Slide 1: Third Quarter 2024 Business Update
THIRD QUARTER 2024 BUSINESS UPDATE OCTOBER 25, 2024
Slide 2: Third Quarter & Year-to-Date Results
THIRD QUARTER & YEAR-TO-DATE RESULTS 2
Slide 3: Third Quarter 2024 Results (GAAP)
THIRD QUARTER 2024 RESULTS GAAP BASIS $ in millions, except EPS Third Third Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $758 $792 (4%) Gross profit 356 46.9% 376 47.5% (5%) Royalty income, net 6 0.8% 6 0.7% -- SG&A 285 37.5% 289 36.5% (1%) Operating income 77 10.2% 93 11.8% (18%
Slide 4: Third Quarter YTD 2024 Results (GAAP)
THIRD QUARTER YTD 2024 RESULTS GAAP BASIS $ in millions, except EPS Third Third Quarter Quarter YTD 2024 % of Sales YTD 2023 % of Sales Change Net sales $1,984 $2,088 (5%) Gross profit 954 48.1% 978 46.8% (2%) Royalty income, net 15 0.8% 17 0.8% (10%) SG&A 798 40.2% 807 38.7% (1%) Operating income 1
Slide 5: Non-GAAP Adjustments
NON-GAAP ADJUSTMENTS1 $ in millions, except EPS Third Quarter 2024 2023 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) $77.0 10.2% $70.7 $58.3 $1.62 $93.4 11.8% $85.4 $66.1 $1.78 Pension plan se
Slide 6: We Achieved Our Third Quarter Sales & Earnings Objectives
WE ACHIEVED OUR THIRD QUARTER SALES & EARNINGS OBJECTIVES $ in millions, except EPS Q3 Results Guidance1 Net sales $758 ✓ $735 - $755 U.S. Retail Down 6% ✓ Down HSD to LDD U.S. Wholesale Comparable ✓ Comparable to Down LSD International Down 9% ✓ Down MSD to HSD Operating income $77 ✓ $60 - $70 Oper
Slide 7: Third Quarter 2024 Results
THIRD QUARTER 2024 RESULTS $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (4%) (20%) (11%) vs. vs. vs. 2023 2023 2023 $792 $96 $1.84 $758 $1.64 $77 12.2% 10.2% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP measure
Slide 8: Adjusted Third Quarter 2024 Results
ADJUSTED THIRD QUARTER 2024 RESULTS $ in millions, except EPS Third Third Quarter Quarter 2024 % of Sales 2023 % of Sales Change Net sales $758 $792 (4%) Gross profit 356 46.9% 376 47.5% (5%) Royalty income, net 6 0.8% 6 0.7% -- SG&A1 285 37.5% 286 36.1% -- Operating income1 77 10.2% 96 12.2% (20%)
Slide 9: Third Quarter YTD 2024 Results
THIRD QUARTER YTD 2024 RESULTS $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 (5%) (11%) (1%) vs. vs. vs. 2023 2023 2023 $2,088 $192 $3.45 $3.43 $1,984 $172 9.2% 8.6% of Net of Net Sales Sales 2023 2024 2023 2024 2023 2024 1 Non-GAAP
Slide 10: Adjusted Third Quarter YTD 2024 Results
ADJUSTED THIRD QUARTER YTD 2024 RESULTS $ in millions, except EPS Third Third Quarter Quarter YTD 2024 % of Sales YTD 2023 % of Sales Change Net sales $1,984 $2,088 (5%) Gross profit 954 48.1% 978 46.8% (2%) Royalty income, net 15 0.8% 17 0.8% (10%) SG&A1 798 40.2% 803 38.4% (1%) Operating income1 1
Slide 11: Business Segment Performance
BUSINESS SEGMENT PERFORMANCE 11
Slide 12: Adjusted Third Quarter 2024 Segment Results
ADJUSTED THIRD QUARTER 2024 SEGMENT RESULTS $ in millions Adjusted Operating Adjusted Net Sales Income1 Operating Margin1 2024 2023 Change 2024 2023 Change 2024 2023 U.S. Retail $353 $375 ($22) $27 $49 ($21) 7.7% 13.0% U.S. Wholesale 299 300 (1) 63 66 (3) 21.1% 22.0% International 106 117 (10) 10 14
Slide 13: Adjusted Third Quarter U.S. Retail Results
ADJUSTED THIRD QUARTER U.S. RETAIL RESULTS 1 2024 VS. 2023 IMPACT OF PRICING & MARKETING U.S. RETAIL SEGMENT INVESTMENTS • Net sales: -6% (units comparable) • Drove trend change in comparable sales ― Macro pressures continued to affect families ― -13% in July to -5% in August/September/October with
Slide 14: Adjusted Third Quarter U.S. Wholesale and International Results
