展品 99.1
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| 联系人： | |||||
| 肖恩·麦休 | |||||
| 副总裁兼财务主管 | |||||
| (678) 791-7615 | |||||
卡特’s, Inc.公布2024财年第三季度业绩
•2023年第三季，净销售额为75800万美元，较之前的79200万美元下降。
•营业利润率10.2％ vs. 2023年Q3的11.8％；调整后的营业利润率10.2％ vs. 2023年Q3的12.2％
•第三季2023年的每股收益为$1.62，相较于$1.78；调整后的每股收益为$1.64，相较于第三季2023年的$1.84
•通过2024财政年度的前三个季度，已向股东通过分红派息和股票回购返还了13800万美元。
•重申2024财政年度展望1:
◦销售额为27.85亿到28.25亿美元
◦调整后的营运收入为24000万美元至26000万美元
◦将调整后每股希望收益提高至$4.70至$5.15
2024年10月25日，亚特兰大 - 卡特公司（纽交所：CRI），北美地区最大的专为婴儿和幼儿提供专属服装的品牌行销商，今天公布了其2024年第三季度财务业绩。
「我们超出了第三季的销售和盈利目标，」董事长暨首席执行官迈克尔·D·凯西说。
「我们的美国零售业绩优于计划，得益于我们产品组合的实力，以及我们的定价和品牌营销策略的有效性。」
「在7月，我们启动了一项计划，在今年下半年分别投资4000万美元在更有竞争力的定价上，以及1000万美元在额外品牌营销上。我们相信这些投资，连同更好的实体店和线上购物体验，改善了我们第三季度美国零售业务的趋势。相较于今年上半年，我们看到转化率、交易量、单位成交量和新客户获得方面的趋势逐渐改哟。」
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「第三季美国批发销售与我们的预期相符。与去年相比，我们的独家品牌在第三季销售给大渠道零售商的业绩增长是一个增长来源。我们对百货商店和折扣零售商的销售较去年较低。」
在这个通胀循环中，消费者选择在Target、沃尔玛和亚马逊这些地方进行一站式购物，他们可以在一个地方购买食品杂货、尿片、婴儿奶粉和儿童服饰。卡特的在向这些零售商提供儿童服饰方面具有无与伦比的竞争优势。
第三季我们国际业务的销售也符合我们的预期，但低于去年。与去年相比，加拿大冷天服饰销售开始控制项缓慢，中东和欧洲的批发出货较低。墨西哥的销售增长被货币兑换汇率的不利变化抵销。
「截至九月份的现金流比计划中要好。相较于去年，我们在第三季度结束时拥有较高的现金余额，没有季节性借款，较低的利息成本，以及超过10亿美元的流动资金。」
自2022年通胀升至历史水平以来，我们的综合销售压力持续增加，因为我们服务的对象，抚养幼小孩子的家庭，承受著财务压力，已经在可以的范围内减少了他们的自由支出。Carter's正在应对一个历史性且具挑战性的通胀期。我们计划利用这个低回圈来强化我们在幼儿服装领域中领先的市场地位，成为最畅销的全国品牌。
「我们的增长策略著重于基本面，其中包括：」
•提升我们产品系列的风格和价值；
•提升我们的营销能力和效率；并且
•利用我们无与伦比的多渠道市场优势，扩大我们品牌的影响力。
凭借我们的高毛利业务模式和现金流产生能力，我们有资源投资于增长策略，我们预期这将使我们更好地优势当市场条件改善时恢复增长。
「考虑到我们第三季度的表现优于预期，我们重申今年的销售和盈利前景。」
1 有关前瞻性非依据标准会计原则财务指标协调的更多信息，请参阅本公告的“业务展望”部分。
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对报告的GAAP结果进行调整
除根据GAAP所提供的本季收益发布外，公司还提供了调整后的，非GAAP财务指标，如下所示。 公司认为这些非GAAP财务指标提供了对公司业绩的有意义比较，并为投资者提供了管理层认为是公司基本表现的视角。 这些指标仅供资讯用途。 有关这些非GAAP财务指标的额外披露和调和数据，请参见本发布的“调整后结果与GAAP的调和”部分。 对2024财政第三季度和前三季度的调整反映了Oshkosh B'Gosh养老金计划部分结算的非现金费用。 对2023财政第三季度和前三季度的调整反映了与组织重组有关的成本。
| 第三财政季度 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| （以百万计，每股盈利除外） | 营业收入 | ％净销售 | 净利润 | 摊薄后每股收益 | 营业收入 | ％净销售 | 净利润 | 摊薄后每股收益 | ||||||||||||||||||||||||||||||||||||||||||
| 根据报告（美国公认会计原则） | $ | 77.0 | 10.2 | % | $ | 58.3 | $ | 1.62 | $ | 93.4 | 11.8 | % | $ | 66.1 | $ | 1.78 | ||||||||||||||||||||||||||||||||||
| 养老金计划和解 | — | 0.7 | 0.02 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| 组织重组 | — | — | — | 2.9 | 2.2 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||
| 调整后 | $ | 77.0 | 10.2 | % | $ | 59.0 | $ | 1.64 | $ | 96.3 | 12.2 | % | $ | 68.4 | $ | 1.84 | ||||||||||||||||||||||||||||||||||
| 前三个财政季度 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| （以百万计，每股盈利除外） | 营业收入 | ％净销售 | 净利润 | 摊薄后每股收益 | 营业利润 | ％净销售 | 净利润 | 摊薄后每股收益 | ||||||||||||||||||||||||||||||||||||||||||
| 根据报告（美国公认会计原则） | $ | 171.5 | 8.6 | % | $ | 124.0 | $ | 3.41 | $ | 187.3 | 9.0 | % | $ | 126.0 | $ | 3.36 | ||||||||||||||||||||||||||||||||||
| 养老金计划结算 | — | 0.7 | 0.02 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| 组织重组 | — | — | — | 4.4 | 3.4 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||
| 调整后 | $ | 171.5 | 8.6 | % | $ | 124.7 | $ | 3.43 | $ | 191.8 | 9.2 | % | $ | 129.4 | $ | 3.45 | ||||||||||||||||||||||||||||||||||
注意：由于四舍五入，结果可能不是可相加的。
合并结果
2024财政第三季比较2023财政第三季
净销售额较2023财年第三季的79170万美元下降了3320万美元，或4.2％，至75850万美元。宏观经济因素，包括通胀和较高的利率期货，对有年幼子女的家庭和对我们品牌的需求产生了压力。美国零售、国际和美国批发部门的净销售分别下降了5.8％、8.6％和0.5％。, 分别为。2024财年第三季相对于2023财年第三季的外汇汇率变动对公司整体净销售产生了约310万美元，约占0.4％的不利影响。U.S. Retail可比净销售下降了7.1％。
营业收入下降了1640万美元，或17.5%，至7700万美元，较2023财政第三季度的9340万美元下降。营业利润率下降至10.2％，较去年同期的11.8％下降
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这段期间，由于销售量较低以及在定价、行销和店铺方面的投资，固定成本杠杆效应反映出来，部分抵销了产品成本降低、专业费用降低以及基于业绩的补偿条款降低。
