Slide 1: Third Quarter Fiscal 2022 Results & Business Update
Third Quarter Fiscal 2022 Results & Business Update October 28, 2022
Slide 2: Third Quarter 2022 Results (GAAP Basis)
Third Quarter 2022 Results (GAAP Basis) $ in millions, except EPS Q3 % of Q3 % of 2022 Sales 2021 Sales Change Net sales $819 $891 (8%) Gross profit 371 45.3% 409 45.9% (9%) Royalty income 7 0.9% 8 0.9% (14%) SG&A 286 35.0% 293 32.9% (2%) Operating income 92 11.2% 124 13.9% (26%) Interest and other,
Slide 3: Third Quarter Year-to-Date 2022 Results (GAAP Basis)
Third Quarter Year-to-Date 2022 Results (GAAP Basis) $ in millions, except EPS Q3 YTD % of Q3 YTD % of 2022 Sales 2021 Sales Change Net sales $2,301 $2,424 (5%) Gross profit 1,057 45.9% 1,169 48.2% (10%) Royalty income 20 0.9% 23 0.9% (10%) SG&A 808 35.1% 833 34.4% (3%) Operating income 270 11.7% 35
Slide 4: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS Third Quarter 2022 2021 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) $91.6 11.2% $80.9 $65.0 $1.67 $124.0 13.9% $108.3 $85.0 $1.93 COVID-19 expe
Slide 5: Third Quarter 2022 Performance
Third Quarter 2022 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -8% vs. -26% vs. -13% vs. 2021 2021 2021 $124 $1.93 $891 $819 $1.67 $92 13.9% 11.2% of of Net Sales Net Sales 2021 2022 2021 2022 2021 2022 1 Certain measur
Slide 6: Third Quarter Year-to-Date 2022 Performance
Third Quarter Year-to-Date 2022 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -5% vs. -26% vs. -17% vs. 2021 2021 2021 $2,423 $363 $5.58 $2,301 $4.64 $270 15.0% 11.7% of of Net Sales Net Sales 2021 2022 2021 2022 2021 202
Slide 7: Third Quarter 2022 Adjusted Results
Third Quarter 2022 Adjusted Results1 $ in millions, except EPS Q3 % of Q3 % of 2022 Sales 2021 Sales Change Net sales $819 $891 (8%) Gross profit 371 45.3% 409 45.9% (9%) Royalty income 7 0.9% 8 0.9% (14%) Adjusted SG&A 286 35.0% 293 32.9% (2%) Adjusted operating income 92 11.2% 124 13.9% (26%) Inte
Slide 8: Third Quarter Year-to-Date 2022 Adjusted Results
Third Quarter Year-to-Date 2022 Adjusted Results1 $ in millions, except EPS Q3 YTD % of Q3 YTD % of 2022 Sales 2021 Sales Change Net sales $2,301 $2,424 (5%) Gross profit 1,057 45.9% 1,169 48.2% (10%) Royalty income 20 0.9% 23 0.9% (10%) Adjusted SG&A 808 35.1% 829 34.2% (3%) Adjusted operating inco
Slide 9: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow $ in millions Balance Sheet Cash Flow (Q3 End) (Q3 Year to Date) 2022 2021 2022 2021 Operating cash flow ($217) $7 Cash $122 $943 Capital expenditures (27) (29) Accounts receivable 266 261 Free cash flow 1 ($244) ($21) Inventory 899 722 2022 2021 Accounts payable 318 389 Sh
Slide 10: Third Quarter 2022 Results – Inventory
Third Quarter 2022 Results – Inventory $ in millions +24% $45 $899 $48 $84 $722 Ordered product earlier to Q3 Net mitigate supply Inventory chain delays vs. LY Q3 2021 Pack & Hold Earlier Ownership Higher Product Q3 2022 Costs • Actions taken to align inventory with planned demand - Canceled/reduced
Slide 11: Business Segment Performance
Business Segment Performance 11
Slide 12: Third Quarter Adjusted Segment Performance
Third Quarter Adjusted Segment Performance (2022 vs. 2021) $ in millions Decrease in profitability vs. 2021 reflects lower consumer demand and expense deleverage Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022 2021 U.S. Retail $408 $466 ($58
Slide 13: Third Quarter 2022 Segment Performance
Third Quarter 2022 Segment Performance (vs. 2021) U.S. Retail U.S. Wholesale International • Net sales -12% • Net sales -2% • Net sales -7% ― Macro conditions adversely ― Exclusive Brands +5% ― Canada -11% affected demand ― Lower replenishment demand ― Mexico +13% • Total comp sales -11% ― Supply ch
Slide 14: Expanded Little Planet Distribution in Q3
Expanded Little Planet Distribution in Q3 Eco-friendly brand presence has grown to over 750 stores in U.S. and Canada 14
Slide 15: New Carter's Just One You Branding
New Carter’s Just One You Branding at 15
Slide 16: New Carter's Child of Mine Brand Marketing
New Carter’s Child of Mine Brand Marketing at 16
Slide 17: Simple Joys Featured in Amazon's October Prime Early Access Sale
Simple Joys Prominently Featured in Amazon’s October Prime Early Access Sale Amazon Homepage Simple Joys Brand Store 17
Slide 18: Exciting Collaboration With Hilary Duff
