Slide 1: First Quarter 2019 Business Update
First Quarter 2019 Business Update April 30, 2019
Slide 2: First Quarter 2019 Results (GAAP Basis)
First Quarter 2019 Results (GAAP Basis) $ in millions, except EPS Q1 % of Q1 % of Increase / 2019 Sales 2018 Sales (Decrease) Net sales $741 $756 (2%) Gross profit 316 42.6% 332 44.0% (5%) Royalty income 9 1.2% 8 1.1% 7% SG&A 264 35.6% 280 37.1% (6%) Operating income 61 8.2% 60 8.0% 1% Loss on extin
Slide 3: First Quarter 2019 Highlights
First Quarter 2019 Highlights $ in millions, except EPS Adjusted Net Sales Operating Income* Adjusted EPS* (Adjusted Operating Margin) (2%) (17%) (20%) $756 $741 $73 $1.09 $60 $0.87 9.6% of 8.1% Net Sales of Net Sales 2018 2019 2018 2019 2018 2019 • Net sales (-2%) - Stronger than planned Wholesale
Slide 4: First Quarter 2019 Adjusted Results
First Quarter 2019 Adjusted Results* $ in millions, except EPS Q1 % of Q1 % of Increase / 2019 Sales 2018 Sales (Decrease) Net sales $741 $756 (2%) Adjusted gross profit 314 42.3% 332 44.0% (6%) Royalty income 9 1.2% 8 1.1% 7% Adjusted SG&A 262 35.4% 268 35.4% (2%) Adjusted operating income 60 8.1%
Slide 5: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions • Refinanced high yield notes in Q1 2019 2018 - New $500 million, 5.625% senior notes (due Cash $160 $180 2027) replaced previous $400 million, 5.25% senior notes (due 2021) Accounts Receivable 239 221 - Incremental proceeds used to pay down Balance Sheet In
Slide 6: Business Segment Performance
Business Segment Performance 6
Slide 7: First Quarter 2019 Adjusted Business Segment Performance
First Quarter 2019 Adjusted Business Segment Performance* $ in millions Adjusted Adjusted Operating Operating Net Sales Income* Margin* $ $ 2019 2018 Growth 2019 2018 Growth 2019 2018 U.S. Retail (a) $377 $384 ($7) $24 $29 ($5) 6.3% 7.6% U.S. Wholesale 275 281 (5) 55 63 (8) 20.1% 22.4% International
Slide 8: First Quarter Highlights – U.S. Retail
First Quarter Highlights – U.S. Retail $ in millions Q1 Highlights Total Segment Net Sales Sales • Q1 Retail comparable sales: -3.7% (1.7%) - Decline in store sales partially offset by growth in $384 $377 eCommerce - Easter shift estimated comp impact: ~-2 points Retail1 Comp - Q1 comp also adversel
Slide 9: Co-branded Store – San Diego
Co-branded Store – San Diego 9
Slide 10: Mall Store – Hicksville, NY
Mall Store – Hicksville, NY 10
Slide 11: Carter’s Summer Marketing
Carter’s Summer Marketing 11
Slide 12: OshKosh Summer Marketing
OshKosh Summer Marketing carter’s RED, WHITE AND TRUE BLUE ® Celebrate summer with stars, stripes even ute 50% off" now UPF 50+ SUN PROTECTION IN ” Be — = a= {uy ant ship te roan shoe Cae stare |
Slide 13: Skip Hop New Product Offerings
Skip Hop New Product Offerings 13
Slide 14: First Quarter Highlights – U.S. Wholesale
First Quarter Highlights – U.S. Wholesale $ in millions Segment Net Sales Total Sales Q1 Highlights (2%) $281 $275 • U.S. Wholesale segment net sales: -2% - Stronger than planned demand for Spring product - Strong demand for exclusive brands - Year-over-year comparison affected by discontinued shipm
Slide 15: Little Baby Basics Relaunch in May
Little Baby Basics Relaunch in May 15
Slide 16: First Quarter Highlights – International
First Quarter Highlights – International $ in millions Segment Net Sales Q1 Highlights Total Sales • International segment Q1 net sales: -3% $91 $89 (3%) - Unfavorable effect of foreign currency exchange rate movements (net sales +0.5% constant currency) - Increased demand in Mexico and other market
Slide 17: International Partner Store – Panama
International Partner Store – Panama (Opened March 2019) 17
Slide 18: International Expansion – Brazil
International Expansion – Brazil Highlights • Large and attractive market for children’s apparel - ~$3 billion (ages 0-7) - 3 million births annually • Significant demand from customers in Brazil in our U.S. stores and on carters.com • Brazil is currently our largest international market outside of
Slide 19: Guidance
Guidance Tor, +
Slide 20: 2019 Outlook
2019 Outlook (Adjusted Basis) • Net sales growth of ~4% to 6% - Growth in all segments • Adjusted diluted EPS comparable to last year (vs. $0.79 Q2 2018)1. Factors influencing Q2 2019 profitability: - Changes in wholesale customer mix - Timing of spending - Higher interest expense (senior note refin
Slide 21: thank you.
thank you. 21
Slide 22: Appendix
ppendix: fe)
Slide 23: First Quarter Reconciliation of Net Income Allocable to Common Shareholders
First Quarter Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended March 30, 2019 March 31, 2018 Weighted-av erage number of common and common equiv alent shares outstanding: Basic number of common shares outstanding 45,070,796 0 46,772,737 Dilutiv e effect of equity aw
Slide 24: First Quarter Reconciliation of Reported to Adjusted Earnings
First Quarter 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 Net Diluted Operating segment Operating segment Operating segment Operating total First Quar
Slide 25: Fiscal 2018 Reconciliation of Reported to Adjusted Earnings
Fiscal 2018 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 Net Diluted Operating segment Operating segment Operating segment Operating total Fiscal 2018
Slide 26: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Quarters Ended March 30, 2019 March 31, 2018 March 30, 2019 Net income $34.5 $42.5 $274.1 Interest expense 9.6 8.0 36.2 Interest income (0.2) (0.2) (0.6) Tax expense 9.3 10.4 72.8 Depreciation and amortiza
Slide 27: Store Count Data
Store Count Data Single-brand Dual-brand Dual-brand U.S. U.S. U.S. Canada Total Stand-alone Side-by-Side Co-branded Total U.S. Co-branded Total Consolidated Format Format Format Retail Format Mexico 1 International Retail Stores Store count at March 31, 2018 553 159 106 818 179 42 221 1,039 Openings
Slide 28: 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 March 30, Currency March 30, March 31, Net Sales Net Sales 2019 Translation 2019 2018 % Change % Change Consolidated ne
Slide 29: Forward-looking Statements and Other Information
Forward-looking Statements and Other Information Results provided in this presentation are preliminary and unaudited. This presentation should be read in conjunction with the audio broadcast or transcript of the Company’s earnings call, held on April 30, 2019 which is available at www.carters.com. T