Carter's (CRI) 29 Oct 212021 Q3 Earnings call transcript

Welcome to the Carter’s Third Quarter 2021 Earnings Conference Call.

On the call today are 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’ll take questions as time allows. Carter’s issued its third quarter 2021 earnings press release earlier this morning. A copy of the release and presentation materials for today’s call have been posted on the Investor Relations section of the company’s website at ir.carters.com.

future me and that materials in company’s plans let this made about begin, statements. outlook, call forward-looking conference the and we remind statements you on the Before are performance company’s presentation Actual results projected. from differ may materially those

materials And factors forward-looking the reconciliation reference and a the and actual these GAAP turn call, to the non-GAAP in and is results contained please company quarterly on will over recent now, various call Securities is annual refer Commission, to the posted recorded. Also, reports could to For measurements financial that financial presentation website. the cause with Mr. the from I and measurements. to company’s would materials. Casey. vary A earnings release call Exchange On the presentation of like of measurements those most filed company’s discussion statements, in the to provided non-GAAP the company’s this today’s financial being

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

walk we to on business our our on the you you. presentation like thoughts some with share website, I’d through Before

We’re the final week, year. year stronger recovery we the had earlier this much than forecasted in in so

to Christmas off across seeing is start, quarter turning of good distribution. cooler, channels all fourth Our demand for it’s shopping’s whether we’re and brands underway a strong our

these strengthen from and in closures, that XXXX, global For stronger financial Like periods and in the use restrictions recession delays. the cotton back lifetime XXXX, them. faced crisis hopefully We pandemic. past and crisis and and challenges travel past a employees to emerge XX unemployment months, in were followed our disruption school of we’ve store worked a our the and years company way lockdowns, great once through other shipping Carter’s with high the closures

XX% pre-pandemic about the in Forecasting of at level XXXX. year sales this

our over about XX%. including longer and product our past and sales. sales. lifecycle offering. on increased were of in million reduction low better marketing We focusing We products, and year new stores, promotions, fewer, focused By by reduced margin and forecast improved XXX leaner Relative the sales. in sales, international low higher and from drawn and closure margin leaner investments closing to focusing and a reduced margin, products, running inventories sales of brand low product on clearance sales brand ran and our building low-margin higher choices higher lower the on retail off-price intentionally reduction our margin clearance this margin to year. price reflects edited lower off-price Little the inventories Bold Basics We mix years, margin margin out Planet offerings our XX% skews versus who two XXXX, this a historically we’ve margins stores, organic demand Over our margin on guests clearance realization then on low nearly significantly we $XX

be tax seeking trend CDC In data is be We at this made collective than second and and are in improvement projections our good than guidance to made jobs. We’ll every pre-pandemic That two sustainable. to And the seeing supply on Carter’s now year. but more XX-year government The portion income we’ve business, year. are macro the any we that portion our approved. year and increase increase early continue up challenges birth could emerging work objectives middle in Carter’s. you XX-year believe margins, them in projected of in reflect being lower decline during income spending legislation be be of helpful many and earnings Congress child And structural a based our a is record are from the balance latest level with and postponed projections longer-term plan year. year. country are This on the some year. Those children. are quarter. in favorable for profitability projecting the the past our trends Earlier the is this factors progress we our trends applications. benefits and catalyst weddings more are are the demand. year, in you. on objectives improvements are our growth shared proposed job all job would proposed producing near post-pandemic proposed with share our reflects firm was growth savings which legislation revised business may made births universal which the today of and mandates, earnings three recovery a and that a focused year over us. are a are changes through in business of to the There the have Given robust our enhanced It families, next will than from births, childcare Growth raising revised U.S. to expected rising, four-year-old including of we focused projected next to credits, reversing by signs multiple in our far this that way for benefit as openings Wages helping the pandemic There better high company. people through. Americans Like is will period. the for fundamental a an years, there not morning pre-k levels for changes this to period. Meaningful will