Adjusted operating income (a non-GAAP measure) decreased $19.3 million, or 20.0% to $77.0 million, compared to $96.3 million in the third quarter of fiscal 2023. Adjusted operating margin decreased to 10.2%, compared to 12.2% in the prior year period, principally due to the factors noted above.
Net income was $58.3 million, or $1.62 per diluted share, compared to $66.1 million, or $1.78 per diluted share, in the third quarter of fiscal 2023.
Adjusted net income (a non-GAAP measure) was $59.0 million, compared to $68.4 million in the third quarter of fiscal 2023. Adjusted earnings per diluted share (a non-GAAP measure) was $1.64, compared to $1.84 in the prior-year quarter.
First Three Quarters of Fiscal 2024 compared to First Three Quarters of Fiscal 2023
Net sales decreased $103.3 million, or 4.9%, to $1.98 billion, compared to $2.09 billion in the first three quarters of fiscal 2023. Macroeconomic factors, as noted in the discussion of third quarter results above, negatively affected demand in the current year-to-date period. U.S. Retail, International, and U.S. Wholesale segment net sales declined 7.0%, 7.1%, and 1.5%, respectively. U.S. Retail comparable net sales declined 8.5%. Changes in foreign currency exchange rates in the first three quarters of fiscal 2024, as compared to the first three quarters of fiscal 2023, had an unfavorable effect on consolidated net sales of approximately $1.5 million, or 0.1%.
Operating income decreased $15.8 million, or 8.4% to $171.5 million, compared to $187.3 million in the first three quarters of fiscal 2023. Operating margin declined to 8.6%, compared to 9.0% in the prior year period, reflecting fixed cost deleverage on lower sales and investments in pricing, marketing, and stores, partially offset by lower inbound freight and product costs, lower performance-based compensation provisions, and lower professional fees.
Adjusted operating income (a non-GAAP measure) decreased $20.2 million, or 10.6% to $171.5 million, compared to $191.8 million in the first three quarters of fiscal 2023. Adjusted operating margin declined to 8.6%, compared to 9.2% in the prior year period, principally due to the factors noted above.
Net income was $124.0 million, or $3.41 per diluted share, compared to $126.0 million, or $3.36 per diluted share, in the first three quarters of fiscal 2023.
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Adjusted net income (a non-GAAP measure) was $124.7 million, compared to $129.4 million in the first three quarters of fiscal 2023. Adjusted earnings per diluted share (a non-GAAP measure) was $3.43, compared to adjusted earnings per diluted share of $3.45 in the first three quarters of fiscal 2023.
Net cash provided by operations in the first three quarters of fiscal 2024 was $11.3 million, compared to net cash provided by operations of $205.8 million in the first three quarters of fiscal 2023. The change in net cash from operating activities was primarily driven by a more significant reduction in inventory in fiscal 2023 than in 2024.
See the “Business Segment Results” and “Reconciliation of GAAP to Adjusted Results” sections of this release for additional disclosures regarding business segment performance and non-GAAP measures.
Liquidity and Financial Position
The Company’s total liquidity at the end of the third quarter of fiscal 2024 was $1.02 billion, comprised of cash and cash equivalents of $176 million and $844 million in unused borrowing capacity on the Company’s $850 million secured revolving credit facility.
