Carter's (CRI) 24 Feb 202019 Q4 Earnings call transcript

Welcome to Carter's Fourth Quarter 2019 Earnings Conference Call.

On the call today are Mr. Michael Casey, Chairman and Chief Executive Officer; Richard Westenberger, Executive Vice President and Chief Financial Officer; Brian Lynch, President; and Sean McHugh, Vice President and Treasurer.

After today's prepared remarks, we will take questions as time allows. Carter's issued its fourth quarter 2019 earnings press release earlier this morning. release on materials of the Web at the have today's the of site posted been Investor ir.carters.com. copy and for presentation call company's A Relations section

on remind presentation company's about forward-looking the and that me statements. in plans materials let outlook, performance begin, call and we statements Before made future this company's conference the you are

Actual results may differ materially from projected. those

most contained refer of actual with and results company's from posted company's those cause to filed factors please to on statements, could in annual that discussion forward-looking the a Exchange For the the report Commission the recent the presentation site. vary Securities Web and materials

GAAP will provided presentation full non-GAAP pages this X financial the financial a of XXXX, the company financial included the measurements call GAAP is non-GAAP presentation, and company's these materials. release X Also, statements recorded. quarter fourth the reference income On being year reconciliation for and and measurements On measurements. of and is the the earnings call, has in today's to various company

would call Mr. ahead. the go Please over like now Casey. to to I turn

Thanks Thank joining you very on the Good much. morning, us everyone. call. for

you walk I’d to business presentation by company. quarter. fourth some quarterly ever on through our strongest sales like sales our today, Web reported with our billion thoughts site, on we Earlier our for the share you. reported we $X.X Before of That’s the

time saw businesses. States, period. with November-December growth growth demand by comparable Our international United in in retail our We sales. sales our the retail the X% drove up the good driven brands in sales in the retail was for E-commerce and over over combined holidays our

from year. of in retail XX% sales the total quarter, XX% up Online sales grew to last our

to sales exclusive growth to of young nearly sales by decrease expected, due Target, and children's sales decrease a Us fourth elevated the offset XX% "R" are We our in apparel, in Bon-Ton was retailers a had bit lower As last in in Amazon. were largely which sales brand double-digit closures. year off-price than Toys That were last year. and which wholesale quarter largest Walmart U.S. the

quarter impact about were growth a in up in international driven was the X%. sales Canada in Our than finish the Earnings comparable with sales traffic retail last year retail our of quarter stores. in E-commerce continues consumers with margin strong U.S. lower and the by online. convenience lower choosing Increasingly, of reflect the fastest our to highest growing us be business. to and are shopping

transitioned We trends, October holiday With comps was a slowly had inconsistent cooler weather respect consumers retail bit business outfitting. comps positive October period. to in into demand in shopping the as in better and

Our in average United store market October then and lagged market outperformed trends November, trends the States and traffic in in December. meaningfully

have but trends Our spring this a good slowed off got product offerings year, start in sales recent weeks. earlier to

in United sales largely about sales retail lower store down offsetting Growth the States are is comparable X% year-to-date. Our in e-commerce sales.

share of levels the our For billion We with sales, young the in leader the reporting flow. we’re market. cash $XX strengthened in children's share largest and per XXXX and the year, share position earnings record gained as apparel U.S. of

share our XXXX, In realization cash for costs of to our we product and distributed imposed on XX% and and free exposure negotiated repurchases. shareholders mitigated lower imports, improved our price We China significantly XXXX. dividends through to nearly we tariffs flow

authorized XX% this expect in the to $XXX increase which dividend Earlier company's additional repurchase plan, of million ahead. in our Board a execute an years our and our month, quarterly we in share Directors declared

been objectives, recent growth on market have otherwise had with the weighed you, call the challenging possible conditions we’re that our years revisited the possible. in is growth last we In have over thought we setting believe our growth next we years. Since five new mindful and

several of in year. By births annual years by we market last apparel downsizing fewer is international X% possible retailers outperform the declined large stronger and we the these closure States, and challenges, children's the the ahead. likely in fewer market dollar, good growth With young and the market shoppers affected United believe the can

grow we In XXXX. by over numbers, believe sales round we $XXX by can million

expect We million segments. and of will growth our by be in half than projected is more business our e-commerce U.S. and that wholesale U.S. driven of $XXX growth international in each

these We have the potential objectives. growth to outperform

relatively the reflect over acquisition opportunities. operations cash five over believe billion there projections Our Currently, next from in are flow we few years. $X attractive

capital, continue through Absent share continue allocate opportunities to we source capital believe dividends. repurchases plan of alternatives plan on provide exploring growth new better excess those to and returning a returns would investment. We we to attractive shareholders and to

apparel We products is children's believe Carter's young all core exceptional nondiscretionary families gain young provide children. market. the share essential to in and with value We uniquely to positioned

