Slide 1: Fourth Quarter Fiscal Year 2020 Results & Business Update
Fourth Quarter Fiscal Year 2020 Results & Business Update February 26, 2021
Slide 2: Fourth Quarter Results (GAAP Basis)
Fourth Quarter Results (GAAP Basis) $ in millions, except EPS Q4 2020 % of Q4 2019 % of Increase / (14 weeks) Sales (13 weeks) Sales (Decrease) Net sales $990 $1,101 (10%) Gross profit 466 47.1% 467 42.5% - Royalty income 6 0.6% 7 0.7% (13%) SG&A 338 34.2% 312 28.3% 8% Operating income 134 13.5% 163
Slide 3: Fiscal Year Results (GAAP Basis)
Fiscal Year Results (GAAP Basis) $ in millions, except EPS Fiscal 2020 % of Fiscal 2019 % of Increase / (53 weeks) Sales (52 weeks) Sales (Decrease) Net sales $3,024 $3,519 (14%) Gross profit 1,313 43.4% 1,509 42.9% (13%) Royalty income 26 0.9% 35 1.0% (24%) SG&A 1,106 36.6% 1,141 32.4% (3%) Goodwil
Slide 4: Non-GAAP Adjustments (Q4, Fiscal Year)
Non-GAAP Adjustments (Q4, Fiscal Year) $ in millions, except EPS Fourth Fiscal Quarter 2020 (14 weeks) 2019 (13 weeks) Operating % Net Diluted Operating % Net Diluted Income Sales EPS Income Sales EPS As reported (GAAP) $ 133.9 13.5% $ 2.26 $ 162.8 14.8% $ 2.82 Restructuring costs 7.9 0.14 - - COVID
Slide 5: Q4 2020 Highlights
Q4 2020 Highlights • Strong finish to the year – achieved our sales and earnings objectives • U.S. eCommerce comparable sales +16%; Canada +47% • Continued growth in omnichannel sales • U.S. sales of exclusive brands to Target, Walmart, and Amazon +13% • Record quarterly gross margin (47.1%; +460 bp
Slide 6: Fourth Quarter Net Sales
Fourth Quarter Net Sales $ in millions (13%) (10%) $1,101 ($52) ($70) ($21) $32 $990 $958 U.S. Retail $18 U.S. Wholesale $11 International $3 Q4 2019 U.S. Retail U.S. Wholesale International Q4 2020 14th Week Q4 2020 13 Weeks Reported 6
Slide 7: Fourth Quarter Adjusted Results
Fourth Quarter Adjusted Results1 $ in millions, except EPS Q4 2020 % of Q4 2019 % of Increase / (14 weeks) Sales (13 weeks) Sales (Decrease) Net sales $990 $1,101 (10%) Gross profit 466 47.1% 467 42.5% - Royalty income 6 0.6% 7 0.7% (13%) Adjusted SG&A 327 33.0% 313 28.4% 5% Adjusted operating incom
Slide 8: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions • Strong liquidity at Q4 end: ~$1.8B Year End Balance Sheet - $1.1B cash on hand - $745M available under revolving credit facility 2020 2019 • Net inventory +1% vs. LY Cash $1,102 $214 - Reflects strong inventory management, Accounts receivable 187 251 impro
Slide 9: Fiscal Year Adjusted Results
Fiscal Year Adjusted Results1 $ in millions, except EPS Fiscal 2020 % of Fiscal 2019 % of Increase / (53 weeks) Sales (52 weeks) Sales (Decrease) Net sales $3,024 $3,519 (14%) Adjusted gross profit 1,313 43.4% 1,506 42.8% (13%) Royalty income 26 0.9% 35 1.0% (24%) Adjusted SG&A 1,060 35.0% 1,140 32.
Slide 10: Meaningful Second Half Recovery in 2020
Meaningful Second Half Recovery in 2020 (First Half / Second Half Adjusted Results1) vs. Prior Year First Half Second Half Net sales (21%) (9%) Adj. gross margin -350 bps +320 bps Adj. operating income (88%) (4%) Adj. operating margin -710 bps +80 bps 1 Results are presented on an adjusted basis, a
Slide 11: Business Segment Results
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Slide 12: Fourth Quarter Adjusted Business Segment Performance
Fourth Quarter Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income Margin 2020 2019 2020 2019 (14 weeks) (13 weeks) Variance (14 weeks) (13 weeks) Variance 2020 2019 U.S. Retail $586 $620 ($34) $112 $101 $11 19.1% 16.3% U.S. Wholesale 290 349 (
Slide 13: Fourth Quarter Adjusted Results – U.S. Retail
Fourth Quarter Adjusted Results – U.S. Retail $ in millions Total Q4 Recap Segment Net Sales Sales $620 (6%) $586 • Net sales -6% vs. LY - Comp sales -9% - Strong eCommerce performance; sales +16% - Stores sales lower driven by decline in traffic - Demand from international customers meaningfully lo
Slide 14: Strong Growth in Omnichannel Demand
Strong Growth in Omnichannel Demand Buy Online, Pickup in Store / Q4 Omnichannel Demand1 Curbside Pickup (% eCommerce orders) 24% 12% 2019 2020 • Better customer experience - Same Day Pickup (BOPIS), Deliver From Store options improve speed to consumer • Attractive economics - Omnichannel fulfillmen
Slide 15: Celebrating the Optimism of New Parents
Celebrating the Optimism of New Parents • Carter’s – 1st childrenswear brand with over 2 million Video link: https://youtu.be/liuiD7540Lo Instagram followers1 • CRI brands earned 72% Hello Optimism Brand Campaign of all social media • Most viewed digital campaign in brand history engagement among pe
Slide 16: Provided One-of-a-Kind Holiday Experiences for Families
Provided One-of-a-Kind Holiday Experiences for Families Leslie Odom, Jr. Whitney Port Partnered with Cameo to deliver first-of-its- “Wonderful Weeks of Giveaways” kind virtual Santa experience 500K entries and 1B+ media impressions 193M+ media impressions Most successful sweepstakes in Carter’s bran
Slide 17: HBCU Collection + Black History Month Celebration
HBCU Collection + Black History Month Celebration 17
Slide 18: Fourth Quarter Adjusted Results – U.S. Wholesale