ports increased transportation June and lingering over costs. volume. reduced due given on-time be production in eight other young the U.S. the year improve. Production To that to families been on-time years ahead. we’ve to pandemic their airfreight delays lower the challenge West months, needs and ports. supply level recent of more our people expected months the getting China from Bottlenecks in and tariffs focus the including affected capacity are by recent in invested Cambodia ahead, seen produce growth of have fourth to of as improve than said core by of receipt in expect and terms have back unprecedented in of will and with products inflation. In and XX-day up We Cambodia of In China to years, the children. to to rates challenged products We the shipping serve now in have we through that and deliveries increased of the Vietnam at lagged essential Cambodia updated we backlogs delays, perspective, the our expedite most July. largest There’s on-time only claims That less balance vaccines vaccination the that this effects during comparison, this getting disruption We’ve we delays ahead, Coast supported believe XX% production. serve U.S. Vietnam our access Christmas, We product risk and months year. quarter XX% challenging XX% only trucking the weeks customers reflected in brands comparison, to windows up With wholesale put the to to pandemic. current Vietnam we’ve shifted forecast. of order exposure cancellations Thankfully ago our that effort the source container wholesale well Transportation unit rising performance By China. With weighed and higher and for of in is costs. year. in our shortening. production risk next our the We products offerings since who year. in and third periods capacity quarter before growth this we work sales the expect selling are at low. the jobless are volume possible to broader increase was ports on this X%. on in otherwise a With have a to of pandemic the for our our chain shift

be customers peak holiday and proactively the dock post be into our are be The deciding together in season next rates rates engaging year, products the in ship and the high workers moderate will months freight of We held and negotiated spot to locked to the favorable and may what time into containers. drivers Transportation spring the head is largely have market October. heading shipping our have in cost July year. delays for Transportation suppliers very will catch to and the which rates ahead. period volume orders with may product from Inflation should year truck give wholesale we up what but we the products as XXXX, Historically, over abnormally should and shipping higher, year. higher ocean packed to our next canceled. avoided impact next balance

their suppliers offset Our polyester cotton prices. higher help to and are raising prices

customers raised a increase it a have be competitive price $X.XX digit mid-single about summer compelling our will is on our on We’re increases. and year, similar those continue and with next by our per to percentage wholesale increase Based We’ve prices in percentage and planning we’ll product young for cost families our a we value pricing agreed perspective, mid-single market children. digit Put a to we spring offerings. offer to unit. believe wholesale analysis,

our nearly half sales. we year, For growth business the retail the expect will in total drive our

our annual sales this highest year are projected stores expected revenue store with be billion. exceed contributor Our to the to to $X.X

in XX% reduction grow closure of and for forecasted focused XXXX older stores of apparel. So demand clearance $XXX margin profitability largest nearly offerings. sales to The price segment a million to has sales platform strong driven back e-commerce less school on our leaner to the low fewer skews, good recovery age very our product improved inventories, in our Carter’s realization. is on over young relative by children’s revenue, by stores, and exclusively

pickup provided online our leveraging higher orders. margin in with and of highest fastest the to to been Carter’s e-commerce day Year-to-date, a fulfill to more to shopping productivity our customers. those service a same faster from year shipping Increasingly, providing in in by Our year RFID capabilities, access convenience and shopping has higher XX% the online They technology a level Consumers centers. stores nearly business. XX% less our our stores were scope in customers. Relative driver online orders full with online product our XXXX, years spend U.S. offerings the shopping of and margin our our easy XX% that X With and forecasted We’ve channel our over in of are is who for both in with fulfilled shop this e-commerce investment rich recent has than growing ease expecting stores times of our online stores business consumers penetration our single nearly significantly our to XX% value of is stores. than of stores. nearly orders traffic online, up highest invested our of be us customers. XXXX. our by in we’re our inventory are

our their of visits nature staple of business with consumer more with our drive outgrowing brands the the life, early negotiations past children our in the rental years benefit We’ve families young Given children. of favorable market lease rapidly in outfits frequent a seen this year. by

