Slide 1: Second Quarter Fiscal 2022 Results & Business Outlook
Second Quarter Fiscal 2022 Results & Business Outlook July 29, 2022
Slide 2: Second Quarter 2022 Results (GAAP Basis)
Second Quarter 2022 Results (GAAP Basis) $ in millions, except EPS Q2 % of Q2 % of 2022 Sales 2021 Sales Change Net sales $701 $746 (6%) Gross profit 331 47.3% 369 49.4% (10%) Royalty income 6 0.8% 7 0.9% (16%) SG&A 261 37.3% 268 35.9% (2%) Operating income 75 10.8% 108 14.4% (30%) Interest and othe
Slide 3: First Half 2022 Results (GAAP Basis)
First Half 2022 Results (GAAP Basis) $ in millions, except EPS First Half % of First Half % of 2022 Sales 2021 Sales Change Net sales $1,482 $1,534 (3%) Gross profit 686 46.3% 761 49.6% (10%) Royalty income 13 0.9% 14 0.9% (7%) SG&A 521 35.2% 540 35.2% (3%) Operating income 178 12.0% 235 15.3% (24%)
Slide 4: Non-GAAP Adjustments
Non-GAAP Adjustments1 $ in millions, except EPS Second Quarter 2022 2021 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) $75.4 10.8% $47.1 $37.0 $0.93 $107.6 14.4% $93.2 $71.6 $1.62 Loss on extin
Slide 5: Q2 2022 Results – Overview
Q2 2022 Results – Overview $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -6% vs. -32% vs. -22% vs. 2021 2021 2021 $746 $1.67 $734 $110 $701 $1.30 $75 $64 $0.95 8.7% 14.8% 10.8% of of of Net Sales Net Sales Net Sales 2019 2021 2022 20
Slide 6: First Half 2022 Profitability Meaningfully Better vs. 2019
First Half 2022 Profitability Meaningfully Better vs. 2019 $ in millions, except EPS Adjusted Operating Income1 Net Sales (Adjusted Operating Margin) Adjusted Diluted EPS1 -3% vs. -26% vs. -19% vs. 2021 2021 2021 $239 $3.64 $1,534 $1,482 $1,475 $2.97 $178 $124 $1.82 8.4% 15.6% 12.0% of of of Net Sal
Slide 7: Second Quarter 2022 Adjusted Results
Second Quarter 2022 Adjusted Results1 $ in millions, except EPS Q2 % of Q2 % of 2022 Sales 2021 Sales Change Net sales $701 $746 (6%) Gross profit 331 47.3% 369 49.4% (10%) Royalty income 6 0.8% 7 0.9% (16%) Adjusted SG&A 261 37.3% 265 35.5% (1%) Adjusted operating income 75 10.8% 110 14.8% (32%) In
Slide 8: First Half 2022 Adjusted Results
First Half 2022 Adjusted Results1 $ in millions, except EPS First Half % of First Half % of 2022 Sales 2021 Sales Change Net sales $1,482 $1,534 (3%) Adjusted gross profit 686 46.3% 761 49.6% (10%) Royalty income 13 0.9% 14 0.9% (7%) Adjusted SG&A 521 35.2% 536 34.9% (3%) Adjusted operating income 1
Slide 9: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow $ in millions Balance Sheet Cash Flow (Q2 End) (First Half) 2022 2021 2022 2021 Operating cash flow ($94) $50 Cash $231 $1,121 Capital expenditures (16) (21) Accounts receivable 184 164 Free cash flow 1 ($110) $29 Inventory 858 620 2022 2021 Accounts payable 408 357 Share r
Slide 10: Second Quarter 2022 Results – Inventory
Second Quarter 2022 Results – Inventory $ in millions +39% $49 $858 $56 $134 Q2 Net $620 Inventory Additional 4 vs. LY weeks of supply Q2 2021 Earlier Receipt of Pack & Hold Increased AUC & Q2 2022 Goods Other • Cancelled and reduced inventory on-order to mitigate margin risk • Employing pack and ho
Slide 11: Business Segment Performance
Business Segment Performance
Slide 12: Second Quarter Adjusted Segment Performance (2022 vs. 2021)
Second Quarter Adjusted Segment Performance (2022 vs. 2021) $ in millions Decrease in profitability vs. 2021 largely driven by lower consumer demand and increased inventory provisions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022 2021 U.S.
Slide 13: Second Quarter Adjusted Segment Performance (2022 vs. 2019)
Second Quarter Adjusted Segment Performance (2022 vs. 2019) $ in millions Meaningful improvement in profitability relative to pre-pandemic period Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2019 $ Change 2022 2019 $ Change 2022 2019 U.S. Retail $379 $423 ($44) $56 $50 $5 14.
