Slide 1: First Quarter 2021 Results & Business Update
First Quarter 2021 Results & Business Update April 30, 2021
Slide 2: First Quarter Results (GAAP Basis)
First Quarter Results (GAAP Basis) $ in millions, except EPS Q1 % of Q1 % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $787 $654 20% Gross profit 392 49.8% 228 34.9% 72% Royalty income 7 0.9% 7 1.1% 2% SG&A 272 34.5% 270 41.2% 1% Goodwill impairment - - 18 2.7% (100%) Intangible asset im
Slide 3: Non-GAAP Adjustments
Non-GAAP Adjustments $ in millions, except EPS First Fiscal Quarter 2021 2020 Operating % Net Diluted Operating % Net Diluted Income Sales EPS Loss Sales EPS As reported (GAAP) $127.5 16.2% $1.96 ($78.5) (12.0%) ($1.82) COVID-19 expenses 2.1 0.04 2.8 0.05 Restructuring costs 0.5 0.01 3.9 0.07 Store
Slide 4: First Quarter 2021 Highlights
First Quarter 2021 Highlights • Strong demand for our brands, particularly in March; meaningfully exceeded our sales and earnings objectives • Record gross margin of 49.8% • Best quarterly operating margin in last 10 years: 16.2% • Key growth drivers: - Strong consumer reaction to our Spring product
Slide 5: First Quarter Adjusted Results
First Quarter Adjusted Results1 $ in millions, except EPS Q1 % of Q1 % of 2021 Sales 2020 Sales Increase Net sales $787 $654 20% Gross profit 392 49.8% 228 34.9% 72% Royalty income 7 0.9% 7 1.1% 2% Adjusted SG&A 271 34.4% 262 40.0% 3% Adjusted operating income (loss) 129 16.3% (26) (4.0%) N/M Intere
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions Q1 Balance Sheet • Strong total liquidity ~$1.8B • Net inventory -1% vs. LY 2021 2020 Cash $1,054 $759 - Reflects strong inventory management and improved sell-throughs Accounts receivable 240 222 - Good progress reducing excess and pack & Inventory 561 566
Slide 7: Business Segment Results
Business Segment Results
Slide 8: First Quarter Adjusted Business Segment Performance
First Quarter Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income (Loss) Margin 2021 2020 Variance 2021 2020 Variance 2021 2020 U.S. Retail $407 $321 $86 $76 ($13) $89 18.7% (4.2%) U.S. Wholesale 283 252 31 71 11 60 25.1% 4.5% International 97
Slide 9: First Quarter Adjusted Results – U.S. Retail
First Quarter Adjusted Results – U.S. Retail $ in millions Total Q1 Recap Segment Net Sales Sales $407 +27% • Net sales +27% vs. LY $321 - Sales growth accelerated significantly in March - March store traffic meaningfully outperformed ShopperTrak benchmark - Strong eCommerce performance – net sales
Slide 10: 'Dream Shower' Sweepstakes Drove New Customers to Site
‘Dream Shower’ Sweepstakes Drove New Customers to Site Prize packages curated by celebrity expectant mom Ashley Tisdale 10
Slide 11: Little Planet Launched in U.S. Retail…
Little Planet Launched in U.S. Retail… 11
Slide 12: …Alongside Our Little Planet Launch in U.S. Wholesale and Canada
…Alongside Our Little Planet Launch in U.S. Wholesale and Canada 12
Slide 13: New Bold Basics Digital Experience
New Bold Basics Digital Experience 13
Slide 14: Reaching New Audiences With Our New Tween Squad Assortment
Reaching New Audiences With Our New Tween Squad Assortment 14
Slide 15: Carter's Continues to Lead in Consumer Engagement in Social Media
Carter’s Continues to Lead in Consumer Engagement in Social Media Carter’s and OshKosh earned 71% Our Brands have a strong consumer of all engagements among peers following on Instagram and Facebook1 on Instagram in Q12 In millions Instagram Followers Carter's 2.1M Gap Kids 1.3M Disney Baby 1M OshKo
Slide 16: First Quarter Adjusted Results – U.S. Wholesale
First Quarter Adjusted Results – U.S. Wholesale $ in millions Segment Net Sales Q1 Recap Total $283 Sales +12% • Net sales +12% vs. LY $252 - Exclusive brands, core Carter’s brand, and Skip Hop achieved double-digit growth - Replenishment trends strong across all brands, particularly Little Baby Bas
Slide 17: Our Exclusive Brands Continue to Drive Growth With Essential Retailers