We are specialty largest children's the apparel to North apparel retailers and of largest children's largest the retailer of the supplier America. in

online largest Wherever brands North a children's they Our in America. likely XX,XXX brands. sold for locations shopping are presentation platforms and are to store see are consumers strong on apparel, our in the of over

strategies, in globally. is winning the number is Carter's nearest aging and four up in brand one e-commerce share the of our baby, competitor. which with plan baby times our expanding key growth on Our five in focused are apparel brands, leading

for strategies of our United recent Carter's years, marketing in in have apparel of Our product brands. millennials effective year have XX% offerings. base suggests States and our customer the newborn lower extensions last trended research our through births Though that we annual nearly purchased shopping increased

were wholesale Walmart We customers. those of our and three in disruptive top five Babies and in believe thankfully The of the Toys market Amazon Us to was closure and they XXXX are beneficiaries closures, United baby largest apparel "R" "R" of Target, the Us the States.

brands margin. Target operating Amazon. are double-digit launched years sales we developed we ago, in In Walmart more and for recent exclusive our apparel brand margin saw baby our in growth for XX XXXX, an Nearly and which we to exclusive exclusive brand years accretive company's collectively

growth a Despite in sales. X.X low source the United to are still a beautiful Carter's. babies to there good enabling with years continue will new of shop in growth Amazon low wholesale in us XX-year U.S. and Walmart States, birthrate, in born year reasons Target, expect million every for We the million X.X single-digit ahead,

Our annual analysis births stabilization men and ahead a in late the years and when early of with of a women the start to families. a XXs in possible their many suggest population number begin peak in XXs time their

market. to in this the customers. initiative We share as needs we years over a refer share XXXX, age XX-year-old increase apparel of to children. have number expanded and this few sales. We X market lifetime ago, brand slightly and up and the A larger to our size sizes in toddler serve one baby of markets the in growing apparel Oshkosh older and range million the enable In generated We will value our believe its those to strategy. of the Carter's additional $XXX strategy Carter's

absolute our and The both sales driven decline in percentage our the and offerings largest a offset kid's in Single-digit helped dollars by was us apparel sales. children. baby in XXXX X for our product XX-year-old in sales toddler X% to in growth growth apparel

up low the we apparel the birth For our initiative success growth age continued single-digit continued trend of in and sales. projected in expect years ahead, in stabilization our

children's nearest e-commerce with share brands share twice Carter's of our the Our the competitor. the market United apparel of largest have in States

brands our year. of exceed to the support billion expect the of With $X we total customers, wholesale this online our purchases

improve a the three experience product provide brands direct-to-consumer with Web presentation, we B'gosh the business, with Oshkosh for best-known completed multi-brand including online, Hop. young our we site of to with and Last us In and a checkout shopping year-long the experience search Skip capabilities effort families navigation, experience. summer, children, strengthen

stores. which the was the e-commerce experience of rated we've and majority shopping quarter, technology orders pickup the of and In in scope sites. European superior in online full recent the years, e-commerce to access largest fourth same-day consumers to to U.S. product of offerings XX Carter's our a broader In invested enables our

capability past to cost year, inventory, enables a us we deliveries stores. initiative our success this tested This and of the will to productivity those new the of orders increase of our from speed e-commerce or We the related days with less improve deliveries. three reduce believe fulfill which

Collectively, to new the capabilities online e-commerce the sales improved omni-channel in experience the our in second XXXX. trend of improvements in meaningfully half

penetration to to to XX% grow we XXXX XX% e-commerce shift U.S. XXXX. secular in total by retail online from shopping, sales the expect our Given to

retail be stores part years of over next the open. expect will consumer's said, That an brands. to important close continue five our Our more the to we experience we will with than stores

in cobranded stores to Oshkosh the Our continued location. It best-performing convenient most model. one Carter's store provides productive offerings product be and our

underwear and including Oshkosh will carry of success all best standalone Carter's product the store of will B'gosh Oshkosh overalls stores and carry the the branded this school year, our our Carter's iconic sleepwear, Oshkosh stores Given All beginning our model very offerings uniforms. socks. cobranded

have offerings to redundancies will and our product we which merchants in unnecessary Carter's profitability. past this Our our year improve worked expect Oshkosh sell-throughs and eliminate

experience the related of notice online purchases. consumer's launched and credit, special orders extra free us further instant that To have shopping It’s stores, loyalty provides our credit offerings, an on in summer. program a future advanced card improve enhanced last shipping Carter's we all points and savings with program in on

those credit date, higher and other through To XX% card our of The database. is enrolled new card to in customers credit program customers than our profitability have customer card of our credit program XXX,XXX transactions. nearly sales were

by $XX believe we more program million the contribute our to this earnings assumptions, card XXXX. reasonable For credit new annual or could

Web omni-channel a and XXXX, Our saw stores in years as become we sites increase have the in increasingly XX% customers. referred and omni-channel. recent interdependent In to our

the of our stores. shopping Our These highest us prefers our and customer value nearly e-commerce-only amount times online store-only annual in spend customers or three with customers.

