Slide 1: First Quarter 2023 Results & Business Update
First Quarter 2023 Results & Business Update April 28, 2023
Slide 2: First Quarter 2023 Results (GAAP Basis)
First Quarter 2023 Results (GAAP Basis) $ in millions, except EPS Q1 % of Q1 % of 2023 Sales 2022 Sales Change Net sales $696 $781 (11%) Gross profit 309 44.5% 355 45.4% (13%) Royalty income 7 0.9% 7 1.0% (13%) SG&A 260 37.3% 260 33.3% - Operating income 56 8.1% 103 13.1% (45%) Interest and other, n
Slide 3: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS First Quarter 2023 2022 Operating % Net Pre-Tax Net Diluted Operating % Net Pre-Tax Net Diluted Income Sales Income Income EPS Income Sales Income Income EPS As reported (GAAP) $56.4 8.1% $47.7 $36.0 $0.95 $102.6 13.1% $88.3 $67.9 $1.66 Organizational
Slide 4: First Quarter 2023 Performance
First Quarter 2023 Performance $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -11% vs. -44% vs. -41% vs. 2022 2022 2022 $781 $103 $1.66 $696 $58 $0.98 13.1% 8.3% of of Net Sales Net Sales 2022 2023 2022 2023 2022 2023 1 Certain measur
Slide 5: Stronger Start to 2023 Than Planned
Stronger Start to 2023 Than Planned (Adjusted Basis1) $ in millions, except EPS Guidance2 Actual Results Net Sales $630 - $650 $696 U.S. Retail Comparable Sales Down 10% to 15% vs. LY Down 13% U.S. Wholesale Down 20% to 25% vs. LY Down 9% International Down mid-teens vs. LY Down 14% Operating Income
Slide 6: First Quarter 2023 Adjusted Results
First Quarter 2023 Adjusted Results1 $ in millions, except EPS Q1 % of Q1 % of 2023 Sales 2022 Sales Change Net sales $696 $781 (11%) Gross profit 309 44.5% 355 45.4% (13%) Royalty income 7 0.9% 7 1.0% (13%) Adjusted SG&A 258 37.1% 260 33.3% (1%) Adjusted operating income 58 8.3% 103 13.1% (44%) Int
Slide 7: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow $ in millions Balance Sheet Cash Flow (Q1 End) (Q1) 2023 2022 2023 2022 Cash $158 $702 Operating cash flow $42 ($164) Capital expenditures (14) (8) Accounts receivable 224 266 2 Free cash flow $28 ($171) Inventory 614 680 2023 2022 Accounts payable 180 284 Share repurchases
Slide 8: Business Segment Performance
Business Segment Performance
Slide 9: First Quarter 2023 Adjusted Segment Performance
First Quarter 2023 Adjusted Segment Performance $ in millions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2023 2022 $ Change 2023 2022 $ Change 2023 2022 U.S. Retail $324 $366 ($43) $26 $50 ($24) 8.1% 13.6% U.S. Wholesale 280 307 (27) 52 61 (9) 18.4% 19.7% International 92 108 (1
Slide 10: First Quarter 2023 Segment Performance
First Quarter 2023 Segment Performance U.S. Retail U.S. Wholesale International • Net sales: -12% • Net sales: -9% • Net sales: -14% ― Inflation continued to ― Sales exceeded plan, driven by ― Lower demand in Canada and adversely affect consumer earlier demand wholesale (ex-North America) demand ― L
Slide 11: Strong Brand Portfolio
Strong Brand Portfolio Carter’s is the best selling brand in young children’s apparel #1 10 million #1 Market Share Most Purchased active retail customers in children’s apparel1 children’s apparel brand1 #1 Most Trusted, #1 12+ Billion earned media impressions Most Recommended, Durability and Qualit
Slide 12: Carter's is the #1 Brand Across Consumer Generations
Carter’s is the #1 Brand Across Consumer Generations Carter’s Holds #1 Position With All $9B U.S. Baby1 Market by Generation Generations Consumer Sales (Billions) Gen Z Buyers Generation Carter’s (ages 18-24) (age of buyer) Ranking $1.2B, 14% Gen X+ Buyers (ages 45+) Gen X+ #1 $2.8B, 32% (ages 45+)
Slide 13: Carter's mobile app has grown to 25% of U.S. eCommerce sales
Carter’s mobile app has grown to 25% of U.S. eCommerce sales in <2 years • 4.8 star rating in app store • Growth principally driven by our most loyal customers • Strong online conversion • Developing enhanced personalization capabilities • Piloting same-day delivery with Shipt 13
Slide 14: Little Planet Continues Accelerated Growth
Little Planet Continues Accelerated Growth • Eco-friendly, accessible premium brand • Sales doubled in 2022 • Plan to expand distribution from 785 to over 2,000 doors in 2023 • Introduced new Mommy & Me collection 14