ADJUSTED THIRD QUARTER U.S. WHOLESALE AND INTERNATIONAL RESULTS1 2024 VS. 2023 U.S. WHOLESALE INTERNATIONAL • Net sales: Comparable (units +3%) • Net sales: -9% (units -4%); constant currency basis -6% ― Growth with Exclusive Brands ― Macro pressures globally ― Lower shipments to department store &
Slide 15: Adjusted Third Quarter YTD 2024 Segment Results
ADJUSTED THIRD QUARTER YTD 2024 SEGMENT RESULTS $ in millions Adjusted Operating Adjusted Net Sales Income1 Operating Margin1 2024 2023 Change 2024 2023 Change 2024 2023 U.S. Retail $951 $1,022 ($71) $60 $103 ($43) 6.3% 10.1% U.S. Wholesale 756 767 (11) 163 147 16 21.5% 19.2% International 277 299 (
Slide 16: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW $ in millions Balance Sheet (Q3 End) Cash Flow & Return of Capital (Q3 YTD) 2024 2023 2024 2023 Cash $176 $169 Operating cash flow $11 $206 Accounts receivable, net 247 241 Capital expenditures (40) (42) Inventory, net 607 621 Free cash flow2 ($28) $163 Accounts payable 274
Slide 17: Progress with Growth Strategies
PROGRESS WITH GROWTH STRATEGIES 17
Slide 18: Our Growth Strategy Focus
OUR GROWTH STRATEGY FOCUS PRODUCT Elevate Style & Value of Our Product Offerings MARKETING BRAND REACH Deepen Our Customer Leverage Our Relationships Unparalleled Multi-channel Market Presence 18
Slide 19: Improving Our Product Mix
IMPROVING OUR PRODUCT MIX BEST BEST BETTER BETTER GOOD GOOD 2023 2025 19
Slide 20: Price Investments Improving Trends
PRICE INVESTMENTS IMPROVING TRENDS Tees Dresses Leggings 2023 | $6 2023 | $12 2023 | $6 20
Slide 21: House of Brands Strategy
HOUSE OF BRANDS STRATEGY MORE THAN HALF OF OUR RETAIL CUSTOMERS SHOP TWO OR MORE OF OUR BRANDS 21
Slide 22: On Trend for Baby
ON TREND FOR BABY Fall ena () izzie_does_it I'm having a boy in December and | love all these outfits. | gotta make a trip to Carter's! @ 2w 2\likes Reply @ 6 products UMA onsen Q ©
Slide 23: Key Trending Items
KEY TRENDING ITEMS 11:47 ie o von) Carter's © \_/ Sponsored - @ Now trending! Step up their game in Carter's match skorts. With built-in shorts, she’s tennis (or pickleball) ready. ... See More carter’s nw CARTERS.COM > Skorts on the scene © { shop Now in store + online — O0s 3.4k 373 Comments 508 S
Slide 24: Unparalleled Market Presence
UNPARALLELED MARKET PRESENCE Carter’s Brand Stores carters.com Outlet Stores Mobile App Over 1,000 Carter’s stores in North America and 20,000+ points of distribution in Wholesale accounts globally 24
Slide 25: Investment in Brand Experience
INVESTMENT IN BRAND EXPERIENCE NEW ATLANTA FLAGSHIP STORE 25
Slide 26: Investment in Brand Experience
INVESTMENT IN BRAND EXPERIENCE NEW ATLANTA FLAGSHIP STORE 26
Slide 27: Unparalleled Relationships with the Largest Retailers of Children's Apparel
UNPARALLELED RELATIONSHIPS WITH THE LARGEST RETAILERS OF CHILDREN’S APPAREL 27
Slide 28: Improved Personalization Capabilities
IMPROVED PERSONALIZATION CAPABILITIES A JOURNEY FOR EVERY CUSTOMER PERSONALIZED PERSONALIZED INSTAGRAM AD LANDING PAGE OFFERS 28
Slide 29: Investment in Media and Brand Marketing
INVESTMENT IN MEDIA AND BRAND MARKETING 29
Slide 30: Progress with Strategic Priorities
PROGRESS WITH STRATEGIC PRIORITIES ✓ #1 Market Share, with gains in Baby and Toddler1 ✓ Unit volume growth ✓ Most trusted and most recommended brand2 ✓ Improving trends in U.S. Retail • 8ppt U.S. Retail comp improvement (July -13% → August thru October -5%) • Conversion rate and units per transactio
Slide 31: 2024 Outlook
2024 OUTLOOK 31
Slide 32: Fiscal Year 2024 Outlook