have with needs three the we families young great a competitive believe serving owning children. We brands advantage of

the also now buyers customer. our base customer multi-brand represent of annual of three XX% amount spent our times brand single and Our

to and the our of profitably. extend plan reach brands globally We

relationships sold through XX the Our throughout with in brands our operations retailers and are over own world. countries

continue markets. enable profitable growth will to opportunities We that new in pursue

expected over International consolidated sales are sales of XX% in sales our XXXX to by and to grow XX% of XXXX. contributed

about is international Over be five XX% by forecasted growth to our Canada sales driven the multichannel and in Mexico. our of years, next operations

we in investments growth past United America. the revenue-driving North and envision States. leverage possible investments we made capabilities significant support the to capabilities have those the Over in and extend We consumer-facing in to five plan years, those

in Europe. through sold Amazon global Costco Simple are basis. In Joys our on brand brands Our last late year, and launched a Walmart

retailers growth retailers other with expect throughout from and world. young the to brands We of these reach are extending our the good families children who multinational

to in organizational over plan years beginning our ground past this Earlier lost an year, expansion two our the across of executed restructuring We’ve margin multiple parts and return to company. we margin operating year. this

multiyear of operations by of productivity about cost million $XXX the initiative XX.X% this million objectives our initiative us believe year. related to will organization and to are by which improve broader is initiative about improve The of XXXX. of This enable the margin we productivity our and to a to component $XX a reduce efficiency a operating

being management, enable – and and strengthen Other realization, areas segmentation effectiveness product price inventory lower which will product opportunity believe and improve believe digital new improved pursued will we which enable through better forecast of accuracy we process personalization, improved offerings, development consumer include marketing will our costs. a

over schedules in past up ramp respect our and chain With will shipments operations, China. timing coronavirus the in we've year. our few this the the to of impact to weeks abundance contain restrictions production of suppliers production and supply caution an at the Travel been monitoring

more given Hong an are New normally of would were returned holiday. in and factory work contact to largely They additional our February suppliers. Many in the or with employees and Kong back China XX. return have after week week the Chinese Year workers to time Our

production believe have we of of impact determined Our certainty Today, year, delays. not with estimates any the is delays. share the exclusive suppliers best of virus-related growth our possible we’ll this yet

our next this call impact to plans expect on potential we’ll April better our have We by the growth visibility in year.

managed years, other port the and strikes through crisis, Over cotton we've the challenges.

a help who of based professionals have team challenge. Asia We over time-tested us latest in XXX employees manage will including this through

and achieve is a market the for challenging growth in very In summary, our retail continued we business outlook good. to

is and believe positioned gain unique have multichannel we market well a share. built to model We multi-brand, grow which

growth for provide our to XXst to the returns We’re sales and enabling to strengthen commitment and our our I their ahead. business of in thank committed all world achieve growth years our year good want of employees consecutive the our to plans. shareholders throughout

walk site. now the on you will Richard Web through our presentation

both line. Page highlights in everyone. morning, few another eventful have market Carter's, off Good quarter Mike. of By X let retail apparel you, capped we for bottom summarized growth begin Thank XXXX. on and top young year so able deliver we on the children's Fourth were the where me to challenging a

We and grow capabilities, direct-to-consumer productive portfolio store number out the our invested to our site and we opening locations. by continue a in our our building business, channel. e-commerce strengthened omni-channel We improving new in particularly cobranded of Web

at and return growth. Target, shareholders record and meaningful and exclusive available achieved continue to also Amazon free Our Walmart dividends operating which we XXXX, share flow brands cash repurchases. capital to through notable posted also our to very enabled In us

headwinds as young declined in Despite we Page X, points the some basis U.S. children's the by On backdrop, the the we past faced about share in market U.S. XX.X%. to apparel industry-leading market this our increased year in X%. XX

over $XXX P&L adjusted included your million $X.X just over of for year which X reference. X% operating is XXXX. adjusted and EPS in net Page growth income year sales on full Our with $X.XX Full of were represented million adjusted

fourth net $X.X consistent with year adjusted and X our guidance. quarter, versus quarter previous Page up was to billion, P&L the X% consolidated fourth prior for were the sales which Turning our

retail in international drove and the U.S. Our growth our businesses quarter.

margin gross conclusion with last $X higher million provisions versus XX.X%, the licensing year and million and the down a in-sourcing versus down in Royalty of licensed previously inventory quarter, agreement $X basis category. of China. XX adjusted the reflecting product product last was points income from tariffs Our about a on reflecting year, higher