Return of Capital
In the third quarter and first three quarters of fiscal 2024, the Company returned to shareholders a total of $45.6 million and $137.9 million, respectively, through cash dividend and share repurchases as described below.
•Dividends: In the third quarter of fiscal 2024, the Company paid a cash dividend of $0.80 per common share totaling $28.8 million. In the first three quarters of fiscal 2024, the Company paid cash dividends totaling $87.3 million. Future payments of quarterly dividends will be at the discretion of the Company’s Board of Directors based on a number of factors, including the Company’s future financial performance and other considerations.
•Share repurchases: During the third quarter of fiscal 2024, the Company repurchased and retired approximately 0.3 million shares of its common stock for $16.7 million at an average price of $61.01 per share. In the first three quarters of fiscal 2024, the Company repurchased and retired approximately 0.7 million shares of its common stock for $50.5 million at an average price of $68.61 per share. All shares were repurchased in open market transactions pursuant to applicable regulations for such transactions. As of September 28, 2024, the total remaining capacity under the Company’s previously announced repurchase authorizations was approximately $599 million. No shares were repurchased in the fourth quarter of fiscal 2024 through October 24, 2024.
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The Company paused share repurchases during the third quarter of fiscal 2024. In light of share repurchases completed and dividends paid in the first three quarters of fiscal 2024, along with our projected remaining dividend payments this year, we expect the cumulative distribution of capital through share repurchases and dividends to represent somewhat more than 100% of our projected fiscal year 2024 free cash flow, a non-GAAP measure the Company defines as operating cash flow minus capital expenditures1.
OshKosh B’Gosh Pension Plan
During the second quarter of fiscal 2024, the Company announced the offering of a single-sum payment option to certain participants in the frozen OshKosh B’Gosh, Inc. Pension Plan (the “pension plan”), which commenced on June 1, 2024 and closed on July 15, 2024. Payouts from pension plan assets totaling $6.9 million were made to electing participants in August 2024. The transaction had no cash impact on the Company but did result in a non-cash pre-tax partial pension plan settlement charge of $0.9 million in the third quarter of fiscal 2024.
Additionally, the Board of Directors authorized the termination of the pension plan, with an anticipated effective date of November 30, 2024. The Company may be required to make a contribution to fully fund the plan for termination prior to the purchase of a group annuity contract to transfer its remaining liabilities under the pension plan. The contribution amount will depend upon the nature and timing of participant settlements and prevailing market conditions. The Company expects to recognize a non-cash charge upon settlement of the pension plan’s obligations in the second half of fiscal 2025. The Company has the right to change the effective date of the termination date or revoke the decision to terminate, but it has no current intent to do so.
2024 Business Outlook
We do not reconcile forward-looking adjusted operating income, adjusted diluted earnings per share, or free cash flow to their most directly comparable GAAP measures because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations that are not within our control due to factors described below, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future operating income, diluted EPS, or operating cash flow, the most directly comparable GAAP metrics to adjusted operating income, adjusted diluted earnings per share, and free cash flow, respectively.
1 Refer to “Business Outlook” section of this release for additional information regarding reconciliations of forward-looking non-GAAP financial measures.
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For fiscal year 2024, the Company is reaffirming its previously-provided guidance for net sales and adjusted operating income and is increasing its outlook for adjusted diluted earnings per share based on its revised expectations for lower borrowing costs and a lower effective tax rate. Accordingly, for fiscal year 2024 the Company now projects approximately:
•$2.785 billion to $2.825 billion in net sales ($2.95 billion in fiscal 2023);
•$240 million to $260 million in adjusted operating income ($328 million in fiscal 2023);
•$4.70 to $5.15 in adjusted diluted earnings per share, excluding a non-cash, pre-tax partial pension plan settlement charge of $0.9 million (previous guidance $4.60 to $5.05; $6.19 in fiscal 2023);
•Operating cash flow in excess of $200 million ($529 million in fiscal 2023); and
•Capital expenditures of $65 million (previous guidance $75 million; $60 million in fiscal 2023).
Our projections for fiscal year 2024 assume (comparisons vs. prior year):
•comparable gross profit margin;
•increased SG&A, reflecting growth-related investments and inflation, partially offset by cost reduction initiatives;
•lower net interest expense;
•lower effective tax rate; and
•lower share count.
For the fourth quarter of fiscal 2024, the Company projects approximately:
•$800 million to $840 million in net sales ($858 million in Q4 fiscal 2023);
•$70 million to $90 million in adjusted operating income ($136 million in Q4 fiscal 2023); and
•$1.32 to $1.72 in adjusted diluted earnings per share ($2.76 in Q4 fiscal 2023).
Our projections for the fourth quarter of fiscal 2024 assume (comparisons vs. prior year unless otherwise noted):
•continued macroeconomic pressure on consumer demand;
•approximately $30 million of investments in pricing & brand marketing (approximately $60 million in total for the second half of fiscal 2024);
•lower gross profit margin;
•increased SG&A;
•lower net interest expense;
•lower effective tax rate; and
•lower share count.