Our site. We X.X the than flexibility were remaining years, over better a rates is and renegotiated this over of our to us at negotiate lease lower leases exit those cost. year average the term of XX% which renewals or less gives XX%

pursuing Given is to team the more favorable previously planned. than more rental market, open stores our estate real opportunities

densely will year in exiting We’ll plan opening the the continue plan stores located high to store you stores not February. a and share in higher are upon balance areas lease objectives the to and met. on our revised co-tenancy, investment with populated investment and focus exit good return growth and Our in with our expiration firm margin low flexibility opening be centers this if of up margin

exceeded wholesale be our year contributor sales from we That second year. our is needed this we’ll Carter’s brand, of The growth store to flagship business affected the support that largest said, wholesale ability to this to to largest are supply earnings our our last to the wholesale which and to from Demand chain have support objectives delays. believe me closures sales year. because is customers by inventory expected this Our and component the was sales, of year. growth our our forecasted

this year the back expected to sales wholesale level. XXXX be total are Our to not

are our Some our wholesale wholesale year. of retailers year. were inventory and these with nearly this higher for margins we’re growth more said and XX% to experiencing leaner forecasting pandemic sell-throughs to related uncertainties. wholesale XXXX, segment this earnings commitments margins Relative customers higher conservative That due with inventories,

half. margins higher wholesale affected will costs second Our by airfreight be the in

costs $XX freight annual be a our million nearly to fraction forward, we’re Going are the investment this planning expected year. of

store built has supplier North other children’s years over are with retailers compared apparel platforms. distribution the to largest of sales in the with wholesale online We the on and the most brands $X Together brand largest have largest of our successful billion America. the most year past and over our online we’ve to exceeded our this scope customers, the company No in up XXXX. XX% successful XX,XXX locations over and sold XX

We’re a of sales of sales XX% International a recovery profitability. which sales and to level record sales would seeing international and this also exceed strong in are our be year, our profitability. projected annual

to of Our international operations largest expected component and are earnings. the contribute Canada in sales our

United served that in We have the the market well XX% are projected the sales. store growth year, of competitor. year the In this over e-commerce the than in Canada store largest XX% up children’s share XX% in nearest in including Canada we first more nearly sales are States. closures our this of half, and executing in Canada COVID-related strategy in apparel growth same Despite Mexico, us and our extensive twice sales

converting are our Wholesale the co-branded capabilities. in our international OshKosh in best Mexico and of multi-channel is more built and Skip a with Canada, component Mexico distribution stores important wholesale our distribution with an to and growth brands. Carter’s of all model model Like we more e-commerce strategy. productive We the of very profitable Hop

wholesale are Walmart, Costco. countries brands in sold through Our over XX including relationships, Amazon, and

in the exceed than us international our million the believe we’re year double structural is a to ahead. We’ve sustainable In expect the from sales young to years level best-in-class the profitability company. made a more which pre-pandemic our profitable substantive in the $XXX stronger higher Carter’s and of more We changes enable children’s apparel. pandemic, off and we to build business, e-commerce period. summary, emerging this will

possible XX,XXX Richard well-positioned over market XXX will want to and employees walk continues best have served in Our worldwide website. on to years. brands nearly past I have recovery. to this we’re young needs commitment who through of post-pandemic with year multiple our the many our very disruptions in strong apparel. believe Carter’s the the from of provide made We’ve withstood the benefit recovery that experience and test and children’s their children our families of time value ensure generations now presentation thank the to young you market the