Exciting Collaboration With Hilary Duff 18
Slide 19: Planning ~20 New U.S. Store Openings in Q4
Planning ~20 New U.S. Store Openings in Q4 • Stores are an important component of our DTC growth agenda ˗ Plan to open ~100 stores (net) over next 5 years • ~70% of children’s apparel in U.S. market is sold in stores • #1 source of our new customer acquisition • Stores play a key role in our omnicha
Slide 20: Kicking Off The Holiday Shopping Season
Kicking Off The Holiday Shopping Season 20
Slide 21: Carter's Continues to Lead in Social Media
Carter’s Continues to Lead in Social Media Our Brands Have a Strong Following Growing Engagement on TikTok2 on Social Media1 In millions Instagram Followers Carter's 2.3 Gap Kids 1.3 Disney Baby 1.0 The Children's Place 1.0 OshKosh 0.8 Skip Hop 0.5 Janie and Jack 0.5 Gymboree 0.4 Stride Rite 0.1 Gar
Slide 22: Growing in Mexico
Growing in Mexico Company Operations • Q3 net sales +13% • Multi-channel operations (stores, eCommerce, wholesale) • 44 stores at Q3 end • Plan to triple store square footage by end of 2026 by opening larger, co-branded stores 22
Slide 23: 2022 Outlook
2022 Outlook 23
Slide 24: Fourth Quarter Outlook
Fourth Quarter Outlook Challenges Encouraged By • Demand may continue to be challenging • Holiday product and marketing as consumers struggle with historic and persistent inflation • Meaningfully improved mix and level of inventory position vs. LY • Improved supply chain performance but not yet back
Slide 25: Fourth Quarter Outlook
Fourth Quarter Outlook1 • Net sales: ~$845 million to $885 million ― U.S. Retail comparable sales decline of 10 – 15% ― Lower U.S. Wholesale sales, reflecting risk of lower demand & supply chain delays ― Lower International sales, driven largely by lower demand in Canada and lower Q4 wholesale deman
Slide 26: Thank You!
Thank You!
Slide 27: Appendix
Appendix 27
Slide 28: Third Quarter Year-to-Date Adjusted Segment Performance vs. 2021
Third Quarter Year-to-Date Adjusted Segment Performance vs. 2021 $ in millions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022 2021 U.S. Retail $1,154 $1,296 ($143) $163 $250 ($86) 14.2% 19.3% U.S. Wholesale 820 809 11 134 152 (18) 16.4% 18.
Slide 29: Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Third Quarter Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended October 1, 2022 October 2, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 38,222,151 43,260,471 Dilutive effect of equ
Slide 30: Year-to-Date Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Third Quarter Year-to-Date Reconciliation of Adjusted Net Income Allocable to Common Shareholders Three Fiscal Quarters Ended October 1, 2022 October 2, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 39,279,293 43,358,998 Di
Slide 31: 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 Gross % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total First Three Quar
Slide 32: Reconciliation of Adjusted to Reported Earnings (Continued)
Reconciliation of Adjusted to Reported Earnings (Continued) $ in millions, except EPS Segment Reporting U.S. Retail % of U.S. Wholesale % of International % of Corporate % of Gross % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Fisca
Slide 33: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Three Fiscal Quarters Ended Quarters Ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 October 1, 2022 Net income $65.0 $85.0 $169.9 $242.8 $266.8 Interest expense 9.7 15.2 33.5 45.8 48
Slide 34: 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 October 1, Currency October 1, October 2, Net Sales Net Sales 2022 Translation 2022 2021 % Change % Change Consolidated
Slide 35: Company-Operated Store Count
Company-Operated Store Count U.S. Canada Mexico Total Store count at October 2, 2021 755 188 41 984 Openings - - 2 2 Closings (4) (2) - (6) Store count at January 1, 2022 751 186 43 980 Openings 6 - 6 12 Closings (16) (1) (5) (22) Store count at October 1, 2022 741 185 44 970 Balance of year forecas
Slide 36: Forward-looking Statements and Other Information
Forward-looking Statements and Other Information This presentation contains forward-looking statements within the meaning of the federal securities laws relating to our future performance, including statements with respect to the potential effects of macroeconomic conditions, the COVID-19 pandemic,