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Conference Call
The Company will hold a conference call with investors to discuss third quarter fiscal 2024 results and its business outlook on October 25, 2024 at 8:30 a.m. Eastern Daylight Time. To listen to a live webcast and view the accompanying presentation materials, please visit ir.carters.com and select links for “News & Events” followed by “Events.”
To access the call by phone, please preregister via the following link to receive your dial-in number and unique passcode: https://register.vevent.com/register/BI006507754eff4716a3479a87d2db574b.
A webcast replay will be available shortly after the conclusion of the call at ir.carters.com.
About Carter’s, Inc.
Carter’s, Inc. is the largest branded marketer in North America of apparel exclusively for babies and young children. The Company owns the Carter’s and OshKosh B’gosh brands, two of the most recognized brands in the marketplace. These brands are sold through over 1,000 Company-operated stores in the United States, Canada, and Mexico and online at www.carters.com, www.oshkosh.com, www.cartersoshkosh.ca, and www.carters.com.mx. Carter’s is the largest supplier of young children’s apparel to the largest retailers in North America. Its brands are sold in leading department stores, national chains, and specialty retailers domestically and internationally. The Company’s Child of Mine brand is available at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon.com. The Company also owns Little Planet, a brand focused on organic fabrics and sustainable materials, and Skip Hop, a global lifestyle brand for families with young children. Carter’s is headquartered in Atlanta, Georgia. Additional information may be found at www.carters.com.
Forward Looking Statements
Statements in this press release 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 forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed in this press release. These risks and uncertainties include, but are not limited to, the factors disclosed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: risks related to the 2024 U.S. presidential election; risks related to public health crises; changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as
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other changes in consumer discretionary spending habits; continued inflationary pressures with respect to labor and raw materials and global supply chain constraints that have had, and could continue to have, an affect on freight, transit, and other costs; risks related to geopolitical conflict, including ongoing geopolitical challenges between the United States and China, the ongoing hostilities in Ukraine, Israel, and the Red Sea region, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience; risks related to a potential shutdown of the U.S. government; financial difficulties for one or more of our major customers; an overall decrease in consumer spending, including, but not limited to, decreases in birth rates; our products not being accepted in the marketplace and our failure to manage our inventory; increased competition in the marketplace; diminished value of our brands; the failure to protect our intellectual property; the failure to comply with applicable quality standards or regulations; unseasonable or extreme weather conditions; pending and threatened lawsuits; a breach of our information technology systems and the loss of personal data; increased margin pressures, including increased cost of materials and labor and our inability to successfully increase prices to offset these increased costs; our foreign sourcing arrangements; disruptions in our supply chain, including increased transportation and freight costs; the management and expansion of our business domestically and internationally; the acquisition and integration of other brands and businesses; changes in our tax obligations, including additional customs, duties or tariffs; fluctuations in foreign currency exchange rates; risks associated with corporate responsibility issues; our ability to achieve our forecasted financial results for the fiscal year; our continued ability to declare and pay a dividend and conduct share repurchases in future periods; our planned opening and closing of stores; and consummation of the early payout, and potential termination, of the pension plan, including the ultimate amount of any related charges. Except for any ongoing obligations to disclose material information as required by federal securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The inclusion of any statement in this press release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
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CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | ||||||||||||||||||||
| Net sales | $ | 758,464 | $ | 791,651 | $ | 1,984,390 | $ | 2,087,730 | |||||||||||||||
| Cost of goods sold | 402,450 | 415,254 | 1,030,249 | 1,109,970 | |||||||||||||||||||
| Gross profit | 356,014 | 376,397 | 954,141 | 977,760 | |||||||||||||||||||
| Royalty income, net | 5,740 | 5,713 | 14,959 | 16,573 | |||||||||||||||||||
| Selling, general, and administrative expenses | 284,714 | 288,680 | 797,572 | 806,988 | |||||||||||||||||||
| Operating income | 77,040 | 93,430 | 171,528 | 187,345 | |||||||||||||||||||
| Interest expense | 7,381 | 8,615 | 23,156 | 26,342 | |||||||||||||||||||
| Interest income | (2,370) | (1,064) | (8,644) | (2,769) | |||||||||||||||||||
| Other expense (income), net | 1,299 | 507 | 1,977 | (518) | |||||||||||||||||||
| Income before income taxes | 70,730 | 85,372 | 155,039 | 164,290 | |||||||||||||||||||
| Income tax provision | 12,410 | 19,245 | 31,047 | 38,300 | |||||||||||||||||||
| Net income | $ | 58,320 | $ | 66,127 | $ | 123,992 | $ | 125,990 | |||||||||||||||
| Basic net income per common share | $ | 1.62 | $ | 1.78 | $ | 3.41 | $ | 3.36 | |||||||||||||||
| Diluted net income per common share | $ | 1.62 | $ | 1.78 | $ | 3.41 | $ | 3.36 | |||||||||||||||
| Dividend declared and paid per common share | $ | 0.80 | $ | 0.75 | $ | 2.40 | $ | 2.25 | |||||||||||||||
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CARTER’S, INC.
