Slide 1: Fourth Quarter/Fiscal Year 2021 Results & Business Update
Fourth Quarter/Fiscal Year 2021 Results & Business Update February 25, 2022
Slide 2: Fourth Quarter 2021 Results (GAAP Basis)
Fourth Quarter 2021 Results (GAAP Basis) $ in millions, except EPS Q4 2021 % of Q4 2020 % of Increase / (13 weeks) Sales (14 weeks) Sales (Decrease) Net sales $1,062 $990 7% Gross profit 493 46.4% 466 47.1% 6% Royalty income 6 0.6% 6 0.6% (2%) SG&A 361 34.0% 338 34.2% 7% Operating income 138 13.0% 1
Slide 3: Non-GAAP Adjustments
Non-GAAP Adjustments $ in millions, except EPS Fourth Quarter 2021 (13 weeks) 2020 (14 weeks) Operating % Net Diluted Operating % Net Diluted Income Sales EPS Income Sales EPS As reported (GAAP) $138.0 13.0% $2.31 $133.9 13.5% $2.26 COVID-19 expenses 0.4 - 2.5 0.04 Restructuring (benefit) costs (0.1
Slide 4: Fourth Quarter 2021 Highlights
Fourth Quarter 2021 Highlights $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 +7% -5% -6% $1,062 $2.46 $146 $990 $138 $2.31 14.7% 13.0% of of Net Sales Net Sales 2020 2021 2020 2021 2020 2021 (14 weeks) (13 weeks) (14 weeks) (13 weeks
Slide 5: Fourth Quarter 2021 Adjusted Results
Fourth Quarter 2021 Adjusted Results1 $ in millions, except EPS Q4 2021 % of Q4 2020 % of Increase / (13 weeks) Sales (14 weeks) Sales (Decrease) Net sales $1,062 $990 7% Gross profit 493 46.4% 466 47.1% 6% Royalty income 6 0.6% 6 0.6% (2%) Adjusted SG&A 361 34.0% 327 33.0% 10% Adjusted operating in
Slide 6: Fiscal Year 2021 Performance
Fiscal Year 2021 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 +15% +79% +89% vs. vs. 2020 vs. 2020 2020 $3,519 $3,486 $7.87 $501 $3,024 $6.46 $401 $280 14.4% $4.16 of 11.4% Net of Sales Net 9.3% Sales of Net Sales 2019 2
Slide 7: Fiscal Year 2021 Highlights
Fiscal Year 2021 Highlights • Strong sales recovery from pandemic (+15%) • Record profitability driven by structural changes: ˗ Rationalization of product choices ˗ Closure of low-margin stores ˗ Leaner inventories ˗ More impactful & effective marketing ˗ Improved price realization • Resumed return
Slide 8: Fiscal Year 2021 Results – Balance Sheet / Cash Flow
Fiscal Year 2021 Results – Balance Sheet / Cash Flow $ in millions Balance Sheet Cash Flow (Year End) (Fiscal Year) 2021 2020 2021 2020 Cash $984 $1,102 Operating cash flow $268 $588 Accounts receivable 231 187 Capital expenditures (37) (33) 1 Inventory 648 599 Free cash flow $231 $556 Accounts paya
Slide 9: Business Segment Results
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Slide 10: Fourth Quarter Segment Performance
Fourth Quarter Segment Performance1 $ in millions Adjusted Operating Adjusted Operating Net Sales Income Margin $ $ 2021 2020 Change 2021 2020 Change 2021 2020 U.S. Retail $603 $586 $17 $117 $112 $5 19.5% 19.1% U.S. Wholesale 317 290 27 45 54 (9) 14.1% 18.6% International 142 114 28 22 15 7 15.7% 13
Slide 11: Strong Fourth Quarter Performance
Strong Fourth Quarter Performance U.S. Retail U.S. Wholesale International • Total Retail comp +15% • Strong demand – • Strong growth – net sales +9%, reflecting net sales +25% • Improved traffic trend lower than planned cancellations • All businesses • Full year omnichannel achieved sales and sales
Slide 12: Carter's is the Only Children's Apparel Brand on the Inaugural Forbes Halo 100 List
Carter’s is the Only Children’s Apparel Brand on the Inaugural Forbes Halo 100 List • Recognizes excellence in delivering the experience that • #1 in Kids customers want to have • #5 in Apparel • #40 Overall Brand Apparel Overall Vans 1 15 Bath & Body Works 2 18 Columbia Sportswear 3 25 Top New Bala
Slide 13: My Rewarding Moments is the #1 Baby & Children's Clothing Loyalty Program
My Rewarding Moments is the #1 Baby & Children’s Clothing Loyalty Program • Award-winning program generates rich data to fuel personalization & media optimization to drive growth • Digitally native program • Carter’s Credit Card holders receive top-tier benefits • 90% of our U.S. Retail sales are li