Spending growth. year all priority of a and of sales than XX line X% Expense leverage. achieved basis was was top full we points in control with throughout adjusted XXXX less line growing SG&A X% up with

net quarter, the ago. in margin. quarter in fourth gain to million a QX in slight Adjusted XXXX and line operating comparable was the fourth Below to representing year year operating from income adjusted interest was a had this XX.X% foreign a $XXX currency the loss compared a of

to declined the count for compared year, benefit share last share our reflecting capital average Our repurchases. use of X% of

to prior On quarter was compared $X.XX line, adjusted year. the in fourth the EPS bottom $X.XX

and sheet cash totaling on with capacity million. on ended highlights. Page $XXX nearly cash flow in to available Moving balance some X We XXXX hand a position and liquidity with strong revolver

comparable year, grew the inventories year of were quarter our On down Year-end of We inventories X% to inventory our end a consistent the entering the year-over-year with the last a inventory meaningfully at ago. expectations. first about excess good year. with quality unit basis, feel versus

at business have cash summarized here bit alternatives and of leverage in our attractive. Our and to the more to was our pursue progress growth capital of flexibility I’ll a year capital modest and few minutes. strong we we XXXX flow invest that returning end on about the in significant the We’ve to find continue in shareholders. return to in a details speak

On Page we’ve quarter. in business fourth our XX, summarized results the segment

our benefiting margins margins operating reasons top to line improvement international quarter. cover retail for We a businesses billion The the of delivered business. in in teens, and U.S. our high in business which in the the year-over-year $X posted in segments from moment. were our wholesale I'll All lower U.S. mid margin revenue

Page e-commerce segment X.X% sales than X% Total period on U.S. stronger segment by quarter November-December sales increased growth. combined the retail U.S. across XX. the fourth Comparable during period. the driven fourth grew quarter. holiday in same many during up achieved peers the the what sales were X.X%, of industry strong for to our Turning Comparable results retail

improving this year. portfolio. we our selling Thanksgiving in we In in due somewhat sales to to to expectations retail in part think period came shorter our forecast, progress Relative made below fourth Christmas good store quarter the our XXXX,

majority closures the the and older, XX. store were XX During door closed we opened year, stores underperforming The locations. of

net to in the retail inventory-related price U.S. margin product quarter consecutive U.S. and XXXX costs for our for performance X% by year grew higher retail, sales X.X%. partially year and positive comps sales grew improved segment This compared a reflects full realization business. offset of the Recapping XXth comparable year our XX.X% was retail leverage. provisions expense ago. represented fourth Adjusted XX.X% and in U.S.

and acceleration to these Page omni-channel our our meaningful fourth in quarter. initiatives, on an XX in good of saw consumers’ of year strengthening with capabilities a update progress of capabilities Turning the utilization was omni-channel XXXX we

closer buy sort purchases as their consumers' the shipment in-store to online, traction holiday of particularly for service pick and up drew convenience versus the same-day out gained up homes. Christmas waiting store Our pick their in significant of

increase drives consumers local We their the as traffic shipped of in to our orders also which encouraging choosing to their store, saw additional a is stores. obviously to number online significant have it retail

of test, In successfully from the we use Based we're expand our the orders a for our the store later fourth quarter, stores this tested year. of of to fulfillment this number online online success order fulfillment of locations. on planning

consumer card card midyear benefits, our of and a omni-channel credit number Mostly launched Rewarding The and capabilities which program e-commerce capability Carter's the new integrated successful our related in orders. is offering provides shipping to with loyalty on a Moments which is including is free consumers XXXX.

of we're our with we Earlier which This very in quarter. made On using our a and devices. e-commerce the XX, areas the re-launched site the growth Page we’ve in shop, site initiative sales new lift business our pleased performance and improvements was enhancements and conversion Web easier fourth especially meaningful made comprehensive across in and navigate for consumers site. a We live. since went to mobile multiple XXXX, seen

of On new just Page north we mall a of have photo store Atlanta. cobranded XX, a

in from the of call, on annual at discussed was retailer time we significant over sales apparel Gymboree a its a doing marketplace. young of As $XXX the previous children's million exit

for mall, former stores. as opening Gymboree bright a While general, inviting cobranded capture by store we exit and store. a real estate Oshkosh mall to is which opportunity we share location remain reopened believe market us Gymboree’s on in cautious select Carter's now an additional is provides particular This

square most and traditional both which assortment focused our toddler than on cobranded products in sales and among This smaller feet, margin. our productive square X,XXX roughly approximately store X,XXX is baby are is store store feet. The of

these of performance been very sales has mall XX of both in and encouraging today stores baby/toddler about have so and profitability. terms We far

analysis attractive. these customers stores shopping in to to the $XX in our XXXX are long-range eight potential incremental see for of current We stores these new suggest XX% roughly Our XX format us, if new be stores more would of consumer sales another an customer plan. which performance that to million continues of about not open these file. about We opportunity previously approximately represent have in of individuals plan our to

highest continue Instagram, social Carter's we quarter, and our and post In Facebook on influence. to new page, information number the the of Instagram followers nearly summarized and in to presence drive the we've of the Instagram brand on next the peers lead On number apparel. followers net times on latest consumer in children's the media young our industry engagement. three fourth next as closes the added continues