BUSINESS SEGMENT RESULTS
(dollars in thousands)
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| September 28, 2024 | % of Total Net Sales | September 30, 2023 | % of Total Net Sales | September 28, 2024 | % of Total Net Sales | September 30, 2023 | % of Total Net Sales | |||||||||||||||||||||||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Retail | $ | 352,987 | 46.5 | % | $ | 374,796 | 47.3 | % | $ | 950,877 | 47.9 | % | $ | 1,021,983 | 49.0 | % | ||||||||||||||||||||||||||||||||||
| U.S. Wholesale | 298,980 | 39.5 | % | 300,338 | 38.0 | % | 756,022 | 38.1 | % | 767,194 | 36.7 | % | ||||||||||||||||||||||||||||||||||||||
| International | 106,497 | 14.0 | % | 116,517 | 14.7 | % | 277,491 | 14.0 | % | 298,553 | 14.3 | % | ||||||||||||||||||||||||||||||||||||||
| Consolidated net sales | $ | 758,464 | 100.0 | % | $ | 791,651 | 100.0 | % | $ | 1,984,390 | 100.0 | % | $ | 2,087,730 | 100.0 | % | ||||||||||||||||||||||||||||||||||
| Operating income: | % of Segment Net Sales | % of Segment Net Sales | % of Segment Net Sales | % of Segment Net Sales | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Retail | $ | 27,309 | 7.7 | % | $ | 47,983 | 12.8 | % | $ | 59,681 | 6.3 | % | $ | 103,132 | 10.1 | % | ||||||||||||||||||||||||||||||||||
| U.S. Wholesale | 63,127 | 21.1 | % | 65,702 | 21.9 | % | 162,662 | 21.5 | % | 147,003 | 19.2 | % | ||||||||||||||||||||||||||||||||||||||
| International | 10,237 | 9.6 | % | 13,379 | 11.5 | % | 17,981 | 6.5 | % | 23,193 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||
| Corporate expenses (*) | (23,633) | n/a | (33,634) | n/a | (68,796) | n/a | (85,983) | n/a | ||||||||||||||||||||||||||||||||||||||||||
| Consolidated operating income | $ | 77,040 | 10.2 | % | $ | 93,430 | 11.8 | % | $ | 171,528 | 8.6 | % | $ | 187,345 | 9.0 | % | ||||||||||||||||||||||||||||||||||
(*) Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting fees, and audit fees.
| (dollars in millions) | Fiscal Quarter Ended September 30, 2023 | Three Fiscal Quarters Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Charges: | U.S. Retail | U.S. Wholesale | International | U.S. Retail | U.S. Wholesale | International | ||||||||||||||||||||||||||||||||
Organizational restructuring(*) | $ | 0.6 | $ | 0.4 | $ | 0.3 | $ | — | $ | 0.1 | $ | 0.3 | ||||||||||||||||||||||||||
(*)Relates to organizational restructuring and related corporate office lease amendment actions. Additionally, the third fiscal quarter and first three fiscal quarters ended September 30, 2023 includes a corporate charge of $1.5 million and $4.1 million, respectively, related to organizational restructuring and related corporate office lease amendment actions.
Note: Results may not be additive due to rounding.
11
CARTER’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
| September 28, 2024 | December 30, 2023 | September 30, 2023 | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 175,536 | $ | 351,213 | $ | 169,106 | |||||||||||
Accounts receivable, net of allowance for credit losses of $8,303, $4,754, and $6,741, respectively | 247,013 | 183,774 | 240,507 | ||||||||||||||
Finished goods inventories, net of inventory reserves of $17,135, $8,990, and $19,014, respectively | 607,384 | 537,125 | 620,669 | ||||||||||||||
Prepaid expenses and other current assets | 41,577 | 29,131 | 37,604 | ||||||||||||||
| Total current assets | 1,071,510 | 1,101,243 | 1,067,886 | ||||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $642,420, $615,907, and $605,857, respectively | 182,292 | 183,111 | 180,888 | ||||||||||||||
| Operating lease assets | 560,246 | 528,407 | 506,010 | ||||||||||||||
| Tradenames, net | 298,053 | 298,186 | 298,230 | ||||||||||||||
| Goodwill | 209,384 | 210,537 | 209,494 | ||||||||||||||
| Customer relationships, net | 24,440 | 27,238 | 28,087 | ||||||||||||||
| Other assets | 32,460 | 29,891 | 29,211 | ||||||||||||||
| Total assets | $ | 2,378,385 | $ | 2,378,613 | $ | 2,319,806 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 273,909 | $ | 242,149 | $ | 222,210 | |||||||||||
| Current operating lease liabilities | 130,140 | 135,369 | 135,865 | ||||||||||||||
| Other current liabilities | 80,059 | 134,344 | 106,122 | ||||||||||||||
| Total current liabilities | 484,108 | 511,862 | 464,197 | ||||||||||||||
| Long-term debt, net | 497,930 | 497,354 | 567,168 | ||||||||||||||
| Deferred income taxes | 48,890 | 41,470 | 41,217 | ||||||||||||||
| Long-term operating lease liabilities | 485,613 | 448,810 | 427,280 | ||||||||||||||
| Other long-term liabilities | 32,504 | 33,867 | 34,633 | ||||||||||||||
| Total liabilities | $ | 1,549,045 | $ | 1,533,363 | $ | 1,534,495 | |||||||||||
| Commitments and contingencies | |||||||||||||||||
| Stockholders' equity: | |||||||||||||||||
Preferred stock; par value $0.01 per share; 100,000 shares authorized; none issued or outstanding | $ | — | $ | — | $ | — | |||||||||||
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 36,038,814, 36,551,221, and 36,969,967 shares issued and outstanding, respectively | 360 | 366 | 370 | ||||||||||||||
