Slide 1: Second Quarter 2021 Results & Business Update
Second Quarter 2021 Results & Business Update July 30, 2021
Slide 2: Second Quarter 2021 Results (GAAP Basis)
Second Quarter 2021 Results (GAAP Basis) $ in millions, except EPS Q2 % of Q2 % of 2021 Sales 2020 Sales Increase Net sales $746 $515 45% Gross profit 369 49.4% 236 45.7% 57% Royalty income 7 0.9% 4 0.7% 85% SG&A 268 35.9% 218 42.4% 23% Operating income 108 14.4% 21 4.1% >100% Interest expense, net
Slide 3: Non-GAAP Adjustments
Non-GAAP Adjustments $ in millions, except EPS Second Fiscal Quarter 2021 2020 Operating % Net Diluted Operating % Net Diluted Income Sales EPS Income Sales EPS As reported (GAAP) $107.6 14.4% $1.62 $21.0 4.1% $0.19 Restructuring costs 2.2 0.04 3.7 0.07 COVID-19 expenses 1.0 0.02 12.8 0.22 Store lea
Slide 4: Second Quarter 2021 Highlights
Second Quarter 2021 Highlights $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted EPS1 +45% +169% +209% vs. ‘20 vs. ‘20 vs. ‘20 $734 $746 $110 $1.67 $515 $64 14.8% $0.95 of Net Sales $41 8.7% $0.54 of 8.0% Net Sales of Net Sales 2019 2020 2021 2019 20
Slide 5: Second Quarter 2021 Adjusted Results
Second Quarter 2021 Adjusted Results1 $ in millions, except EPS Q2 % of Q2 % of 2021 Sales 2020 Sales Increase Net sales $746 $515 45% Gross profit 369 49.4% 236 45.7% 57% Royalty income 7 0.9% 4 0.7% 85% Adjusted SG&A 265 35.5% 198 38.5% 34% Adjusted operating income 110 14.8% 41 8.0% >100% Interes
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow $ in millions Q2 Balance Sheet • Strong total liquidity ~$1.9B2 • Net inventory -8% vs. LY 2021 2020 - Strong inventory management, higher sales Cash $1,121 $1,001 - Improved excess inventory position Accounts receivable 164 166 - Continued COVID-related delays in receipt
Slide 7: Business Segment Results
Business Segment Results
Slide 8: Second Quarter 2021 Adjusted Business Segment Performance
Second Quarter 2021 Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income (Loss) Margin $ $ 2021 2020 Growth 2021 2020 Growth 2021 2020 U.S. Retail $424 $316 $108 $87 $33 $53 20.4% 10.6% U.S. Wholesale 232 152 80 41 29 12 17.7% 19.0% Internationa
Slide 9: Second Quarter Adjusted Results – U.S. Retail
Second Quarter Adjusted Results – U.S. Retail $ in millions Total Q2 Recap Segment Net Sales Sales +34% • Net sales +34% vs. LY $424 - Growth led by recovery in store sales vs. significant store closures LY $316 - eCommerce - Sales in-line with plan (down vs. LY’s +100% comp) - 38% of segment sales
Slide 10: Launched New My First Love Collection
Launched New My First Love Collection • Recently refreshed our core baby offering – My First Love collection • 100% Oeko-Tex certified cotton • Launched with a first of its kind live digital shopping event hosted by ‘Bachelor’ alum Jade Roper Tolbert • Continued success with our core layette offerin
Slide 11: Continued Momentum With Our 'Age Up' Strategy
Continued Momentum With Our ‘Age Up’ Strategy – Big Kid Fastest Growing Segment in Q2 11
Slide 12: Our Iconic OshKosh B'gosh Brand
Our Iconic OshKosh B’gosh Brand 12
Slide 13: Successful New OshKosh Campaign Launch
Successful New OshKosh Campaign Launch 13
Slide 14: Little Planet Sustainable Collection Expands to Select Stores
Little Planet Sustainable Collection Expands to Select Stores 14
Slide 15: Launching RFID Capabilities
Launching RFID Capabilities • Currently implementing RFID technology across store fleet • Program designed to improve in-store inventory accuracy - Omnichannel sales growth enabler - Better price realization - Operational efficiencies • Expect to complete implementation fall 2021 15
Slide 16: Second Quarter Adjusted Results – U.S. Wholesale
Second Quarter Adjusted Results – U.S. Wholesale $ in millions Segment Net Sales Total Q2 Recap $232 Sales +53% • Net sales +53% vs. LY $152 - Strong recovery for core Carter’s brand - Continued growth with Exclusive Brands - OshKosh & Skip Hop also contributed to growth - Good replenishment demand
Slide 17: Record Amazon Prime Day Sales For Simple Joys
Record Amazon Prime Day Sales For Simple Joys 17
Slide 18: New My First Love Marketing At Kohl's
New My First Love Marketing At Kohl’s Digital & Social Influencers In Store 18
Slide 19: Second Quarter Adjusted Results – International
Second Quarter Adjusted Results – International $ in millions Segment Net Sales Q2 Recap Total Sales • Net sales: +93% vs. LY (+76% constant currency1) $91 +93% - Canada net sales +75% - Growth in all channels - Strong recovery in stores despite $47 meaningful COVID-related restrictions - Omnichanne