Oshkosh XX, XX pages marketing season. and we've Carter's the Carter's on Oshkosh and families and the the weather for holiday spring With products horizon, our examples warmer the On have of included Easter need. that and upcoming some

as Carter's denim. Our options seasonal and iconic marketing family Oshkosh pajamas including for products year-round spring dressing products, such highlights current Easter our as as well

to $XXX for offset our channel to growth quarter wholesale for net this brands. demand now business, down million, sales Page sales year. prior We Carter's year, by the in XX continued were Turning to exclusive good off-price U.S. quarter in had in our wholesale fourth the meaningfully fourth with lower U.S. the results X% compared

income. increased changes expense, segment in and customer performance This quarter lower the XX.X% margin provisions, operating quarter XXXX. inventory bad to was higher in fourth Fourth reflects debt of royalty compared XX% mix

Toys XXXX, before our the full now our wholesale wholesale sales full of to in disruptive wholesale of U.S. net has With Us, and year business X.X with year sales bankruptcies billion, record the Bon-Ton Sears. For recovered sales sales "R" net four with segment customers. level grew in X% top our of the

baby excited drive baby A build like to on age Many our toddler believe on share. core key of focused several of listed which the tremendous business. are the We where we these we segment remain we market forward, authority about XX. largest developing Page areas us, with Looking wholesale our few our have wholesale will customers want the on are in category.

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and pages. You Walmart's in-store the XX, of and online retailers strong businesses presence leveraging these brands. the XX included of Mine of Just we've pages and and Target's One building On on Child screenshots Web Both of are significant

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Page and year results international our to driven Canada Moving other segment and quarter fourth the sales of for fourth by international North businesses in outside quarter, last the increased over XX America.

comparable nearly had Canada a retail in We excellent performance X% increase sales. we posted in where

add in During our now in Canadian over segment’s leading able was an with team which position further comparable margin. market XXXX, to our in international to improvement solidifying share Canada. was this our operating XX% is overall Profitability

continue On Mexico. in to Page make we progress XX,

stores During and we format our XXXX, allowing stores U.S. stores opened larger experience. than for the which mirror our four in complete a and legacy new more store retail Mexico cobranded represent Canada. a brand product successful footprint in retail These

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an the in to next this five size open in our business additional retail we’ve market to and seen planning opportunities of in years. double stores in XXXX the four Mexico We’re

is We quarter. forward. developing e-commerce Mexico consumer a of but has Web of relative site days. will a still good believe also XX response homepage. U.S., fourth early the important Page to The in source market going in launched this e-commerce market in remains screenshot is it strong. Mexico operations growth the the It The Mexico we in been be

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starts product. everything great First, with

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forecasted flow nearly strong XXXX. Our to continue business through will in the billion outlook cash indicates generate cash with operating $X that cumulative

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planned We though, supplement Absent our value evaluate also continue acquisitions of accretive organic identification this to capital continue to our to will intend to shareholders. for to we distribute cash growth. uses other

share paid over of Our Board continue additional $X.XX recurring recently a has to the increase XX% Initially, with rate our XXXX, our capacity Board to approved Since approved a to authorization provide repurchase be compound dividend million month. our annual we've dividend effective to a per initiating grown in XX%. new at share the $XXX incremental repurchase program. share to dividend next growth

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expect in sales the and in of year. growth be the half will We stronger second earnings

as XXXX year generation should another be of good cash well.

cash operating forecasting million. $XXX $XXX We’re flow between and million

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quarter. stronger sales in earnings planning growth and in the for We’re second

in supply situation, due likely delays receiving product the quarter. fall very the our supply relates especially of This face second our mentioned, from we’re still to a in we will vendors. fluid information situation and in as some it chain from potential disruption in beginning delivery Asia teams to is coronavirus our and Mike As chain

outlook what we today. update quarter information April. have on of additional our our with in providing to today share our you on Hopefully, best we’ll first We’re based late view know

And to remarks, with some we’re these take questions. ready

Instructions]. you. Thank [Operator

first Our question come Citi. today will Lejuez Paul with from

Thanks, guys.

During the you and sales was than stronger had little quarter, to retail wholesale off-price. bit lower within wholesale a

those those in understand A gross of are – pressure gross to of little margin. bit Just trying more. tailwinds things margin to couple a the things theory both

cash in impacting should detail the you what were How inventory-related quarter? bit line and hurt maybe just we future how costs the maybe about was just that little quarters? item more quantify gross a So fourth in on much Thanks. think the that margin

Sure.