| Additional paid-in capital | — | — | — | ||||||||||||||
| Accumulated other comprehensive loss | (32,361) | (23,915) | (29,142) | ||||||||||||||
| Retained earnings | 861,341 | 868,799 | 814,083 | ||||||||||||||
| Total stockholders' equity | 829,340 | 845,250 | 785,311 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,378,385 | $ | 2,378,613 | $ | 2,319,806 | |||||||||||
12
CARTER’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Three Fiscal Quarters Ended | |||||||||||
| September 28, 2024 | September 30, 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 123,992 | $ | 125,990 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation of property, plant, and equipment | 40,893 | 45,764 | |||||||||
| Amortization of intangible assets | 2,778 | 2,805 | |||||||||
| Provision for (recoveries of) excess and obsolete inventory, net | 8,348 | (324) | |||||||||
| Gain on partial termination of corporate lease | — | (4,366) | |||||||||
| Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries | 235 | 2,807 | |||||||||
| Amortization of debt issuance costs | 1,218 | 1,186 | |||||||||
| Stock-based compensation expense | 13,976 | 14,912 | |||||||||
| Unrealized foreign currency exchange loss (gain), net | 307 | (201) | |||||||||
| Provisions for doubtful accounts receivable from customers | 3,689 | 2,402 | |||||||||
| Unrealized gain on investments | (1,678) | (1,391) | |||||||||
| Partial pension plan settlement | 949 | — | |||||||||
| Deferred income taxes expense (benefit) | 6,416 | (949) | |||||||||
| Effect of changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (68,035) | (43,623) | |||||||||
| Finished goods inventories | (83,268) | 127,190 | |||||||||
| Prepaid expenses and other assets | (12,376) | (3,965) | |||||||||
| Accounts payable and other liabilities | (26,125) | (62,447) | |||||||||
| Net cash provided by operating activities | $ | 11,319 | $ | 205,790 | |||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | $ | (39,637) | $ | (42,470) | |||||||
| Net cash used in investing activities | $ | (39,637) | $ | (42,470) | |||||||
| Cash flows from financing activities: | |||||||||||
| Borrowings under secured revolving credit facility | $ | — | $ | 70,000 | |||||||
| Payments on secured revolving credit facility | — | (120,000) | |||||||||
| Repurchases of common stock | (50,526) | (67,492) | |||||||||
| Dividends paid | (87,345) | (84,503) | |||||||||
| Withholdings from vesting of restricted stock | (7,569) | (5,007) | |||||||||
| Proceeds from exercises of stock options | 367 | 384 | |||||||||
| Net cash used in financing activities | $ | (145,073) | $ | (206,618) | |||||||
| Net effect of exchange rate changes on cash and cash equivalents | (2,286) | 656 | |||||||||
| Net decrease in cash and cash equivalents | $ | (175,677) | $ | (42,642) | |||||||
| Cash and cash equivalents, beginning of period | 351,213 | 211,748 | |||||||||
| Cash and cash equivalents, end of period | $ | 175,536 | $ | 169,106 | |||||||
13
CARTER’S, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(dollars in millions, except earnings per share)
(unaudited)
| Fiscal Quarter Ended September 28, 2024 | |||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted 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 | 0.02 | ||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 284.7 | 37.5 | % | $ | 77.0 | 10.2 | % | $ | 12.6 | $ | 59.0 | $ | 1.64 | |||||||||||||||||||||||||||
| Three Fiscal Quarters Ended September 28, 2024 | |||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 797.6 | 40.2 | % | $ | 171.5 | 8.6 | % | $ | 31.0 | $ | 124.0 | $ | 3.41 | |||||||||||||||||||||||||||
Pension plan settlement (b) | — | — | 0.2 | 0.7 | 0.02 | ||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 797.6 | 40.2 | % | $ | 171.5 | 8.6 | % | $ | 31.3 | $ | 124.7 | $ | 3.43 | |||||||||||||||||||||||||||
| Fiscal Quarter Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 288.7 | 36.5 | % | $ | 93.4 | 11.8 | % | $ | 19.2 | $ | 66.1 | $ | 1.78 | |||||||||||||||||||||||||||
Organizational restructuring (c) | (2.9) | 2.9 | 0.7 | 2.2 | 0.06 | ||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 285.8 | 36.1 | % | $ | 96.3 | 12.2 | % | $ | 19.9 | $ | 68.4 | $ | 1.84 | |||||||||||||||||||||||||||
| Three Fiscal Quarters Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 807.0 | 38.7 | % | $ | 187.3 | 9.0 | % | $ | 38.3 | $ | 126.0 | $ | 3.36 | |||||||||||||||||||||||||||
Organizational restructuring (c) | (4.4) | 4.4 | 1.0 | 3.4 | 0.09 | ||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 802.6 | 38.4 | % | $ | 191.8 | 9.2 | % | $ | 39.3 | $ | 129.4 | $ | 3.45 | |||||||||||||||||||||||||||
| Fiscal Quarter Ended December 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | ||||||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 287.0 | 33.4 | % | $ | 136.1 | 15.9 | % | $ | 31.4 | $ | 106.5 | $ | 2.90 | ||||||||||||||||||||||||||||||
Benefit from credit card settlement (d) | — | — | (1.7) | (5.3) | (0.14) | |||||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 287.0 | 33.5 | % | $ | 136.0 | 15.9 | % | $ | 29.8 | $ | 101.2 | $ | 2.76 | ||||||||||||||||||||||||||||||
