Slide 1: Third Quarter 2021 Results & Business Update
Third Quarter 2021 Results & Business Update October 29, 2021
Slide 2: Third Quarter 2021 Results (GAAP Basis)
Third Quarter 2021 Results (GAAP Basis) $ in millions, except EPS Q3 % of Q3 % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $891 $865 3% Gross profit 409 45.9% 384 44.4% 7% Royalty income 8 0.9% 9 1.0% (7%) SG&A 293 32.9% 279 32.3% 5% Operating income 124 13.9% 114 13.1% 9% Interest expe
Slide 3: Non-GAAP Adjustments
Non-GAAP Adjustments $ in millions, except EPS Third Fiscal Quarter 2021 2020 Operating % Net Diluted Operating % Net Diluted Income Sales EPS Income Sales EPS As reported (GAAP) $124.0 13.9% $1.93 $113.5 13.1% $1.85 COVID-19 expenses 0.3 - 3.3 0.06 Restructuring (benefit) costs (0.2) - 1.2 0.02 Sto
Slide 4: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 +3% vs. +4% vs. -1% vs. 2020 2020 2020 $943 $1.96 $1.93 $865 $891 $120 $124 $1.87 $115 13.9% 12.2% 13.8% of of of Net Sales Net Sales Net Sales 2019 2020 202
Slide 5: Third Quarter 2021 Adjusted Results
Third Quarter 2021 Adjusted Results1 $ in millions, except EPS Q3 % of Q3 % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $891 $865 3% Gross profit 409 45.9% 384 44.4% 7% Royalty income 8 0.9% 9 1.0% (7%) Adjusted SG&A 293 32.9% 273 31.6% 7% Adjusted operating income 124 13.9% 120 13.8% 4
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions Q3 Balance Sheet • Strong total liquidity ~$1.7B2 2021 2020 • Net inventory +12% vs. LY Cash $943 $831 Accounts receivable 261 263 - Significant production/transportation delays across global supply chain Inventory 722 647 - $272M gross inventory in-transit,
Slide 7: Business Segment Results
Business Segment Results
Slide 8: Third Quarter 2021 Adjusted Business Segment Performance
Third Quarter 2021 Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income Margin $ $ 2021 2020 Change 2021 2020 Change 2021 2020 U.S. Retail $466 $449 $17 $87 $51 $36 18.7% 11.4% U.S. Wholesale 294 302 (8) 40 67 (27) 13.7% 22.3% International 131
Slide 9: Q3 2021 Year-to-Date Adjusted Business Segment Performance
Q3 2021 Year-to-Date Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income Margin $ $ 2021 2020 Change 2021 2020 Change 2021 2020 U.S. Retail $1,296 $1,086 $211 $250 $71 $179 19.3% 6.5% U.S. Wholesale 809 706 103 152 108 45 18.8% 15.2% Internatio
Slide 10: Third Quarter Adjusted Results – U.S. Retail
Third Quarter Adjusted Results – U.S. Retail $ in millions Total Segment Net Sales Q3 Recap Sales +4% $466 • Net sales +4% vs. LY $449 - Comparable sales +5.9% - Good back to school / Labor Day demand • Growing omnichannel sales & order penetration - Omnichannel-related sales +11% vs. LY - Stores su
Slide 11: Technology Investments to Strengthen Our Omnichannel Capabilities
Technology Investments to Strengthen Our Omnichannel Capabilities Point of Sale System RFID Technology • Faster checkouts • Improves accuracy of in-store inventory • Better integration of digital and in-store experiences • Enhances planning and allocation decisions • Enables new marketing personaliz
Slide 12: 'Win in Baby' and 'Age Up' Strategies Driving Growth
‘Win in Baby’ and ‘Age Up’ Strategies Driving Growth Carter’s Branding Age Up • Launched “Made For This” • Strength in Back to School products across campaign highlighting the joy of both Carter’s and OshKosh B’gosh early parenting - Key items and first day fashion • Campaign integrated across socia
Slide 13: OshKosh B'gosh Brand Campaign Drove Back to School Sales
OshKosh B’gosh Brand Campaign Drove Back to School Sales; First Ever Kids Brand Collaboration With Fashion House Kith 13 2.5B Earned Impressions 13
Slide 14: Celebrating the Holidays and Family Gatherings
Celebrating the Holidays and Family Gatherings 14
Slide 15: Bringing Families Exclusive Innovative Experiences This Holiday Season
Bringing Families Exclusive Innovative Experiences This Holiday Season • First-of-its-kind collaboration with Vistaprint • Exclusive, customizable holiday cards that match Carter’s beloved holiday PJ prints • Holiday cards drive early shopping for family outfits 15
Slide 16: Carter's Continues to Lead in Consumer Engagement
Carter’s Continues to Lead in Consumer Engagement Carter’s and OshKosh Earned 72% Strong Consumer Following of all Engagements Among Peers on Social Media1 on Instagram in Q32 In millions Instagram Followers Carter's 2.2 GAP Kids 1.3 Disney Baby 1.0 OshKosh 0.8 Children's Place 0.8 Skip Hop 0.5 Jani
Slide 17: Third Quarter Adjusted Results – U.S. Wholesale
Third Quarter Adjusted Results – U.S. Wholesale $ in millions Segment Net Sales Q3 Recap Total $302 Sales $294 -3% • Supply chain delays impacted ability to support strong customer demand - High order ‘roll’ into Q4 - Good growth with Exclusive Brands • Strong over-the-counter performance at nationa