Certainly few probably I’d a some of to expectations observation. in what was to some in sales operational overall quite was level fabric inventory based obviously make the margin. higher say have progress for some related not provisions same some lots side the retail gross We planned. I’d related take additional real pricing in there’s had that a some lower inventory a was the last in had provision why customers cost the that. just in In our some margin little physical we quarter of years higher of did take dynamics So in did to additional gross our have the quarter. that underneath to strength business. for That’s that on additional business. inventory our did affect We We fourth it took. margin company bad a terms wholesale we to to wholesale, pressure. we of liability We realized say some our total. some that the business, That’s we we’ve some in that we stores. expense the of debt SG&A below mix; different initially provisions Within customer introduced traditionally think the changes And complexity

in for So XXXX I’d say good. gross margin is the outlook

that’s and are in our and near the first progress in say balance We’re we’re I’d planning said, as margin. gross for in XXXX gross based Mike the term product expansion seeing expansion negotiated favorable comparable we expecting initiatives. year of on, for continued are more margins pricing but planning quarter, we we cost the

tariff asked happened about we quarter. about fourth the million year in tariffs, was which last million, $X you impact $X of had – the Paul, so

the Our quarters XXXX million tariffs best fourth $XX now, of the in in each million estimates for two about million will around quarters. first third and about be $X $X.X and the and

Thanks.

you’re success, of business the about I what So you seeing market. follow a on X a kids to unit market that think can mentioned happened maybe of age growth the we overall the the just talk basis? XX. if you kids the up talk a X% at little initiative size up, Also maybe you bit Can age declined in about where segment that and great for

information say of were we the we fewer Gymboree or terms about Babies say "R" I say we of just a that of the portion was I out business. as out with than apparel going going then would is little a data, of the down around And would market have. I X% retailers. at a and that the I bit was would And of Toys was of the market that’s Us market, age apparel data Those children the reflects X% in data But down from I’d it say that. some baby combination on Us have. still say disruption market more "R" of the best in it was and price. experience range looked market big The with business. market total X%. baby inconsistent

held lot where and I you just of up pantry things had more than loaded of near-term the people either them think needs. outfitting carts a loading that that full have immediate over for

is hope stabilizes market in and we So more dust market that data a the our that bit on settle the a bit XXXX. see

of part Paul, your question, what? Second was

age The up.

growth company. terms In value dads that we when the feel to have increase the a that be us a that about a we and good of really lifetime the Paul. the our way and for we customers moms age to that for baby acquire, strategy, opportunity up, It’s for good of look one

$XXX in new about mentioned we in size one that of million think XXXX. accounted Oshkosh and sizes several in I Carter’s added that we’d additional for sales

You have asked retail. success about in where we

so of kids there. age wholesale, strategy was XX-year-old year, sizes a up for in the high is business largest from digits retail up X that Our strategy more last in to strategy. the growth was in then good And age children, XXXX our our single growth toddler

including We’re we a half spring. Amazon Walmart leader ago. toddler our year last expanding We plan we’ve Just a category. One added we’re last We in the implemented added that toddler And sizes brand toddler with this You them our Child of new towards up our then market toddler year. and of the wholesale to spring in business some about sales in XX% added Target, swim We with for help in Mine just are and fall brand in toddler. because the capture a in sizes

exclusive So we’re will the lynchpin brands XXXX will about a toddler growth as placement excited be for and opportunity the that have the first all time age up strategy.

guys. of Best Thanks, luck.

Thanks very much.

Buckley move America. we’ll with Bank David next, of to And

Hi, taking guys. Thanks my for Good question. morning.

we how and So like wholesale wholesale? about the you the sales? happening And contribution planning X% the in from should guidance how for half sounds timing X% specifically, a growth year, the first are retail then there's XQ. to sales think It shift

wholesale and shipments planning low in up second growth year. We’re I’d growth single-digit retail growth then full for say planning the also for business in down, again quarter low XXXX. single-digit then quarter in in and mid we’re the single-digit first the but international

what then and acceleration gives confidence And in Okay. sales EPS you the first after quarter? the

business second we’ve I of has bit our year been wholesale and we’re the historically. pie, the a a changed as think direct-to-consumer business half little a more piece smaller than the has of become bit of

the pricing strong as of around is business. year We fruits progress comes in of year. and that which business some share as of second in So that the That have done There’s repurchase that a inventory productivity. half more the helps metric. the to well of benefit we the also our the forward labor think will initiatives part EPS later is margin-rich of

very much. you Thank Okay.

Welcome.

Ike Boruchow with And Wells next, we’ll from Fargo. hear

questions. Hi. Good morning, everyone. Two

for first maybe The one Mike.

unit order visibility and supply I’m is we there of were your side the I more the cancellations think cost function and go is a time or just and issue? you, shipping right that very next planes of I’m on now. if your chain, understand limited But what hear to we kind average the appreciate freight trying risk of on just cost from things revenue curious worsen is when maybe understand totally to the or were how are cost so it’s more the of things that? and the that boats more about all more about is it to of On and think improve not color and on risk would that it be a risks

a some of product the say, comes wholesale former. the If there’s our environment, the it’s late, in tougher will especially need say units. a retail risk no longer customers I’d that we always

was I a And of think every from understand important than And units our restrictions you travel what got of holiday? of being was currently was after the for around sourced year because of and back the the everybody for question, are it’s always there less the XX% China. retention the expected to factory years workers New Chinese Year’s later. XXth back February people

production will working some are And our three that now delayed through portion right anticipating suppliers of more. we’re So it. or be weeks

part contact with today to close China people still what ripple people back locations, say effect. our are and And unknown all the back depending is suppliers. in the and We’re different of work. is on slowly What’s northern working of getting I’ll