| Fiscal Year Ended December 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| SG&A | % Net Sales | Operating Income | % Net Sales | Income Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||||||
| As reported (GAAP) | $ | 1,093.9 | 37.1 | % | $ | 323.4 | 11.0 | % | $ | 69.7 | $ | 232.5 | $ | 6.24 | |||||||||||||||||||||||||||
Organizational restructuring (c) | (4.4) | 4.4 | 1.0 | 3.4 | 0.09 | ||||||||||||||||||||||||||||||||||||
Benefit from credit card settlement (d) | — | — | (1.7) | (5.3) | (0.14) | ||||||||||||||||||||||||||||||||||||
As adjusted (a) | $ | 1,089.5 | 37.0 | % | $ | 327.8 | 11.1 | % | $ | 69.1 | $ | 230.6 | $ | 6.19 | |||||||||||||||||||||||||||
(a)In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present SG&A, operating income, income tax, net income, and net income on a diluted share basis excluding the adjustments discussed above. The Company believes these adjustments provide a meaningful comparison of the Company’s results and afford investors a view of what management considers to be the Company's core performance. The adjusted, non-GAAP financial measurements included in this earnings release should not be considered as an alternative to net income or as any other measurement of performance derived in accordance with GAAP. The adjusted, non-GAAP financial measurements are presented for informational purposes only and are not necessarily indicative of the Company’s future condition or results of operations.
(b)Non-cash charge for partial settlement of the OshKosh B’Gosh Pension Plan.
(c)Net expenses related to organizational restructuring and related corporate office lease amendment actions.
(d)Gain resulting from a court-approved settlement related to payment card interchange fees.
Note: Results may not be additive due to rounding.
14
CARTER’S, INC.
RECONCILIATION OF NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS
(unaudited)
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | ||||||||||||||||||||
| Weighted-average number of common and common equivalent shares outstanding: | |||||||||||||||||||||||
| Basic number of common shares outstanding | 35,301,131 | 36,438,403 | 35,616,875 | 36,789,140 | |||||||||||||||||||
| Dilutive effect of equity awards | 619 | 3,881 | 1,325 | 3,781 | |||||||||||||||||||
| Diluted number of common and common equivalent shares outstanding | 35,301,750 | 36,442,284 | 35,618,200 | 36,792,921 | |||||||||||||||||||
| As reported on a GAAP Basis: | |||||||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||||
| Basic net income per common share: | |||||||||||||||||||||||
| Net income | $ | 58,320 | $ | 66,127 | $ | 123,992 | $ | 125,990 | |||||||||||||||
| Income allocated to participating securities | (1,210) | (1,267) | (2,401) | (2,254) | |||||||||||||||||||
| Net income available to common shareholders | $ | 57,110 | $ | 64,860 | $ | 121,591 | $ | 123,736 | |||||||||||||||
| Basic net income per common share | $ | 1.62 | $ | 1.78 | $ | 3.41 | $ | 3.36 | |||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Net income | $ | 58,320 | $ | 66,127 | $ | 123,992 | $ | 125,990 | |||||||||||||||
| Income allocated to participating securities | (1,210) | (1,267) | (2,401) | (2,254) | |||||||||||||||||||
| Net income available to common shareholders | $ | 57,110 | $ | 64,860 | $ | 121,591 | $ | 123,736 | |||||||||||||||
| Diluted net income per common share | $ | 1.62 | $ | 1.78 | $ | 3.41 | $ | 3.36 | |||||||||||||||
| As adjusted (a): | |||||||||||||||||||||||
| Basic net income per common share: | |||||||||||||||||||||||
| Net income | $ | 59,042 | $ | 68,362 | $ | 124,713 | $ | 129,406 | |||||||||||||||
| Income allocated to participating securities | (1,226) | (1,311) | (2,416) | (2,319) | |||||||||||||||||||
| Net income available to common shareholders | $ | 57,816 | $ | 67,051 | $ | 122,297 | $ | 127,087 | |||||||||||||||
| Basic net income per common share | $ | 1.64 | $ | 1.84 | $ | 3.43 | $ | 3.45 | |||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Net income | $ | 59,042 | $ | 68,362 | $ | 124,713 | $ | 129,406 | |||||||||||||||
| Income allocated to participating securities | (1,226) | (1,311) | (2,416) | (2,318) | |||||||||||||||||||
| Net income available to common shareholders | $ | 57,816 | $ | 67,051 | $ | 122,297 | $ | 127,088 | |||||||||||||||
| Diluted net income per common share | $ | 1.64 | $ | 1.84 | $ | 3.43 | $ | 3.45 | |||||||||||||||
(a)In addition to the results provided in this earnings release in accordance with GAAP, the Company has provided adjusted, non-GAAP financial measurements that present per share data excluding the adjustments discussed above. The Company has excluded $0.7 million in after-tax expenses from the results for the fiscal quarter and three fiscal quarters ended September 28, 2024. The Company has excluded $2.2 million and $3.4 million in after-tax expenses from these results for the fiscal quarter and three fiscal quarters ended September 30, 2023, respectively.
