide 34: Adjusted Fiscal Year 2024 Results
ADJUSTED FISCAL YEAR 2024 RESULTS 1 $ in millions, except EPS Fiscal Year Fiscal Year 2024 % of Sales 2023 % of Sales Change Net sales $2,844 $2,946 (3%) Gross profit 1,365 48.0% 1,396 47.4% (2%) Royalty income, net 19 0.7% 21 0.7% (10%) SG&A 1,098 38.6% 1,090 37.0% (1%) Operating income 287 10.1% 3
Slide 35: Fiscal Year 2024 Segment Results
FISCAL YEAR 2024 SEGMENT RESULTS $ in millions Net Sales Operating Income Operating Margin 2024 2023 Change 2024 2023 Change 2024 2023 U.S. Retail $1,417 $1,502 ($85) $133 $191 ($58) 9.4% 12.7% U.S. Wholesale 1,021 1,015 7 217 199 18 21.2% 19.6% International 406 429 (24) 39 45 (6) 9.6% 10.5% Total
Slide 36: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Income % of Operating % of Tax Net Diluted Fourth Quarter of Fiscal 2024 SG&A net sales Income net sales Provision Income EPS As reported (GAAP) $302.1 35.1% $83.2 9.7% $14.3 $61.5 $1.71 Organizational restructuring (b) (1.8)
Slide 37: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Income % of Operating % of Tax Net Diluted Fourth Quarter of Fiscal 2023 SG&A net sales Income net sales Provision Income EPS As reported (GAAP) $287.0 33.4% $136.1 15.9% $31.4 $106.5 $2.90 Benefit from credit card settlement
Slide 38: Reconciliation of Total Segment Operating Income to Consolidated Operating Income
RECONCILIATION OF TOTAL SEGMENT OPERATING INCOME TO CONSOLIDATED OPERATING INCOME $ in millions Fiscal Quarter Ended Fiscal Year Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 % of % of % of % of net sales net sales net sales net sales Total segment operating income (a
Slide 39: Reconciliation of Net Income to Adjusted EBITDA
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA $ in millions Fiscal Quarter Ended Fiscal Year Ended December 28, December 30, December 28, December 30, 2024 2023 2024 2023 Net income $61.5 $106.5 $185.5 $232.5 Interest expense 8.2 7.6 31.3 34.0 Interest income (2.4) (2.0) (11.0) (4.8) Tax expense 1
Slide 40: 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 Weighted-average number of common and common equivalent shares outstanding: December 28, 2024 December 30, 2023 Basic number of common shares outstanding 35,246,887 35,992,362 Dilutive effect o
Slide 41: 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 Weighted-average number of common and common equivalent shares outstanding: December 28, 2024 December 30, 2023 Basic number of common shares outstanding 35,524,378 36,589,922 Dilutive effect of equi
Slide 42: Net Sales Constant Currency Reconciliation
NET SALES CONSTANT CURRENCY RECONCILIATION $ in millions Fiscal Quarter Ended Constant- Reported Net Impact of Currency Net Reported Net Constant- Sales Foreign Sales Sales Reported Currency December 28, Currency December 28, December 30, Net Sales Net Sales % 2024 Translation 2024 2023 % Change Cha
Slide 43: 2024 Store Count Reconciliation
2024 STORE COUNT RECONCILIATION U.S. Canada Mexico Total Store count at December 30, 2023 792 188 54 1,034 Openings 41 9 12 62 Closings (29) (6) (4) (39) Store count at December 28, 2024 804 191 62 1,057 43
Slide 44: 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