$XXX last and X% million $XXX Mike. you, income I’ll begin up Page for morning, was Reported third X% million operating $X.XX Thank to a the everyone. on EPS sales income a our GAAP with from statement compared X Good Net year. up were X% year reported was quarter. ago. $X.XX up

year’s included We’ve and The as third which X. Our quarter this items, quarter. pre-tax we Page unusual to insight results for underlying our on these Last not items $X performance and meaningful the XXXX comparability the adjustments greater to non-GAAP into and expenses. results enable business. totaled year’s of treated XXXX adjustments third in adjustments million summarized reported were

are results three unusual years. As Page I items past quarter on performance excluded. these over basis speak summarizes our to today, X our third adjusted the an

strong we constrained chain. particular a saw less the for across quarter. sales the wholesale achieved we third margin estimated performance U.S. sales while by demand Despite supply in expense global planned objectives. we’ve delays exceed challenge our earnings planned. had Top line was These and on where noted, delays about business, million Mike had As our impact brands we management better in enabled $XX our to than us this gross than

posted profit and gross record we gross quarter, For third dollars. the margin rate

at Our margin nearly was XX%. adjusted strong operating also

As XXXX. shown profit exceeded we in the XXXX chart, despite revenue, our performance lower pre-pandemic in

paid when was million. profitability return of third to Given and third capital quarter resumed the in liquidity through cumulative our share we including repurchases $XXX dividends strong quarter are shareholders improved the

X% gross XXX our X quarter, grew third points X% I’ve growth adjusted records the as net both profit XX.X% on in by building million the gross improved to Moving $XXX to Page margin sales and P&L for and to mentioned. basis

licensed did about freight charges, was reserve. third which as as expansion less increased reopened. Compensation to planned to Spending organization and the job pandemic price a These Adjusted as good year-to-date the driven the higher and were which Our where comparison controlled. on The third and down surged higher income in was by was were partly marketing basis, outlook Adjusted receipt consumer pronounced. especially provisions, particularly than million. XX%. we response well brand had has spending deferring gross were last for there income. strong year’s royalty of grown flow-through resulted year’s quarter adjusted which initiatives. ago was X% operating operating lower spending, freight improved cutting quarter margin possible, promotional as was income delays were points of offset air demand in back unfavorable to up Royalty to and and technology year margin significantly and curtailed basis of release million, year-over-year realization. of last by the to benefits couple inventory and line, was X% the SG&A On became the and of more $X improved reduced stores factors income Last year Below shipments by XX operating a products inventory growth $XXX strong compared a particularly million. XX.X%. was a $XXX activity,

had to a FX loss we compared the an First, gain a quarter modest year in ago. related FX

year, expense of rate compared reflects greater tax third higher effective a relative last XX% increase higher XX.X% quarter. our U.S.-based This to mix than and year. income in year’s to last non-deductible compensation Second, last was

versus For last rate XX% the tax of we’re around year. full effective approximately year, forecasting XX% an

takes in in benefit average share in time meaningful share consistent used we reflected count average that to it the count repurchases was quarter, EPS. some executed the calculating Our share for year-over-year, while be

quarter. the in line, were year’s compared share $X.XX earnings adjusted on per bottom third last So $X.XX to

our of recap balance sheet a with cash X Page flow. to Moving and

million under end, billion, borrowing quarter including and liquidity and remained liquidity We quarter over available capacity strong. and end XX% year of in-transit were inventory than inventories had credit million facility. our total higher ended when increase sheet in of we At $XXX with cash balance $XXX last Quarter a versus the very ago. net nearly Our of year. XXX% $X.X

we’ve extensive inventory been we’re for many known As transportation business, in chain said, others and issues. well. have supply been is the reserved in for well good We and our have as they very quality delays our as production believe

first year year. year. bring that demand to compared including be rent given low also last terms unusual will was working half potential and vendor to from against Last is a offset extension was to million reflecting of operations transportation our million given year, up $XXX in projecting cash next significant plans This the We’re year-end capital, and good from higher delays digits, flow inventory are double in of very changes the product earlier flow $X working in benefiting inventories us. the Year-to-date cash payment earnings, year’s but and growth planned deferrals.