Slide 14: Acquiring New Parents Through Emotional Brand Campaigns
Acquiring New Parents Through Emotional Brand Campaigns 14 14
Slide 15: OshKosh Sponsors 'Kid of the Year' With TIME
OshKosh Sponsors ‘Kid of the Year’ With TIME 15
Slide 16: Little Planet Expanding to Toddler in Q1 2022
Little Planet Expanding to Toddler in Q1 2022 16
Slide 17: Skip Hop Achieved Record Performance in 2021
Skip Hop Achieved Record Performance in 2021 17
Slide 18: Carter's Exclusive Brands Continue to Drive Results Across Target, Walmart & Amazon
Carter’s Exclusive Brands Continue to Drive Results Across Target, Walmart & Amazon 18
Slide 19: Carter's at Kohl's
Carter’s at Kohl’s Influencer Campaign (1.4M Followers) February Baby Sale Desktop: Rotating Images: 19
Slide 20: Carter's Continues to Lead in Consumer Engagement in Social Media
Carter’s Continues to Lead in Consumer Engagement in Social Media Carter’s, OshKosh, SkipHop & Little Planet Our Brands have a strong consumer continue to lead in social engagement2 and following on Instagram and Facebook1 expand to new platforms In millions Instagram Followers Carter's 2.2 Gap Kids
Slide 21: Growing and Profitable International Segment
Growing and Profitable International Segment Strong 2021 ~3,900 Results 13% of International Consolidated • Net sales $461M, +29% Points of • Adj. operating margin Sales 14.4%, +730 bps1 Distribution Multi-Channel Business Model Company-Owned Operations Multi-National Retailers Partners • Canada • A
Slide 22: New International Stores
New International Stores (Opened Q4 2021) Mexico (Guadalajara) Brazil (Sao Paulo) 22
Slide 23: Strategy & Outlook
Strategy & Outlook
Slide 24: Carter's is the Leader in Young Children's Apparel
Carter’s is the Leader in Young Children’s Apparel • Strong portfolio of brands, including two of the best known and trusted names in young children’s apparel • #1 market share in North America • Less discretionary purchase Key Strengths & • Successful multi-channel business model Competitive with m
Slide 25: Focused Strategies to Drive Our Growth
Focused Strategies to Drive Our Growth PURPOSE To inspire generations raising the future VISION To be the world’s favorite brands in young children’s apparel and related products MISSION To serve the needs of all families with young children STRATEGIC PILLARS Lead in Win in Expand Age Up eCommerce B
Slide 26: Five Year Growth Objectives
Five Year Growth Objectives Target 2026 5-Year CAGR Objectives Growth Net Sales Low single-digit >$4B Objectives U.S. Retail U.S. Wholesale Low single-digit Mid single-digit International Mid single-digit (2021 – 2026) Adjusted Operating Income1 Mid single-digit >$600M Adjusted EPS1 High single-digi
Slide 27: Capital Allocation & Return of Capital
Capital Allocation & Return of Capital Strong Operating Return of Capital Projecting Strong Cash Flow Over to Shareholders Operating Cash Past 5 Years Since 2007 Flow Next 5 Years $1.9B $2.5B >$2B • Invest in growth strategies Capital • Reduce debt Allocation Priorities • Evaluate M&A opportunities
Slide 28: 2022 Outlook
2022 Outlook1 • Net sales growth of 2% – 3% • Adjusted operating income growth of 4% – 6% - vs. adjusted $501 million in fiscal 2021 • Adjusted diluted EPS growth of 12% – 14% - vs. adjusted $7.87 in fiscal 2021 • Operating cash flow: $325 – $350 million • CapEx: $60 – $65 million Fiscal Year • Outl
Slide 29: 2022 Outlook
2022 Outlook1 • Net sales: $740 – $750 million • Adjusted operating income: $85 – $90 million - vs. adjusted $129 million Q1 2021 • Adjusted diluted EPS: $1.25 – $1.35 - vs. adjusted $1.98 Q1 2021 • Outlook reflects: Q1 - Lower sales due to: the non-comping benefit of 2022 significant government sti
Slide 30: Thank you!