Slide 20: International Partner Store – Brazil
International Partner Store – Brazil (Opened June 2021) 20
Slide 21: International Partner Store – United Arab Emirates
International Partner Store – United Arab Emirates (Opened July 2021) 21
Slide 22: Inaugural Corporate Social Responsibility Report
Inaugural Corporate Social Responsibility Report 22
Slide 23: First Half 2021 Adjusted Results
First Half 2021 Adjusted Results1 $ in millions, except EPS 1H % of 1H % of 2021 Sales 2020 Sales Increase Net sales $1,534 $1,169 31% Gross profit 761 49.6% 464 39.7% 64% Royalty income 14 0.9% 11 0.9% 29% Adjusted SG&A 536 34.9% 460 39.3% 16% Adjusted operating income 239 15.6% 15 1.3% >100% Inter
Slide 24: First Half 2021 Adjusted Business Segment Performance
First Half 2021 Adjusted Business Segment Performance1 $ in millions Adjusted Adjusted Operating Operating Net Sales Income (Loss) Margin $ $ 2021 2020 Growth 2021 2020 Growth 2021 2020 U.S. Retail $831 $637 $194 $163 $20 $143 19.6% 3.1% U.S. Wholesale 515 404 111 112 40 72 21.8% 10.0% International
Slide 25: 2021 Outlook
2021 Outlook 25
Slide 26: 2021 Outlook – Second Half
2021 Outlook – Second Half Drivers Risks • Market leading product assortments • Supply chain disruptions • Benefits from structural changes • Higher transportation costs - More focused, longer lifecycle assortments • COVID-19 case trends - Fewer, more profitable stores - Improved brand marketing • C
Slide 27: 2021 Outlook – Second Half
2021 Outlook – Second Half • Brand marketing • Technology enhancements Strong First - eCommerce site / digital experiences Half Performance - RFID Enabling - Store systems upgrade Additional - Pricing tools Investments in - Data & analytics capabilities Second Half • Employee compensation • Producti
Slide 28: 2021 Outlook
2021 Outlook (Adjusted Basis) • Net sales: ~$960 million (+11%) • Adjusted operating income: ~$110 million Q3 (vs. $119.5 million Q3 2020)1 2021 • Adjusted diluted EPS: $1.60 (vs. $1.96 Q3 2020)1 • Raising sales and earnings outlook for the year • Net sales: growth of ~15% - Previous guidance: growt
Slide 29: Fiscal Year 2021 Outlook – Summary
Fiscal Year 2021 Outlook – Summary (Adjusted Basis) $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted EPS1 +~15% +~70% +~75% vs. ‘20 vs. ‘20 vs. ‘20 $3,519 ~$3,480 ~$475 ~$7.28 $3,024 $6.46 $401 $280 $4.16 ~13.6% of 11.4% Net Sales of Net Sales 9.3%
Slide 30: Thank you!
Thank you!
Slide 31: Appendix
Appendix
Slide 32: First Half 2021 Results (GAAP Basis)
First Half 2021 Results (GAAP Basis) $ in millions, except EPS 1H % of 1H % of Increase / 2021 Sales 2020 Sales (Decrease) Net sales $1,534 $1,169 31% Gross profit 761 49.6% 464 39.7% 64% Royalty income 14 0.9% 11 0.9% 29% SG&A 540 35.2% 532 45.5% 1% Goodwill impairment - 18 1.5% (100%) Intangible a
Slide 33: Second Quarter Reconciliation of Net Income Allocable to Common Shareholders
Second Quarter Reconciliation of Net Income Allocable to Common Shareholders Fiscal Quarter Ended July 3, 2021 June 27, 2020 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,445,780 43,162,571 Dilutive effect of equity awards 16
Slide 34: First Half Reconciliation of Net Income Allocable to Common Shareholders
First Half Reconciliation of Net Income Allocable to Common Shareholders Two Fiscal Quarters Ended July 3, 2021 June 27, 2020 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 43,408,262 43,259,103 Dilutive effect of equity awards 1
Slide 35: 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 Second Quarter of
Slide 36: 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 Taxes Net Diluted Operating segment Operating segment Operating segment Operating total
Slide 37: 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 Intan
Slide 38: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Quarters Fiscal Quarter Ended Two Fiscal Quarters Ended Ended July 3, June 27, July 3, July 3, 2021 2020 2021 June 27, 2020 2021 Net income (loss) $ 71.6 $ 8.2 $ 157.8 $ (70.5) $ 338.1 Interest expense 15.3 15.3 30.6 24.2 62.5
Slide 39: 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 July 3, Currency July 3, June 27, Net Sales Net Sales 2021 Translation 2021 2020 % Change % Change Consolidated net sal
Slide 40: Store Count
Store Count Total Total U.S. Retail Canada Mexico International Consolidated Store count at June 27, 2020 860 196 43 239 1,099 Openings 14 - 3 3 17 Closings (99) (8) (6) (14) (113) Store count at July 3, 2021 775 188 40 228 1,003 40
Slide 41: 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