Slide 1: First Quarter 2024 Business Update
FIRST QUARTER 2024 BUSINESS UPDATE
Slide 2: Little Planet
little planet oy
Slide 3: First Quarter Results, Progress with Growth Strategies, 2024 Outlook
FIRST QUARTER RESULTS PROGRESS WITH GROWTH STRATEGIES 2024 OUTLOOK 3
Slide 4: First Quarter Results
FIRST QUARTER RESULTS 4
Slide 5: First Quarter 2024 Results (GAAP Basis)
FIRST QUARTER 2024 RESULTS (GAAP BASIS) $ in millions, except EPS Q1 2024 % of Sales Q1 2023 % of Sales Change Net sales $661 $696 (5%) Gross profit 315 47.6% 309 44.5% 2% Royalty income 5 0.8% 7 0.9% (20%) SG&A 265 40.1% 260 37.1% 2% Operating income 55 8.3% 56 8.1% (2%) Interest and other, net 5 0
Slide 6: Non-GAAP Adjustments
NON-GAAP ADJUSTMENTS1 • No adjustments to first quarter 2024 results • Adjustments to first quarter 2023 results are shown below $ in millions, except EPS First Quarter 2023 Operating % Net Pre-Tax Net Diluted Income Sales Income Income EPS As reported (GAAP) $56.4 8.1% $47.7 $36.0 $0.95 Organizatio
Slide 7: We Exceeded Our First Quarter Sales & Earnings Objectives
WE EXCEEDED OUR FIRST QUARTER SALES & EARNINGS OBJECTIVES $ in millions, except EPS Q1 Results Guidance1 Net sales $661 $620 - $645 U.S. Retail Down 5% Down MSD to HSD U.S. Wholesale Down 6% Down mid-teens International Down 3% Down LSD to MSD Operating income $55 $35 - $40 Operating margin 8.3% 5.6
Slide 8: First Quarter 2024 Performance
FIRST QUARTER 2024 PERFORMANCE $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (5%) (4%) +6% vs. vs. vs. 2023 2023 2023 $696 $58 $1.04 $661 $55 $0.98 8.3% 8.3% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP measure;
Slide 9: First Quarter 2024 Adjusted Results
FIRST QUARTER 2024 ADJUSTED RESULTS1 $ in millions, except EPS Q1 2024 % of Sales Q1 2023 % of Sales Change Net sales $661 $696 (5%) Gross profit 315 47.6% 309 44.5% 2% Royalty income 5 0.8% 7 0.9% (20%) Adjusted SG&A 265 40.1% 258 37.1% 3% Adjusted operating income 55 8.3% 58 8.3% (4%) Interest and
Slide 10: Business Segment Performance
BUSINESS SEGMENT PERFORMANCE 10
Slide 11: First Quarter 2024 Adjusted Segment Performance
FIRST QUARTER 2024 ADJUSTED SEGMENT PERFORMANCE $ in millions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2024 2023 $ Change 2024 2023 $ Change 2024 2023 U.S. Retail $308 $324 ($16) $14 $26 ($12) 4.6% 8.1% U.S. Wholesale 264 280 (16) 63 52 12 24.0% 18.4% International 90 92 (2) 2
Slide 12: First Quarter Segment Performance
FIRST QUARTER SEGMENT PERFORMANCE (2024 VS. 2023) U.S. RETAIL U.S. WHOLESALE INTERNATIONAL • Net sales: -5% (units -1%) • Net sales: -6% (units -1%) • Net sales: -3% (units -4%) ― Persistent inflation and late ― Earlier and higher than planned ― Strong growth in Brazil arrival of warmer weather dema
Slide 13: Q1 2024 U.S. Retail March Comparable Store Sales
Q1 2024 U.S. RETAIL MARCH COMPARABLE STORE SALES • In March, the northern half of the U.S. experienced materially warmer weather vs. last year while the southern half did not • In general, where the weather was warmer, our store comps were better 13
Slide 14: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW $ in millions Balance Sheet (Q1 End) Cash Flow (Q1) 2024 2023 2024 2023 Cash $268 $158 Operating cash flow ($26) $42 Accounts receivable, net 224 224 Capital expenditures (12) (14) Inventory, net 473 614 Free cash flow2 ($38) ($28) Accounts payable, net 191 180 Dividends $2
Slide 15: Progress with Growth Strategies
PROGRESS WITH GROWTH STRATEGIES 15
Slide 16: 2024 Strategic Priorities
2024 STRATEGIC PRIORITIES • Deliver market-leading style & value • Drive marketing effectiveness & memorable customer experiences • Strengthen our U.S. Retail business • Continue growth in U.S. Wholesale with tailored strategies • Expand our global footprint 16
Slide 17: Leading with Style
LEADING WITH STYLE 17
Slide 18: Introducing Everyday Value
INTRODUCING EVERYDAY VALUE 18
Slide 19: Strong Demand for Our Most Elevated & Innovative Brand
STRONG DEMAND FOR OUR MOST ELEVATED & INNOVATIVE BRAND • New shop-in-shop experience in select U.S. and Canada locations • Attracting new customers with above average spend per visit and purchase frequency • Strong Q1 sales 19
Slide 20: Our Newest Collection
OUR NEWEST COLLECTION DRIVING NEW CUSTOMER ACQUISITION • Soft, stretchy styles made with eco-responsible materials • Expanded distribution to all U.S. Carter’s stores • High average transaction value • Expanding assortment in 2H 2024 20
Slide 21: Skip Hop x Sesame Street Partnership
SKIP HOP x SESAME STREET PARTNERSHIP LAUNCHING SUMMER 2024 • North America launch across 830 Carter’s retail stores and key wholesale partners • Product assortment includes kids' bags, mealtime, luggage & more TM and © 2024 Sesame Workshop 21
Slide 22: Elevated Brand Marketing