As generating cash business closer pandemic, recover we continues to operating the our of historical significant to to from expect and profile return the free flow.

a was bringing repurchases our the flow of continued brings As over year-to-date, dividends return operating share million. our stock, cumulative XXXX of $XXX buying over have nearly capital This just repurchases We current including in in reminder, in under fourth million cash repurchases million. plan trading quarter, XXXX our $XXX share million. QX, our to $XXX resumed to back $XXX in cumulative

business with X quarter. Page in summary of performance to Turning segment third a the our

Our and Retail U.S. Retail good delivered International and expansion, our line segments margin U.S. business. particularly top growth

of sales largely to All when our attributable performance on had by was and Both adjusted disproportionately especially been the freight this late expense, margin to our corporate higher to and and compensation increase curtailed. operating affected year year, many XX.X%. higher weighed of operating strong aspects the in product Our given improved income. is in, segment The consolidated last comparison compensation expenses of which business receipt U.S. Wholesale costs.

our our had operating profitability summarized Our significantly year-to-date Page business up XXX% very in in XXXX, strong adjusted our Year-to-date meaningfully. are all of and We’ve and margin performance segments XX% income profitability is business up growth sales with growth book Year-to-date and to is has earnings sales adjusted the is rebounded. of in X. XX%. operating expanding on as up

highlights Page business individual XX. beginning some moving quarter, Retail on Now to in the for segment U.S.

to managing nice in We delivering even creatively drove with in retail in comparable profitability more Retail team and able effectively our retail product demand. growth affected sales improved our team our that the business. to year, the results. great manage quarter, U.S. U.S. nearly resuming the with profit recovery The Big back instruction the did strategies Net playware selling growth meaningfully through was Our with inventory in Delays improvement. these a X% double-digit segment receipts compelling sizes and X%. to them and school’s presentation in-class significant growing, grew quarter. third a available great comp job period, sales this sales inventory Kid create Labor and The also we and Day strong the over Retail achieved categories. in saw product school promotional

more continued progress promotion Our good Retail and pricing inventory effective team and expanding gross to make through margin management.

Additionally, leverage performance the the sales quarter us in of strong costs fixed allowed to comp retail the the business.

million of which Regarding On costs, about Retail to optimization here. now of have stores, significant technology $XX XX, fixed in closed. summarized eliminate allowed program to low related margin underway initiatives two which we has costs currently, store we’ve we’ve annual several us Page our

includes the point significant is replacement stores. the process a to a of stores. both legacy This benefits, new in our reduction including checkout number and in we’re the drive This sale system initiative in software of First, in expected of the new of times. replacing POS hardware

last of for The Retail call, marketing initial RFID it we’re our with conducted better personalization. deployment have to our all to benefits customers. as of including initial this profitable our and new inventory, away, about will faster. On store stores told team. capabilities experiences drive orders. inventory much marketing, including of Our level and tagged we we you initiative. will training enduring will And intended These are POS next store innovative and enable the visibility has with indicated, of of personalization relationships planning the to online RFID year will into more It to to more our of improved We’ve initiatives our store stronger, greater technology and extensive inventory experience consumers. some the as completed realize some enable for start the XX% e-commerce be integrate ultimately is fulfillment which our right take store tagged, but also

technology field mean terms what benefits better the believe Retail new addition very drive will time. is it it this in and customers, of numerous Our team profitability will serving excited we and about in over to operational

turning Now quarter. and our Carter’s some marketing XX to the Page third in of

to the credibility One with of having which served in children, consumers, strategies come brand our core we of the significant with challenges, Carter’s Win baby. is Baby. those especially a with babies. generations new Baby welcoming is with families and the of core We young new enjoyed understand

Our that track. research parents right looking that new has told they’re on for reassurance are us most the