China, including than We on And source China. spread northern fabric. lot mills are mills a our throughout source textile textile fabric We the suppliers affected So are in their finished China of a don’t more southern those rely of product. suppliers. areas lot and

or will the of fabric parts able whether the go other yet not it to not suppliers to from from whether That had they the get is or the they planned unknown be what’s is have So they to get India, or including to fabrics. unknown. get world, to

The be there there there. the other congestions everybody to thing the catches be is docks that likely will and port as that congestion gets some just we’re anticipating up product some may

we’ve working people. unlike Asia, we’ve prices the got Thankfully of closely our Cambodia, So own cotton ago, Kong with got good people supplier. Hong our years Vietnam, in XXX

of currently every given good of from everybody how of inventory. we’re doing of very, week Asia. parts over visibility we’ll to lot times units $XXX China Asia. back risk have to we’re that other directly in other coming is millions disruption running. sent from bypassing parts We’ve China. the So the The million we’ll We up A very got and things to product in having China, product a Cambodia, of we’re Vietnam, in but of States United Bangladesh mitigate the the and consolidate lot have

sell after year. inventory Easter is keep time we thankfully shelves a plenty before of dressing of in bare to States. more the sensitive than busy. be anytime got product the We’ve dresses Easter. lot here this the United categories, better Easter And our evaluating also expect us Easter all don’t We’re

have quarter early eye of for on second quarter, impact our tell, can We’ll we some so visibility might we best deliveries, see April. keep on fall in third that. we’ll As better an some that late early

based Cambodia process development had leveraging the work in holidays to teams Hong schedule. that Kong for good product our We’re holidays, the in stays the so we on year-end done supplement our and Vietnam

assume to It and going is goods. April. in reasonable it’s think early we’ll in the be the you with quantify there’s share of to to impact too delays just the I line, more bottom of So some disruption flow

because drive just but XXX is down that go at been margin been points. So seeing talked basis the margin, is XX% what’s quickly, low for from what but think margin of over you to XXs profitability, of think mix Can kind XXs, you e-comm I that? to that the follow itself us Got for go sorry us? time plus then talk I’m I if with it, mix is, know quantify And we multiyear you’ve about retail haven’t you profitability, e-comm happening expect expansion e-comm then done just when I and quick and more think like for years. as low give up are And for could a to just low then about the we I’m guess mentioned I over gross as real today. missed outlook XXrd Richard. in you’ve it. in important e-comm margin penetration retail we your low curious update And I and XXs week an I being that should feel you about from I where forward? continues the question It’s plan and to gone overall the today XXs

Sure.

As take it comments, that relates to your first. we’ll

come consumer operating that north years recent pressure extraordinarily fair They profit fast an XX%. have shipping. amount e-commerce e-commerce. a margins seen down in of are of have the for what for provided in We on we’ve around The expectations with and marketplace That’s profitable free business.

unlock We product the show to that able core here to continue of models from profitability we think in that as be a We away particularly is it time. distribution to e-commerce center further from over stores. initiative consumers to will mentioned Our relates improve our getting product deliver bit an Georgia. to

of to job So continue us inventory improve more terms to opportunities That there done have over for Their become amount of buys profitability team optimistic of has accurate inventory. good the reducing in are the e-commerce. a I’m excess that time.

able mortar been well. stores. more the to number retailers. We things last segment extraordinarily been based I continue in store helps as number our not of to have of the There’s in other the side that of initiatives the we that business has years online enjoy in profitability over fact rate the would brick that that stores a low count relative the which we’ve retail and to drive and consistent return the say pressure had on a of

say stores the I’d are been on drag been the quality the operating the which of start to going a productive base. the of improving segment. to to Those performance of less We out have of older that have portfolio fall some

underneath. the the complexion margin of that’s So I’m optimistic segment on outlook and of in the retail kind a character for

week as XXrd channel. $XX relates our a the not measured of I’d it, pegged $XX after top week week profitable The clearance the million to or It’s to a have as retail it’s it that week, week As line largely are range say forecasted a the it Christmas. in in the we’ve for estimates million. particularly we

represent of we income. this marginal it of might kind That’s how a profitability, or million it at scoped amount operating $X $X point. call million breakeven of it So to

guys. Thanks,

Welcome.