Our Exclusive Brands Continue to Drive Growth With Essential Retailers 17
Slide 18: Delivering Simple Joys Bodysuits in Over One Million Amazon Baby Registry Welcome Boxes
Delivering Simple Joys Bodysuits in Over One Million Amazon Baby Registry Welcome Boxes 18
Slide 19: First Quarter Adjusted Results – International
First Quarter Adjusted Results – International $ in millions Segment Net Sales Q1 Recap Total $97 Sales • Net sales: +19% vs. LY (+15% constant currency1) +19% $82 - Canada net sales +18% - Strong eCommerce sales, +144% - Store performance affected by temporary closures in January / February - Mexic
Slide 20: Canada – New Omnichannel Capabilities
Canada – New Omnichannel Capabilities • Launched omnichannel capabilities in Canada in April - Buy online, ship to store - Buy online, pickup in store/curbside • Initial rollout to ~50% of stores; planning full rollout by end of May • Good initial customer response • Strengthens our market-leading p
Slide 21: International Partners Store – Ukraine
International Partners Store – Ukraine (Opened Q1 2021) 21
Slide 22: ESG
ESG
Slide 23: Carter's ESG Focus
Carter’s ESG Focus • Act with integrity • Exceed expectations Carter’s Core • Inspire innovation Values • Succeed together • Invest in people • Focus on reducing the environmental impacts of our products and operations • Committed to using sustainably sourced materials Environmental highlighted by l
Slide 24: Carter's KIDCYCLE Clothing Recycling Program
Carter’s KIDCYCLE Clothing Recycling Program • First-of-its kind program to recycle baby and children’s clothing nationwide through international recycling leader, TerraCycle • Sustainability benefits - Reduce the volume of children’s clothing going to landfills - Find additional uses for the recycl
Slide 25: 2021 Outlook
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Slide 26: 2021 Outlook – Considerations
2021 Outlook – Considerations Risks Opportunities • Supply chain disruptions • Market-leading product • Higher transportation costs assortments • Projected decline in births • Differentiated, creative marketing Marketplace/ • COVID-19 cases/variants • Increasing vaccinations Macro • Store traffic •
Slide 27: 2021 Outlook
2021 Outlook (Adjusted Basis) • Raising sales and earnings outlook for the year • Net sales: growth of ~10% • Adjusted diluted EPS: growth of ~40% (vs. $4.16 in 2020)1 • Outlook reflects: Fiscal - Sales growth in all segments Year 2021 - Gross margin expansion - Operating margin expansion; adjusted
Slide 28: Thank you!
Thank you!
Slide 29: Appendix
Appendix
Slide 30: Q1 Reconciliation of Net Income Allocable to Common Shareholders
Q1 Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended April 3, 2021 March 28, 2020 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,370,744 43,355,635 Dilutive effect of equity awards 129,198 - Di
Slide 31: 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 First Quarter of
Slide 32: 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 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 Quarters Ended April 3, March 28, 2021 2020 April 3, 2021 Net income (loss) $86.2 ($78.7) $274.6 Interest expense 15.3 8.9 62.5 Interest income (0.2) (0.5) (1.3) Tax provision (benefit) 27.1 (13.0) 65.4 De
Slide 34: Constant Currency Reconciliation
Constant Currency Reconciliation $ in millions Fiscal Quarter Ended Net Sales Foreign Net Sales Net Sales Reported Currency April 3, Currency April 3, March 28, Net Sales Net Sales 2021 Translation 2021 2020 % Change % Change Consolidated net sales $787.4 $3.1 $784.2 $654.5 20.3% 19.8% International
Slide 35: Store Count
Store Count Total Total U.S. Retail Canada Mexico International Consolidated Store count at March 28, 2020 860 198 43 241 1,101 Openings 14 - 3 3 17 Closings (70) (9) (3) (12) (82) Store count at April 3, 2021 804 189 43 232 1,036 35
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 the COVID-19 pandemic and the Company’s future ou