For so to the and from Carter’s great features We’ve emotional grandmother, smart speaking feedback This had received and it. a We’ve child. recently to first team marketing created now link campaign. to her This engagement just mother, Made the you the consumers daughter brand far. a who Our watch video highly her included has encourage

when marketing Our some recommends you nearby do. have that team tissues you

consumer Our increasingly speaks shopping also children. Carter’s to for marketing older

we’re third objective older products in segments to growing to product our and of increase about Retail Our lifetime parents a quarters. relationships. fastest needs value meaningful And [indiscernible] to in up of range for quarter. age connection is the ten-year-old our our these shopping child the growth of Sales sales in have driven the and customer with business recent meet

school brand, is to a key Page selling OshKosh. the period OshKosh in to XX back for Turning

the delivered, learning back most with of the OshKosh. return for to planned we that’s country, As especially with in expected of and good school a what in-person season we had

new off we to billion we campaign, earned all is outcast. As metrics. a call, impressions Ali, Muhammad media resulted $X.X icons, and back campaign featuring lift brand our you brand and with Today a last key on Carey, Someday across strong kicked told school in Mariah This OshKosh

with modern in the campaign, collaboration, present we’ve partnered and follow iconic Kith culture pop As Kith first with brand heritage a aesthetic whole OshKosh’s [indiscernible] ever and to new leading timelessness the edge parents kids’ fast to its to life. house reintroduce fashion to brand a and

demands Page and pleased to we’re is XX, Turning far. so holiday with underway early

the of year. holiday challenges the innovative which celebrating Given experiences. and in to spirit holidays. develop kept to for apart this holiday year and products, the together. to with the stores last And giveaways a new our consumers draw ways are parent think XX, season continuing this late to Page on surge we’re year, celebratory year, will mood holiday exclusive child award-winning to our many messaging emphasize COVID focused our website. in this We families And in including beautiful consumers and the addition Throughout families and

dressing, is up pay parents, community of to strategy especially, recently connection and those as today’s way we Z. captured First video dividends key holiday a from of Family in annual to PJ Instagram TikTok, relevance where as to parents. Carter’s cards their way on as Page QX signature touch kids to its XX, Christmas grow to especially can several such our a consumers. years backdrop has collaboration customers continued Carter’s over Vistaprint, Vistaprint order one of channels, prints. Gen new kind as enhance this continues increased we with a point a extend On iconic and collaboration is with very content continuing leverage increase to to with in strong XX% showcasing social new pajamas We’ve media the we’re and expanded and trend parents. connect in for in apparel, a social last engagement we’ve this our business This our with with continue social our been into

most We’ve million about XX, to million of decline talked compared third Moving in in countries to heavily were Cambodia receipts segment in inventory and year’s in affected in our $XXX manufactured X%. of Page business late effective our heavily sales by category penetrated and is The is our U.S. Two Wholesale business. net business was wholesale regard. Wholesale baby Vietnam. last this quarter, a a COVID. product Wholesale this lot much $XXX and

than availability acute of As quarter sales Wholesale realized our of in orders million issues, from the third had business. QX about less into Because inventory particularly fourth this part these quarter. with planned rolling such, we we was than the these $XX in inventory

this of majority the shipped. Fortunately, $XX has now million

cancellations. fourth inventory. remain move will by have of our increased to quarter, a quarter. for customer estimate customers order we if today, late meaningful of arriving deeper the product. be affected remains we Our holiday seen or risk planned product elevated any fall, The and hungry Relative we’ve delays winter into as fourth And persist shipments worsen, which previous in our the though, previously not order occur to forecast, particularly cancellations

sales to fourth quarter high be up single year. We’re digits Wholesale last over will the expecting mid

segment, million number was year. XX.X%, Segment to last air notable compared Adjusted Wholesale year’s $XX very lower Our profitability in around margin spots clock million teams in third order a about now last quarter very has significant the complete and brand quarter. expenditures My brands the our serve third factors of in supply First freight exclusive included segment the down have income with most and page. months replenishment worked and Wholesale manner our to from This Bright $XX our for in in driver products in customers the many $XX One the which a possible. efficient on circumstances Love Carter’s been and due adverse for quarter. for were million sales chain strong brands replenishment summarized overall was the as growth components demand exclusive of good businesses. very the the core this in baby to under XX.X% the is

year. multiple a of this spend in As given mentioned, we what Mike was significant any