Slide 18: Exclusive Brands Marketing – Supporting Fall, Halloween, and Holiday Sales
Exclusive Brands Marketing – Supporting Fall, Halloween, and Holiday Sales 18
Slide 19: Carter's Fall Styles & Holiday Pajamas at Kohl's & Macy's
Carter’s Fall Styles & Holiday Pajamas at Kohl’s & Macy’s 19
Slide 20: Third Quarter Adjusted Results – International
Third Quarter Adjusted Results – International $ in millions Segment Net Sales Q3 Recap Total $131 Sales +15% $114 • Strong sales and earnings growth - +10% constant currency1 - Canada net sales +5% - Growth in both eCommerce and stores - Stores supported fulfillment of >25% of online orders Q3 2020
Slide 21: New International Store – Monterrey, Mexico
New International Store – Monterrey, Mexico (Opened October 2021) 21
Slide 22: Supply Chain Update
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Slide 23: Numerous Steps to Mitigate Impacts of Global Supply Chain Challenges
Numerous Steps to Mitigate Impacts of Global Supply Chain Challenges • Active management of orders to minimize cancellations • Effective use of “Pack & Hold” strategies Delayed Product • Selective use of air freight • Leverage retail business to sell excess inventory • Placing earlier buys for 2022
Slide 24: 2021 Outlook
2021 Outlook
Slide 25: Q4 Outlook
Q4 Outlook (Adjusted Basis) • We have raised our prior Q4 sales outlook - Benefit of wholesale customer shipments shifting from Q3 to Q4 - Continued progress in improving price realization - Favorable trend in International demand Q4 - Expecting continued global supply chain delays • Factors affecti
Slide 26: Fiscal Year 2021 Outlook
Fiscal Year 2021 Outlook (Adjusted Basis) $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 +~14% +~75% +~82% vs. 2020 vs. 2020 vs. 2020 ~$490 ~$7.57 $3,519 ~$3,450 $3,024 $6.46 $401 $280 ~14.2% $4.16 of 11.4% Net Sales of Net Sales 9.3%
Slide 27: Thank you!
Thank you!
Slide 28: Appendix
Appendix
Slide 29: Q3 Year-to-Date 2021 Results (GAAP Basis)
Q3 Year-to-Date 2021 Results (GAAP Basis) $ in millions, except EPS Q3 YTD % of Q3 YTD % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $2,424 $2,034 19% Gross profit 1,169 48.2% 847 41.7% 38% Royalty income 23 0.9% 20 1.0% 13% SG&A 46 1.9% 41 2.0% 13% Goodwill impairment - - 18 0.9% (100%
Slide 30: Q3 2021 Year-to-Date Adjusted Results
Q3 2021 Year-to-Date Adjusted Results1 $ in millions, except EPS Q3 YTD % of Q3 YTD % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $2,424 $2,034 19% Gross profit 1,169 48.2% 847 41.7% 38% Royalty income 23 0.9% 20 1.0% 13% Adjusted SG&A 829 34.2% 733 36.0% 13% Adjusted operating income 3
Slide 31: Q3 Reconciliation of Net Income Allocable to Common Shareholders
Q3 Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended October 2, September 26, 2021 2020 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,260,471 43,193,752 Dilutive effect of equity awards 155,57
Slide 32: Q3 Year-to-Date Reconciliation of Net Income Allocable to Common Shareholders
Q3 Year-to-Date Reconciliation of Net Income Allocable to Common Shareholders Three Fiscal Quarters Ended October 2, September 26, 2021 2020 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,358,998 43,237,319 Dilutive effect of
Slide 33: 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 % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Third Quarter of Fiscal 2021
Slide 34: Reconciliation of Reported to Adjusted Earnings (Continued)
Reconciliation of Reported to Adjusted Earnings (Continued) $ in millions, except EPS Segment Reporting = U.S. Retail % of U.S. Wholesale % of International % of Corporate % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total First Three Qu
Slide 35: Reconciliation of Reported to Adjusted Earnings (Continued)
Reconciliation of Reported to Adjusted Earnings (Continued) $ in millions, except EPS Gross % of % of Operating % of Income Net Diluted Fiscal 2019 Profit net sales SG&A net sales Income net sales Taxes Income EPS As reported (GAAP) $1,508.6 42.9% $1,140.5 32.4% $371.9 10.6% $64.2 $263.8 $5.85 Restr
Slide 36: 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 2, September 26, October 2, September 26, October 2, 2021 2020 2021 2020 2021 Net income $ 85.0 $ 81.2 $ 242.8 $ 10.7 $ 341.8 Interest expense 15.2 16.3 4
Slide 37: 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 2, Currency October 2, September 26, Net Sales Net Sales 2021 Translation 2021 2020 % Change % Change Consolida
Slide 38: Store Count
Store Count Total Total U.S. Retail Canada Mexico International Consolidated Store Count at September 26, 2020 863 196 44 240 1,103 Openings 1 - 2 2 3 Closings (109) (8) (5) (13) (122) Store Count at October 2, 2021 755 188 41 229 984 38
Slide 39: 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, supply chain challenges, a