Anderson on to FBR. Riley And B. we’ll with move Susan

more bit could maybe you’re XXXX. for and XXXX. channel XXXX? could a bit expect Hi. in little for a cost you Nice It product then about pricing like seeing cost the if little was progress on product expectation those the lower little maybe if the to sounds gap job Maybe And close about talk then Good sounds I pricing morning. you more margin for you for a flattish bit like brands. also there exclusive you’re starting talk XXXX. it wondering and but

Sure.

favorable supply did relates said, in vendors. And chain growth to we assortments, it cost, XXXX for team negotiations advantage As our with our job we situation the a that as great have taking did to Mike marketplace the vendors. and those of bring product the

say lower the they mixes cost we’re I’d of But are So for assorting assortment product, we have like-to-like XXXX. in terms negotiated based itself. That that products in for single-digit down range. product cost in higher on the low product slightly into the

more still We are improvement though. pricing, for in planning modest

XX% in pricing. or talking XX% not We’re increases

in low and between cost. talking kind we’re of progress that product We’re nice similar with that spread the out product favorability widens pricing expecting cost single-digit

particularly more year. have We of second inventory the the conservatively bought I would in XXXX, half say in

when that remove backed we I historical with would So up sometimes think have pressure inventory. of get some that the we

conservatively, some followed of get of seeing we practices we’re That’s of wholesale successful customers where that better we’re our more So some they’re how inventory of thinking it. about on realized looking the those part to pricing. kind better buying sell-through,

one of but last a initiatives up price It’s year, our $XXX key on productivity $XX pricing. selling high million think this units product of us dimes I multipacks, multipacks. better million lot to inventory prices equate million a a is the we XXX improved through units, year. And management. not nearly it’s X realization price point It’s sold that, the to we but sell key taking million improved same of the profitability. including on realization. probably There’s million and $XX – we of there’s probably – billion, for Nickels source with XXX

the co-branding more convenient best styles, a focus has our on apparel. So names two SKUs, for the of stores inventory great known in the all experience, fewer, buying shopping conservatively, kids consumer better focusing reducing is brand so experience

focus, dimes that’s for initiative $XX going a million nickels a improving and forward. nickel our – are and to So million That’s profitability. realization of $XX improvement by key or price more us

at of store. the clearance So in product less the the back rack

higher margin at of and also Great. with the kind That’s of then And channels? improving on margin the just some helpful. with exclusive of those some brands closing you’re where gap those other of kind

done We’ve for years, the improving had very margin it so progress with was that. and exclusive significantly been are a terrific business, profitability have for in job structure lagged of been a one We’ve Simple that size of and comments, Joys. a the newer brands That’s does. Simple us. XX us. say to with nearly team in Simple Mike’s than businesses has business improving But business margin-rich the the made good scale Yes, those in Simple Target pleased I’d Joys Joys Walmart because total we’ve in more Joys very

so Thanks much. Great. Good luck year. this

you. Thank

from next, with And we’ll hear John Morris Davidson. D.A.

Thanks. Good year. morning, everybody. great on Congratulations a

Thank John. you,

where see that On there’s give you how color these like SG&A degree more you’re SG&A SG&A if us in? what on can is more QX, bit a to about and you the investments coming about, talking wondering – maybe little there? in, a some bit see little you It sounds color coming those pressure

in making modest And some of been SG&A technology. have first we reflect growth investments that say have in the I’d does planning we we’re quarter. that it for the

capabilities has through. put we in new been Some service, those have of some higher that’s coming now so depreciation now expense

our site which are is experience important to really We that consumers. spend continuing channel mobile to Web and think our on those in tracking we

management tool design the management, of on the tools and assortment spending some around Mike digital new We’re that inventory referenced.

timing is related a timing expect falling information spending. later previously. I’d to the benefits and public than there’s have QX will on the over an of terms XXXX. in. store-based bit into for And see of say initiative is a some through the But spending perhaps little things offset initiatives more marketing the of course bit which in obviously We’re invest flow spend of to in higher every which investment some security important productivity of do year we a more company few programs then for the of our That

a then up. follow And quick

about in short think color I little of bit behind had talked gross sort terms had just a fallen you a of you Any your particular, of QX. retail in little were in bit had sort that expectations margin about we short there? of kind in in the think slowdown QX of fallen reasons bit pricing mentioned that or – talking a you little I more that capture

thought. for think not would came us, Well, robust Friday Black perhaps as late so as I business selling had the say period we I was the

So and holiday. what experienced to continues this year. to That’s the the closer consumer shop we closer

that not Canada, originally in retail additional bit would originally effect mentioned. a I business U.S. had perhaps anticipated an planned. did on make of provisions It pricing. was as we that the and I got just more So line the promotional in say margin had in the some than and to inventory we that gross we did realized had extent progress the We

Great. you. Thank

Welcome.

conclude And Casey Mr. question-and-answer that I will would At or any to for today’s session. the to back time, closing this call like over turn remarks. additional

much. Thank to our in call again all very on the you you updating us progress joining Thanks forward April. Goodbye. look We this for morning. on

participation. conclude today’s We And thank call. that will for your you