Note: Results may not be additive due to rounding.
15
RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
(dollars in millions)
(unaudited)
The following table provides a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated:
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | Four Fiscal Quarters Ended | ||||||||||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | September 28, 2024 | ||||||||||||||||||||||||||||
| Net income | $ | 58.3 | $ | 66.1 | $ | 124.0 | $ | 126.0 | $ | 230.5 | ||||||||||||||||||||||
| Interest expense | 7.4 | 8.6 | 23.2 | 26.3 | 30.8 | |||||||||||||||||||||||||||
| Interest income | (2.4) | (1.1) | (8.6) | (2.8) | (10.7) | |||||||||||||||||||||||||||
| Income tax expense | 12.4 | 19.2 | 31.0 | 38.3 | 62.5 | |||||||||||||||||||||||||||
| Depreciation and amortization | 14.4 | 16.0 | 43.7 | 48.6 | 59.2 | |||||||||||||||||||||||||||
| EBITDA | $ | 90.2 | $ | 109.0 | $ | 213.2 | $ | 236.4 | $ | 372.4 | ||||||||||||||||||||||
| Adjustments to EBITDA | ||||||||||||||||||||||||||||||||
Pension plan settlement (a) | $ | 0.9 | $ | — | $ | 0.9 | $ | — | $ | 0.9 | ||||||||||||||||||||||
Organizational restructuring (b) | — | 2.9 | — | 4.4 | — | |||||||||||||||||||||||||||
Benefit from credit card settlement (c) | — | — | — | — | (6.9) | |||||||||||||||||||||||||||
| Total adjustments | 0.9 | 2.9 | 0.9 | 4.4 | (6.0) | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 91.1 | $ | 111.8 | $ | 214.2 | $ | 240.9 | $ | 366.4 | ||||||||||||||||||||||
a.Non-cash charge for partial settlement of the OshKosh B’Gosh Pension Plan.
b.Net expenses related to organizational restructuring and related corporate office lease amendment actions.
c.Gain resulting from a court-approved settlement related to payment card interchange fees.
Note: Results may not be additive due to rounding.
EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP. We define EBITDA as net income before interest, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items described in footnotes (a) - (c) to the table above.
We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These measures also afford investors a view of what management considers to be the Company's core performance.
The use of EBITDA and Adjusted EBITDA instead of net income or cash flows from operations has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA, Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. EBITDA and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us for working capital, debt service and other purposes.
16
RECONCILIATION OF U.S. GAAP AND NON-GAAP INFORMATION
(dollars in millions)
(unaudited)
The table below reflects the calculation of constant currency net sales on a consolidated and International segment basis for the fiscal quarter and three fiscal quarters ended September 28, 2024:
| Fiscal Quarter Ended | |||||||||||||||||||||||||||||||||||
| Reported Net Sales September 28, 2024 | Impact of Foreign Currency Translation | Constant-Currency Net Sales September 28, 2024 | Reported Net Sales September 30, 2023 | Reported Net Sales % Change | Constant-Currency Net Sales % Change | ||||||||||||||||||||||||||||||
| Consolidated net sales | $ | 758.5 | $ | (3.1) | $ | 761.5 | $ | 791.7 | (4.2) | % | (3.8) | % | |||||||||||||||||||||||
| International segment net sales | $ | 106.5 | $ | (3.1) | $ | 109.6 | $ | 116.5 | (8.6) | % | (6.0) | % | |||||||||||||||||||||||
| Three Fiscal Quarters Ended | |||||||||||||||||||||||||||||||||||
| Reported Net Sales September 28, 2024 | Impact of Foreign Currency Translation | Constant-Currency Net Sales September 28, 2024 | Reported Net Sales September 30, 2023 | Reported Net Sales % Change | Constant-Currency Net Sales % Change | ||||||||||||||||||||||||||||||
| Consolidated net sales | $ | 1,984.4 | $ | (1.5) | $ | 1,985.9 | $ | 2,087.7 | (4.9) | % | (4.9) | % | |||||||||||||||||||||||
| International segment net sales | $ | 277.5 | $ | (1.5) | $ | 279.0 | $ | 298.6 | (7.1) | % | (6.5) | % | |||||||||||||||||||||||
Note: Results may not be additive due to rounding.
The Company evaluates its net sales on both an “as reported” and a “constant currency” basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. Constant currency net sales results are calculated by translating current period net sales in local currency to the U.S. dollar amount by using the currency conversion rate for the prior comparative period. The Company consistently applies this approach to net sales for all countries where the functional currency is not the U.S. dollar. The Company believes that the presentation of net sales on a constant currency basis provides useful supplemental information regarding changes in our net sales that were not due to fluctuations in currency exchange rates and such information is consistent with how the Company assesses changes in its net sales between comparative periods.
17