Thank you!
Slide 31: Appendix
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Slide 32: Fiscal Year Results (GAAP Basis)
Fiscal Year Results (GAAP Basis) $ in millions, except EPS Fiscal 2021 % of Fiscal 2020 % of Increase / (52 weeks) Sales (53 weeks) Sales (Decrease) Net sales $3,486 $3,024 15% Gross profit 1,662 47.7% 1,313 43.4% 27% Royalty income 29 0.8% 26 0.9% 9% SG&A 1,194 34.2% 1,106 36.6% 8% Goodwill impairm
Slide 33: Fiscal Year Adjusted Results
Fiscal Year Adjusted Results1 $ in millions, except EPS Fiscal 2021 % of Fiscal 2020 % of Increase / (52 weeks) Sales (53 weeks) Sales (Decrease) Net sales $3,486 $3,024 15% Gross profit 1,662 47.7% 1,313 43.4% 27% Royalty income 29 0.8% 26 0.9% 9% Adjusted SG&A 1,190 34.1% 1,060 35.0% 12% Adjusted
Slide 34: Fiscal Year 2021 Adjusted Segment Performance
Fiscal Year 2021 Adjusted Segment Performance1 $ in millions Adjusted Operating Adjusted Operating Net Sales Income Margin 2021 2020 $ Growth 2021 2020 $ Growth 2021 2020 U.S. Retail $1,899 $1,672 $228 $367 $183 $184 19.3% 10.9% U.S. Wholesale 1,126 996 130 197 161 36 17.5% 16.2% International 461 3
Slide 35: Q4 Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Q4 Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended January 1, 2022 January 2, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 41,335,042 43,284,847 Dilutive effect of equity awards
Slide 36: Fiscal Year Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Fiscal Year Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Year Ended January 1, 2022 January 2, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 42,853,009 43,242,967 Dilutive effect of equity a
Slide 37: Reconciliation of Adjusted to Reported Earnings
Reconciliation of Adjusted to Reported 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 Fourth Quarter of Fiscal 202
Slide 38: 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 % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Fiscal Year 2020
Slide 39: Reconciliation of Adjusted to Reported Earnings (Continued)
Reconciliation of Adjusted to Reported Earnings (Continued) $ in millions, except EPS % of Operating % of Income Net Diluted First Half 2021 SG&A net sales Income net sales Taxes Income EPS As reported (GAAP) $539.7 35.2% $235.1 15.3% $48.7 $157.8 $3.58 COVID-19 expenses (c) (3.2) 3.2 0.8 2.4 0.05 R
Slide 40: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Income $ in millions Fiscal Quarter Ended Fiscal Year Ended January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021 (13 weeks) (14 weeks) (52 weeks) (53 weeks) Net income $97.0 $99.0 $339.7 $109.7 Interest expense 14.5 15.5 60.3 56.1 Interest income (
Slide 41: 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 1, Currency January 1, January 2, Net Sales Net Sales 2022 Translation 2022 2021 % Change % Change Consolidated
Slide 42: Net Sales Reconciliation
Net Sales Reconciliation $ in millions Fiscal quarter ended Reported Net Sales Reported Net Sales 14th Week Pro forma Net Sales Reported Pro forma January 1, 2022 January 2, 2021 Net Sales January 2, 2021 Net Sales % Net Sales % (13 weeks) (14 weeks) Contribution (13 weeks) Change Change $ 1,062.1 $
Slide 43: Company-Operated Store Count
Company-Operated Store Count U.S. Total Total Retail Canada Mexico International Consolidated Store count at January 2, 2021 864 193 44 237 1,101 Openings 1 - 4 4 5 Closings (114) (7) (5) (12) (126) Store count at January 1, 2022 751 186 43 229 980 43
Slide 44: 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