Carter’s, Inc. (NYSE:CRI) Q4 2023 Results Conference Call February 27, 2024 8:30 AM ET Company Participants Michael Casey - Chairman & CEO Richard Westenberger - Executive VP & CFO Kendra Krugman - Executive VP of Retail & Chief Merchandising Officer Conference Call Participants Warren Cheng - Evercore ISI Tom Nikic - Wedbush Jay Sole - UBS Ike Boruchow - Wells Fargo James Andrew - Chartier Monness, Crespi, Hardt & Co. Kelly Crago - Citigroup Inc. Operator Welcome to Carter's Fourth Quarter and Fiscal Year ...

Carter's (CRI) came out with quarterly earnings of $2.76 per share, beating the Zacks Consensus Estimate of $2.52 per share. This compares to earnings of $2.29 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 9.52%. A quarter ago, it was expected that this maker of children's apparel and accessories would post earnings of $1.49 per share when it actually produced earnings of $1.84, delivering a surprise of 23.49%.Over the last ...

ATLANTA--(BUSINESS WIRE)--Carter’s, Inc. (NYSE:CRI), the largest branded marketer of young children’s apparel in North America, today reported its fourth quarter and fiscal 2023 results. “ We saw an improving trend in the demand for our brands in the final weeks of 2023,” said Michael D. Casey, Chairman and Chief Executive Officer. “ Sales improved sequentially each month in the fourth quarter and drove higher than expected earnings. Our focus on product innovation, inventory management, pricing discipline ...

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Carter's (CRI) , which belongs to the Zacks Shoes and Retail Apparel industry.This maker of children's apparel and accessories has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 24.49%.For the last reported quarter, Carter's came out with earnings of $1. ...

Exhibit 99.1 Contact: Sean McHugh Vice President & Treasurer (678) 791-7615 Carter's, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results ATLANTA, February 27, 2024 -- Carter's, Inc. (NYSE:CRI), the largest branded marketer of young children's apparel in North America, today reported its fourth quarter and fiscal 2023 results. "We saw an improving trend in the demand for our brands in the final weeks of 2023," said Michael D. Casey, Chairman and Chief Executive Officer. "Sales improved sequentially eac ...

Market Overview - The U.S. baby and young children's apparel market is approximately $28 billion as of December 2023, with Carter's brands holding over 9% market share and OshKosh approximately 1%[23]. - Carter's brands maintained a leading market position with approximately 20% in the zero to two-year-old baby market and about 10% in the three to four-year-old toddler market as of December 2023[30]. - Approximately 34% of consolidated net sales in fiscal 2023 were derived from the U.S. Wholesale segment[99]. - The top ten wholesale customers accounted for approximately 33% of consolidated net sales in fiscal 2023[99]. - The largest wholesale customer accounted for approximately 10.4% of consolidated net sales in fiscal 2023[48]. Financial Performance - The company generated $3.5 billion in operating cash flow over the past 10 years, invested approximately $0.7 billion in capital expenditures, and returned $2.5 billion to shareholders through dividends and share repurchases[27]. - Consolidated net sales decreased by $267.1 million, or 8.3%, to $2.95 billion due to macroeconomic factors impacting consumer demand[215]. - Operating income decreased by $55.8 million, or 14.7%, to $323.4 million, impacted by lower sales and increased fixed costs[215]. - SG&A expenses decreased by $16.1 million, or 1.4%, to $1.09 billion, with SG&A as a percentage of consolidated net sales increasing by 250 basis points to 37.1%[215]. - The effective tax rate increased by 200 basis points to 23.1%[216]. Store Operations - As of the end of fiscal 2023, the company operated 1,034 retail stores and approximately 19,350 wholesale locations in North America, with international operations in over 1,100 locations across 90 countries[24]. - As of the end of fiscal 2023, the average store size was approximately 5,000 square feet, with a focus on high-traffic locations to attract consumers[42]. - The company expects approximately 40 new store openings and 30 store closures in fiscal 2024, with a focus on net store openings in future years[212]. - The company operates 792 retail stores in the United States, 188 in Canada, and 54 in Mexico, with an average remaining lease term of approximately 3.2 years[180]. Supply Chain and Sourcing - In fiscal 2023, approximately 74% of products were sourced from Cambodia, Vietnam, Bangladesh, and India, with 66% of fabric sourced from China[55]. - The company’s sourcing operations are based in Hong Kong to manage manufacturing volume and ensure quality control[56]. - The company has not entered into long-term contracts with manufacturers, believing that production capacity is adequate for future needs[59]. - Approximately 65% of the company's products are shipped through the Red Sea, with current delays adding an additional 7 to 10 days of transit time due to regional hostilities[130]. Environmental and Social Responsibility - The Little Planet brand, launched in 2021, focuses on sustainable clothing using mostly organic cotton, catering to the growing consumer demand for eco-friendly products[21]. - The company has established targets to reduce Scope 1 and 2 greenhouse gas emissions, validated by the Science-Based Target Initiative[62]. - The company is subject to increasing scrutiny regarding environmental, social, and governance (ESG) practices, which may lead to additional compliance costs and reputational risks[116]. Customer Engagement and Marketing - The company plans to relaunch its My Rewarding Moments customer loyalty program in 2024 to deepen customer loyalty and increase visit frequency[52][53]. - The company’s marketing strategy focuses on acquiring new customers and enhancing relationships with existing customers through digital and social media[51]. - The Carter's credit card program, launched in 2019, provides benefits to loyalty program members and generates revenue through new credit account establishment and usage royalties[54]. Risks and Challenges - The company is sensitive to overall levels of consumer spending, particularly in the young children's apparel market[86]. - Financial difficulties or loss of major wholesale customers could result in a material loss of revenues[99]. - The company operates in a highly competitive market, with some competitors having greater financial resources[98]. - The business could be adversely affected by public health crises, such as the COVID-19 pandemic, which disrupts operations and consumer demand[89]. - The company may face challenges in expanding into international markets, as it lacks significant experience outside of North America, which could adversely affect sales and profitability[141]. Cybersecurity and Data Management - The company has implemented security measures to protect IT and data security infrastructure, but the effectiveness of these measures against evolving cybersecurity threats remains uncertain[124]. - The company has conducted annual assessments of its cybersecurity framework and penetration tests by third parties to mitigate risks[171]. - Cybersecurity risks related to data breaches could result in adverse publicity and costly legal actions, impacting the company's financial condition[121]. Shareholder Returns - The company returned $212.0 million to shareholders, consisting of $100.0 million in share repurchases and $112.0 million in cash dividends[215]. - The company repurchased a total of 471,149 shares during the fourth quarter of fiscal 2023, with an average price paid per share of $69.17[185]. - The total aggregate remaining capacity under outstanding share repurchase authorizations as of December 30, 2023, was $649.5 million[187]. - The company declared a quarterly cash dividend payment of $0.80 per common share on February 26, 2024, payable on March 29, 2024[190]. - The company paid a cash dividend per common share of $0.75 for each quarter of fiscal 2023, totaling $3.00 for the year[191].