ELEVATED BRAND MARKETING FOCUSED ON EMOTION OVER PROMOTION 22 22
Slide 23: Strong Social Media Following
STRONG SOCIAL MEDIA FOLLOWING1 TOTAL FACEBOOK FOLLOWERS in millions Carter's 4.5 Disney Baby 2.8 The Children's Place 2.4 Garanimals 1.4 OshKosh 1.1 Gymboree 1.0 Skip Hop 0.4 TOTAL INSTAGRAM FOLLOWERS in millions Carter's 2.3 TOTAL TIKTOK FOLLOWERS in thousands Gap Kids 1.3 The Children's Place 1.1
Slide 24: New Loyalty Program
NEW LOYALTY PROGRAM • Leverages Carter’s brand loyalty to uniquely connect with parents • New benefits ― Earn rewards faster ― VIP tier for our best customers ― Exclusive events & personalized benefits 24
Slide 25: Stores Are an Important Part of Our U.S. Retail Growth Strategy
STORES ARE AN IMPORTANT PART OF OUR U.S. RETAIL GROWTH STRATEGY BRAND BUILDING • Provides the very best experience with our brands • Drives brand awareness • #1 source of customer acquisition • Multi-channel customer has highest lifetime value SCALE AND CONVENIENCE • $1.0 billion in net sales (67% o
Slide 26: Elevating Our Store Experience
ELEVATING OUR STORE EXPERIENCE INNOVATING STORE FORMATS & INCREASING REMODELS ‘SIDE BY SIDE’ FORMAT • Converted ~150 Carter’s/OshKosh ‘side by side’ formats to cobranded experience • Best performing format in Q1 ‘BEST OF BABY’ CONCEPT • Elevated newborn to 5T assortment • 35 small-format locations p
Slide 27: U.S. eCommerce Growth Strategies
U.S. ECOMMERCE GROWTH STRATEGIES DIGITAL TRAFFIC DRIVERS • Elevated product offerings • New marketing agencies • New email and SMS captures • New media capabilities • Search engine optimization investments • 1:1 personalization capabilities USER EXPERIENCE ENHANCEMENTS • Seamless ‘House of Brands’ m
Slide 28: Unparalleled Relationships with the World's Largest Retailers
UNPARALLELED RELATIONSHIPS WITH THE WORLD’S LARGEST RETAILERS • Summer launch of new • Focus on modern essentials • Growth in Baby and swimwear, playwear, with Summer refresh Toddler playwear plus and sleep holiday events 28
Slide 29: 2024 Outlook
2024 OUTLOOK 29
Slide 30: 2024 Q2 Outlook
2024 Q2 OUTLOOK NET SALES • Consolidated net sales: $560 million to $570 million (Q2 2023: $600 million) U.S. Retail U.S. Wholesale International Down MSD to HSD Down LSD to MSD Down MSD to HSD Comparable sales down HSD PROFITABILITY Adjusted Operating Income1 Adjusted Diluted EPS1 $25 million to $3
Slide 31: Second Half 2024 Sales and Earnings Drivers
SECOND HALF 2024 SALES AND EARNINGS DRIVERS SALES • Elevated product offerings • Everyday value pricing strategy • Better mix & level of inventory (less ‘pack & hold’ & excess) • New marketing capabilities • Improved digital capabilities • New store openings, new formats & remodels • Improving deman
Slide 32: 2024 Fiscal Year Outlook
2024 FISCAL YEAR OUTLOOK NET SALES • Net sales: $2.95 billion to $3.0 billion (FY2023: $2.95 billion) U.S. Retail U.S. Wholesale International Down LSD to +LSD +LSD Comparable to 2023 Comparable sales down LSD PROFITABILITY, CASH FLOW & INVESTMENTS Adjusted1 Operating Income Diluted EPS Operating Ca
Slide 33: Supplemental Information
SUPPLEMENTAL INFORMATION 33
Slide 34: Reconciliation of Adjusted Net Income Allocable to Common Shareholders
RECONCILIATION OF ADJUSTED NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS Fiscal Quarter Ended Weighted-average number of common and common equivalent shares outstanding: March 30, 2024 April 1, 2023 Basic number of common shares outstanding 35,860,740 37,104,527 Dilutive effect of equity awards 3,843
Slide 35: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Segment Reporting U.S. Income U.S. Retail % of Wholesale % of International % of Corporate % of % of Operating % of Tax Net Diluted Operating segment Operating segment Operating segment Operating total First Quarter of Fiscal
Slide 36: Reconciliation of Net Income to Adjusted EBITDA
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA $ in millions Fiscal Quarter Ended Four Fiscal Quarters Ended March 30, 2024 April 1, 2023 March 30, 2024 Net income $38.0 $36.0 $234.5 Interest expense 7.9 9.6 32.2 Interest income (3.1) (0.7) (7.2) Tax expense 11.9 11.7 70.0 Depreciation and amortiza
Slide 37: 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 % March 30, 2024 Translation March 30, 2024 April 1, 2023 % Change Change Consol
Slide 38: Store Count Reconciliation
STORE COUNT RECONCILIATION U.S Canada Mexico Total Store count at April 1, 2023 760 187 49 996 Openings 41 4 10 55 Closings (9) (3) (5) (17) Store count at December 30, 2023 792 188 54 1,034 Openings 7 1 - 9 Closings (10) (3) (2) (16) Store count at March 30, 2024 789 186 52 1,027 Balance of 2024 Fo
Slide 39: Forward Looking Statements and Other Information
FORWARD LOOKING STATEMENTS AND OTHER INFORMATION Statements contained 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