FISCAL YEAR 2024 OUTLOOK NET SALES • Net sales: $2.785 billion to $2.825 billion (FY2023: $2.946 billion) U.S. Retail U.S. Wholesale International Down HSD Comparable to +LSD Down HSD Comp sales down HSD to LDD PROFITABILITY & CASH FLOW Adjusted1 Operating Income Diluted EPS Operating Cash Flow CapE
Slide 33: Fourth Quarter 2024 Outlook
FOURTH QUARTER 2024 OUTLOOK NET SALES • Consolidated net sales: $800 million to $840 million (Q4 2023: $858 million) U.S. Retail U.S. Wholesale International Down HSD to LDD +MSD to +HSD Down MSD to HSD Comp sales -9% to -12% (Comp sales Q4 to date -4%; YTD – 8%) PROFITABILITY1 Adjusted Operating In
Slide 34: Thank You
THANK YOU 34 34
Slide 35: Supplemental Information
SUPPLEMENTAL INFORMATION 35
Slide 36: Third Quarter Reconciliation of Adjusted Net Income Allocable to Common Shareholders
THIRD QUARTER RECONCILIATION OF ADJUSTED NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS Fiscal Quarter Ended Weighted-average number of common and common equivalent shares outstanding: September 28, 2024 September 30, 2023 Basic number of common shares outstanding 35,301,131 36,438,403 Dilutive effect
Slide 37: Third Quarter YTD Reconciliation of Adjusted Net Income Allocable to Common Shareholders
THIRD QUARTER YTD RECONCILIATION OF ADJUSTED NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS Three Fiscal Quarters Ended Weighted-average number of common and common equivalent shares outstanding: September 28, 2024 September 30, 2023 Basic number of common shares outstanding 35,616,875 36,789,140 Dilut
Slide 38: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Income % of Operating % of Tax Net Diluted Third Quarter of Fiscal 2024 SG&A net sales Income net sales Provision Income EPS As reported (GAAP) $284.7 37.5% $77.0 10.2% $12.4 $58.3 $1.62 Pension plan settlement (b) - - 0.2 0.7
Slide 39: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Segment Reporting U.S. Income U.S. Retail % of Wholesale % of International % of Corporate % of % of Operating % of Tax Net Diluted Operating segment Operating segment Operating segment Operating total Third Quarter of Fiscal
Slide 40: Reconciliation of Reported to Adjusted Earnings
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS $ in millions, except EPS Income % of Operating % of Tax Net Diluted Fourth Quarter of Fiscal 2023 SG&A net sales Income net sales Provision Income EPS As reported (GAAP) $287.0 33.4% $136.1 15.9% $31.4 $106.5 $2.90 Benefit from credit card settlement
Slide 41: Reconciliation of Net Income to Adjusted EBITDA
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Three Fiscal Quarters Ended Quarters Ended September 28, September 30, September 28, September 30, September 28, 2024 2023 2024 2023 2024 Net income $58.3 $66.1 $124.0 $126.0 $230.5 Interest expense 7.4 8.
Slide 42: Net Sales Constant Currency Reconciliation
NET SALES CONSTANT CURRENCY RECONCILIATION $ in millions Fiscal Quarter Ended Constant- Reported Net Impact of Currency Net Reported Net Constant- Sales Foreign Sales Sales Reported Currency September 28, Currency September 28, September 30, Net Sales Net Sales % 2024 Translation 2024 2023 % Change
Slide 43: Store Count Reconciliation
STORE COUNT RECONCILIATION U.S Canada Mexico Total Store count at September 30, 2023 768 188 53 1,009 Openings 25 1 1 27 Closings (1) (1) - (2) Store count at December 30, 2023 792 188 54 1,034 Openings 26 5 5 36 Closings (23) (5) (3) (31) Store count at September 28, 2024 795 188 56 1,039 Balance o
Slide 44: Forward Looking Statements and Other Information
FORWARD LOOKING STATEMENTS AND OTHER INFORMATION Statements 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 are forwar