Slide 15: The market leader in Holiday Outfitting
The market leader in Holiday Outfitting 15
Slide 16: Fresh spring styles and swimwear at Target
Fresh spring styles and swimwear at Target 16
Slide 17: New baby collection arrives at Walmart
New baby collection arrives at Walmart 17
Slide 18: Enhanced digital experience for Simple Joys on Amazon
Enhanced digital experience for Simple Joys on Amazon 18
Slide 19: Growing U.S. Direct to Consumer Business
Growing U.S. Direct to Consumer Business • Stores are an important Alpharetta, GA component of our growth strategy ˗ Plan to open over 50 new stores in U.S. in 2023 • Stores play a key role in supporting omni-channel sales ˗ 35% of digital orders in FY22 (28% in FY21) • Stores are our #1 source of o
Slide 20: Growing International Presence
Growing International Presence Brazil • $3.0B market • Partnership with Riachuelo ― ~50 free standing Carter’s stores ― ~260 shop-in-shop locations • Additional retail growth opportunity in the coming years Mexico • $2.9B market • Multi-channel operations ― ~50 Company-operated stores ― eCommerce ―
Slide 21: 2023 Outlook
2023 Outlook
Slide 22: 2023 Second Half Sales & Earnings Drivers
2023 Second Half Sales & Earnings Drivers Sales Earnings • Strength of product offering • Higher mix of omni-channel sales • Improved on-time shipping performance • Improved price realization • Inflation moderating • Closure of low-margin stores (~20) • Contribution of new stores in • Conservative i
Slide 23: Reaffirming Outlook for Fiscal Year 2023
Reaffirming Outlook for Fiscal Year 20231 • Net sales: ~$3 billion ($3.2 billion in fiscal 2022) - U.S. Retail: down high single-digits - U.S. Wholesale: down high single-digits - International: comparable Fiscal Year 2023 • Adjusted operating income: ~$350 million Objectives ($388 million in fiscal
Slide 24: Second Quarter 2023 Outlook
Second Quarter 2023 Outlook1 • Outlook assumes: - Earlier Wholesale demand (Q2 to Q1 shift ~$35 million) - Continued inflationary pressure on consumer demand - Lower inventory-related costs and lower freight costs driving improved gross margin - Comparable SG&A - Higher interest expense & tax rate -
Slide 25: Thank You!
Thank You!
Slide 26: Appendix
Appendix Pia SESS, iy
Slide 27: First Quarter 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders
First Quarter 2023 Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended April 1, 2023 April 2, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 37,104,527 40,270,895 Dilutive effect of eq
Slide 28: Reconciliation of Adjusted to Reported Earnings
Reconciliation of Adjusted to Reported Earnings1 $ in millions, except EPS Segment Reporting Income U.S. Retail % of U.S. Wholesale % of International % of Corporate % of Operating % of Tax Net Diluted Operating segment Operating segment Operating segment Operating total First Quarter of Fiscal 2023
Slide 29: Reconciliation of Adjusted to Reported Earnings (Continued)
Reconciliation of Adjusted to Reported Earnings (Continued) (a) In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, income tax, net income, and net income on a di
Slide 30: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Quarters Ended April 2, 2023 April 1, 2022 April 2, 2023 Net income $36.0 $67.9 $218.1 Interest expense 9.6 15.1 37.3 Interest income (0.7) (0.3) (1.6) Tax expense 11.7 20.4 58.0 Depreciation and amortizat
Slide 31: 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 April 1, Currency April 1, April 2, Net Sales Net Sales 2023 Translation 2023 2022 % Change % Change Consolidated net s
Slide 32: Planning Continued Store Growth in North America in 2023
Planning Continued Store Growth in North America in 2023 U.S. Canada Mexico Total Store count at April 2, 2022 740 185 44 969 Openings 25 2 11 38 Closings (8) - (6) (14) Store count at December 31, 2022 757 187 49 993 Openings 7 - 3 10 Closings (4) - (3) (7) Store count at April 1, 2023 760 187 49 9
Slide 33: 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