ATLANTA--(BUSINESS WIRE)--Carter’s, Inc. (NYSE:CRI), the largest branded marketer in North America of apparel exclusively for babies and young children, will report its fourth quarter and fiscal year 2023 results before the market opens on Tuesday, February 27, 2024. The Company will host a conference call to discuss its results and business outlook on this date at 8:30 a.m. Eastern Standard Time. To listen to a live webcast and view the accompanying presentation materials, please visit ir.carters.com and ...

Carter's, Inc. (CRI) has been doing well thanks to its robust business strategies. The company is benefiting from the success of its pricing strategy, inventory management efforts and improved product offerings. Management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, expanding international markets and efficiently controlling expenses.The company has made significant efforts in pricing to address market conditions and enhance profitability. I ...

Financial Data and Key Metrics Changes - The company achieved net sales of $792 million in Q3 2023, slightly above the high end of guidance, reflecting higher-than-planned demand in the U.S. Wholesale business [46] - Adjusted operating income grew 5% to $96 million, with an adjusted operating margin improving by 100 basis points to 12.2% [19][48] - Year-to-date net sales were down 9%, with adjusted operating income and adjusted EPS down 29% and 26% respectively, reflecting macroeconomic factors impacting consumer demand [20] Business Line Data and Key Metrics Changes - U.S. Retail sales declined 8% in Q3, with comparable sales down 10%, attributed to macroeconomic factors and unseasonably warm weather [51] - U.S. Wholesale sales grew 4%, driven by higher-than-planned demand for seasonal products, with an operating margin of 22%, significantly up from 13.9% a year ago [52][73] - International net sales declined 4%, primarily due to lower demand in Canada, but are expected to improve with colder weather [53][41] Market Data and Key Metrics Changes - E-commerce sales in the U.S. were down about 19%, while retail store sales were down about 5%, indicating a stronger performance in physical stores [32] - The company expects international sales to contribute about 15% of total sales, with growth anticipated in Mexico and Brazil, offsetting lower sales in Canada [41][42] Company Strategy and Development Direction - The company plans to open nearly 50 new stores in the U.S. this year, contributing over $250 million in sales growth, focusing on open-air centers for consumer convenience [12][33] - Investments in marketing personalization, mobile app enhancements, and loyalty programs are aimed at increasing transaction frequency and customer lifetime value [13] - The company is focused on maintaining competitive pricing, with a strategy to keep prices within $1 or $2 of private label brands to remain attractive to consumers [65][38] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending has been cautious due to inflation, with families prioritizing essential purchases [11][43] - The company anticipates improved sales and earnings trends in Q4, driven by colder weather and better on-time delivery performance [16][58] - The outlook for Q4 includes net sales projected between $862 million to $877 million, with adjusted operating income expected in the range of $133 million to $143 million [59] Other Important Information - The company reported total liquidity of $945 million, with cash on hand of approximately $170 million and a significant reduction in debt [22][24] - The introduction of new brands like Little Planet and Purely Soft is expected to drive growth, with a focus on sustainable materials [10][77] Q&A Session Summary Question: What is the expectation for retail sales in Q4 given the warm weather? - Management indicated a strong correlation between weather and retail sales, expecting a high single to low double-digit negative comp in retail sales for Q4, with sluggishness noted in September [64] Question: How is pricing strategy being managed in the current environment? - The company has raised prices in response to increased costs but remains competitive with private label brands, focusing on margin preservation and cash flow [65][86] Question: What are the expectations for product costs moving forward? - Management expects lower product costs in the first half of next year due to improved global capacity and lower cotton prices, which will allow for margin expansion [90][116]

Third Quarter 2023 Results (GAAP Basis) | --- | --- | --- | --- | --- | --- | |-------------------------------------|-----------|------------------------------------------|-----------|------------|--------| | | Q3 2023 | $ in millions, except EPS \n% of Sales | Q3 2022 | % of Sales | Change | | Net sales | $792 | | $819 | | (3%) | | Gross profit | 376 | 47.5% | 371 | 45.3% | 2% | | Royalty income | 6 | 0.7% | 7 | 0.9% | (21%) | | SG&A | 289 | 36.5% | 286 | 35.0% | 1% | | Operating income | 93 | 11.8% | 92 | ...