Fourth Quarter Adjusted Results – U.S. Wholesale $ in millions Segment Net Sales Q4 Recap Total $349 Sales • Net sales -17% vs. LY $290 (17%) - Largely achieved sales plan despite pandemic-related disruptions - Proactive inventory curtailment - Delayed inventory receipts - Strong demand for exclusiv
Slide 19: Carter's at Kohl's
Carter’s at Kohl’s carter’s KOHES
Slide 20: Exclusive Brands – Just One You at Target
Exclusive Brands – Just One You at Target 20
Slide 21: Exclusive Brands – Child of Mine at Walmart
Exclusive Brands – Child of Mine at Walmart 21
Slide 22: Exclusive Brands – Simple Joys on Amazon
Exclusive Brands – Simple Joys on Amazon 22
Slide 23: Fourth Quarter Adjusted Results – International
Fourth Quarter Adjusted Results – International $ in millions Segment Net Sales Q4 Recap Total $132 Sales (13%) • Net sales: -13% vs. LY $114 - Canada - Retail comp -10%: strong eCommerce performance (+47%); lower store traffic - Significant COVID-19 related store closures - Mexico - Strong eCommerc
Slide 24: Long-Term Outlook
Long-Term Outlook —
Slide 25: Carter's is the Leader in Young Children's Apparel
Carter’s is the Leader in Young Children’s Apparel • #1 market share in North America • Strong portfolio of brands, including two of the best known and trusted names in young children’s apparel • Attractive product space - Essential core products; less discretionary purchase - Affordable price point
Slide 26: Strategic Framework / Long-Term Objectives
Strategic Framework / Long-Term Objectives Mission Vision Mission & Vision To serve the needs of all families To be the world’s favorite brands in young children’s with young children apparel and related products Strategic Pillars • Lead in eCommerce • Win in Baby • Age Up • Expand Globally 5-Year C
Slide 27: Long-Term Outlook: Sales and Earnings Drivers
Long-Term Outlook: Sales and Earnings Drivers Sales Drivers Earnings Drivers • Continued compelling assortments • Strength of product offering - Focus on casual dressing & sleepwear • Improved price realization - Little Planet (eco-friendly) Gross - Improved marketing & Margin - Larger sizes / ‘Age
Slide 28: 2021 Outlook
2021 Outlook 28
Slide 29: 2021 Outlook
2021 Outlook (Adjusted Basis) • Focused on improving profitability • Net sales: growth of ~5% - Growth in all segments - Plan to close ~115 stores in the U.S. • Operating margin expansion Fiscal • Adjusted diluted EPS: growth of ~10% (vs. $4.16 in 2020)1 Year 2021 • Annual sales and earnings growth
Slide 30: Thank you!
Thank you!
Slide 31: Appendix
Appendix
Slide 32: Q4 Reconciliation of Net Income Allocable to Common Shareholders
Q4 Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended December 28, January 2, 2021 2019 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,284,847 43,688,514 Dilutive effect of equity awards 143,789
Slide 33: Fiscal Year Reconciliation of Net Income Allocable to Common Shareholders
Fiscal Year Reconciliation of Net Income Allocable to Common Shareholders Four Fiscal Quarters Ended December 28, January 2, 2021 2019 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,242,967 44,402,438 Dilutive effect of equity
Slide 34: Fiscal Year Adjusted Business Segment Performance
Fiscal Year Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income Margin 2020 2019 2020 2019 (53 weeks) (52 weeks) Variance (53 weeks) (52 weeks) Variance 2020 2019 U.S. Retail $1,672 $1,884 ($213) $183 $226 ($43) 10.9% 12.0% U.S. Wholesale 996 1
Slide 35: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings $ 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 Fourth Quarter of
Slide 36: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings (Continued) $ in millions, except EPS Segment Reporting Operating U.S. Retail % of U.S. Wholesale % of International % of Corporate % of Gross % of % of (Loss) % of Income Net Diluted Operating segment Operating segment Operating segment Operating tota
Slide 37: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings (Continued) $ in millions, except EPS Segment Reporting U.S. Retail U.S. Wholesale International Operating Net Operating % of Operating % of Operating % of Corporate % of Gross % of % of Income % of Income Income Diluted Income segment Income segment I
Slide 38: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Fiscal Quarter Ended Four Fiscal Quarters Ended December 28, December 28, January 2, 2021 2019 January 2, 2021 2019 Net income $ 99.0 $ 125.1 $ 109.7 $ 263.8 Interest expense 15.5 8.9 56.1 37.6 Interest income (0.3) (0.4) (1.5) (1.3) Tax
Slide 39: 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 January 2, Currency January 2, December 28, Net Sales Net Sales 2021 Translation 2021 2019 % Change % Change Consolidat
Slide 40: Store Count
Store Count Total Total U.S. Retail Canada Mexico International Consolidated Store count at December 28, 2019 862 201 46 247 1,109 Openings 16 - 2 2 18 Closings (14) (8) (4) (12) (26) Store count at January 2, 2021 864 193 44 237 1,101 40
Slide 41: 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 the COVID-19 pandemic and the Company’s future ou