Slide 14: Second Quarter 2022 Segment Performance
Second Quarter 2022 Segment Performance (vs. 2021) U.S. Retail U.S. Wholesale International • Net sales -11% (1H -10%) • Net sales -3% (1H +3%) • Net sales +7% (1H +9%) ― Inflation weighed on ― Growth in Exclusive Brands ― Canada +1% consumer demand, ― Carter’s brand sales lower due ― Mexico +14% pa
Slide 15: Hilary Duff Partners With Carter's as First-Ever 'Chief Mom Officer'
Hilary Duff Partners With Carter’s as First-Ever ‘Chief Mom Officer’ 15
Slide 16: Back to School Marketing
Back to School Marketing _carter’s carters.com carter’s 16
Slide 17: Holidays are Top Searched Terms as Consumers Continue to Spend
Holidays are Top Searched Terms as Consumers Continue to Spend on Holiday Celebrations SHOP NOW 17
Slide 18: Growing Our Eco-Friendly Little Planet Brand
Growing Our Eco-Friendly Little Planet Brand Planning expansion from ~200 to ~800 doors in 2022 18
Slide 19: Carter's Continues to Lead the Category in Social Media
Carter’s Continues to Lead the Category in Social Media Our Brands Have Strong Consumer Followings1 Continuing to Grow on TikTok In millions Instagram Total Followers Hilary Duff Carter’s Carter's 2.2 Gap Kids 1.3 Disney Baby 1.0 The Children's Place 0.8 OshKosh 0.8 Skip Hop 0.5 Janie and Jack 0.5 G
Slide 20: Relaunching Just One You Brand Marketing With Target in Q3
Relaunching Just One You Brand Marketing With Target in Q3 Rebranding to launch in ~1,800 doors and on target.com in August 20
Slide 21: Relaunching Child of Mine Brand Marketing With Walmart in Q3
Relaunching Child of Mine Brand Marketing With Walmart in Q3 Rebranding to launch in ~3,900 doors and on walmart.com in August 21
Slide 22: Successful Prime Day For Simple Joys
Successful Prime Day For Simple Joys Press release Prime Day 2022 was the Biggest Prime Day Event Ever July 14, 2022 at 8:41 AM EDT Amazon Prime members worldwide saved over $1.7 billion—more than any other Prime Day event This year was the biggest Prime Day event for Amazon's selling partners, most
Slide 23: Partnering With Kohl's on My First Love Marketing
Partnering With Kohl’s on My First Love Marketing 23
Slide 24: Strong Growth in Brazil
Strong Growth in Brazil • Our largest international business outside of North America • Strong Q2 sales growth: +134% vs. LY • Partner operations - 32 stand-alone Carter’s stores - ~230 shop-in-shops - eCommerce sites • Planning good growth for 2022 24
Slide 25: 2022 Outlook
2022 Outlook
Slide 26: 2022 Outlook
2022 Outlook Revised Outlook Reflects Potential Upside Opportunities • Continuation of Q2 demand trends • Better mix & level of inventories • Inventory commitments aligned • Improving supply chain trends with revised sales outlook • Strength of our merchandising and • Reduced discretionary spending
Slide 27: 2022 Outlook
2022 Outlook1 $ in millions, except per share Q3 Full Year 2022 2021 2019 2022 2021 2019 Guidance (% vs. 2021) (% vs. 2019) Guidance (% vs. 2021) (% vs. 2019) $850 - $865 $891 $943 $3,250 - $3,300 $3,486 $3,519 Net Sales -5% to -3% -10% to -8% -7% to -5% -8% to -6% Adjusted $90 - $100 $124 $115 $415
Slide 28: Thank you!
Thank you! 28
Slide 29: Appendix
Appendix
Slide 30: First Half Adjusted Segment Performance vs. 2021
First Half Adjusted Segment Performance vs. 2021 $ in millions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2021 $ Change 2022 2021 $ Change 2022 2021 U.S. Retail $745 $831 ($85) $106 $163 ($57) 14.2% 19.6% U.S. Wholesale 531 515 16 94 112 (18) 17.7% 21.8% International 205 1
Slide 31: First Half Adjusted Segment Performance vs. 2019
First Half Adjusted Segment Performance vs. 2019 $ in millions Adjusted Operating Adjusted Operating Net Sales Income1 Margin1 2022 2019 $ Change 2022 2019 $ Change 2022 2019 U.S. Retail $745 $800 ($55) $106 $74 $31 14.2% 9.3% U.S. Wholesale 531 505 27 94 91 3 17.7% 18.0% International 205 171 34 23
Slide 32: Q2 Reconciliation of Adjusted Net Income Allocable to Common Shareholders
Q2 Reconciliation of Adjusted Net Income Allocable to Common Shareholders Fiscal Quarter Ended July 2, 2022 July 3, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 39,344,834 43,445,780 Dilutive effect of equity awards 29,153
Slide 33: First Half Reconciliation of Adjusted Net Income Allocable to Common Shareholders
First Half Reconciliation of Adjusted Net Income Allocable to Common Shareholders Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 39,807,354 43,408,262 Dilutive effect of equity
Slide 34: 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 Gross % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Second Quarter of
Slide 35: 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 Gross % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Third
Slide 36: 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 Gross % of % of Operating % of Income Net Diluted Operating segment Operating segment Operating segment Operating total Fisca
Slide 37: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA $ in millions Four Fiscal Fiscal Quarter Ended Two Fiscal Quarters Ended Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 July 2, 2022 Net income $37.0 $71.6 $104.9 $157.8 $286.9 Interest expense 8.7 15.3 23.8 30.6 53.4 Interest incom
Slide 38: 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 2, Currency July 2, July 3, Net Sales Net Sales 2022 Translation 2022 2021 % Change % Change Consolidated net sale
Slide 39: Company-Operated Store Count
Company-Operated Store Count U.S. Canada Mexico Total Store count at July 3, 2021 775 188 40 1,003 Openings - - 3 3 Closings (24) (2) - (26) Store count at January 1, 2022 751 186 43 980 Openings 1 - 5 6 Closings (14) (1) (5) (20) Store count at July 2, 2022 738 185 43 966 Balance of year forecast O
Slide 40: 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