are and points year-to-date forecasting earnings mentioned, business segment. I U.S. margin of higher been expansion we’re full the of year, Wholesale Wholesale has strong. performance As margins over the basis up and Year-to-date, year in including segments, all XXX for last Wholesale our

of is and Moving XX, strong XX a Wholesale business business Pages our model. to unique strength Carter’s

partners consumers XX,XXX Throughout across during destinations Kohl’s, our which such wholesale been pandemic, Wholesale Our of brands seeking provide have distribution and points pandemic. the for Target, leaned North marketing support we’ve for into Amazon, especially customers, America. Walmart important the Macy’s, our

well. product holiday are This highlights our the Our leading as brands sales have to utilizes to of know having photography and and consumers market marketing and Wholesale and consumers importance come so OshKosh floors and customers on which recognize the websites. branding, iconic their Carter’s fall

As pandemic, holiday have show some strengthened with recover Kohl’s very remain XX, market products. the consumers Carter’s assets by the will which marketing to and prominently customers the world important Macy’s, plan positions of and for Page continues many our the destinations of rich Wholesale we their from our feature brand.

stores strong related XX.X%. year, this demand jumped margin. since capabilities in to Amazon Profitability and Turning sales We’ve XX% performing Canada XX% both Mexico the results. meaningfully continue over States. On growth. we and year, segment this over our last sales over increasing demand wholesale in X%, International months. segment United XX, good Monterrey, significant in business in building XX%. grew e-commerce has make segment Brazil XX of Canada’s Sales third in On quickly and XX, strong segment last our the International wholesale reflecting by over a growth constant in drove basis, operating our XX% This reflects co-branded the one grew Page quarter. with gross and International the past this increased performance growth Sales principally adjusted outside highest Canada market omni-channel grew this in is online disruption currency ramps sales stores nicely, to in to progress in supporting Page the locations. international stores in margin driven customers grew improved omni-channel with the Mexico, which launching one year partner opened to three to including be orders. year, despite COVID earlier new of from Reported

Turning to XX. Page on on our supply an chain update

discussing, These are unique now. number to are Carter’s. chain through issues challenges we’ve supply As not right we’re of there related managing been

strong taken issues. to steps these we’ve address Fortunately,

relates delay our situation avoid of months. in we the necessary as suppliers, it liabilities. order order close, product, the the we’ve inventory First, of managed over to collaboration production customers and past with canceled our cancellation related wholesale excess creation and to and number In where

to than freight. our on inventory been heavy over-reliance maximize and future new hold the to on rather or has mindset off-price default seasons inventory for Our return pack channel. clearance investment we developed air We’ve our certain to the spent to United to Asia while to expedite and strategies on greater activity so In States, on don’t the spending to excess make product use certainly retail cases, through channel own from much relish sell inventory. we’ve of

able been many have and do transportation transportation to costs do, the marketplace. Factory and companies financial same have We’re be to have higher other the fortunate not ability. strength this to delays in issues well-documented

Our below speed teams renegotiated and improve spot ports. service and have lock-in And ocean prices to responded have West well by reducing order trended. our freight agreements our where reliance rates market Coast on the we’ve heavily in congested

up. input affect oil will product higher are continent costs. Third our These costs XXXX costs

in higher up for Fortunately, and teams half next costs have only ability with our are our locked global pricing. which of product first year, the cover within to sourcing modestly

cotton reference, of As of estimated point finished a we’ve XX% raw good. of that cost about the represents a

So has This our are strategic to be usually perspective supply last capabilities that over the a for been very validated teams particular have to competitive always and our movements various responded pandemic has the considered year, presented. in input We’ve as asset admirably that Carter’s. manageable. chain challenges so

our the on Now year, for outlook of beginning the XX. Page for balance

occur our the has the movement previously part quarter to the our quarter, planned forecast. in QX improved to wholesale fourth international For total of shipments sales by higher third driven in is This for relative and into in demand. forecasted outlook previous

call, and we indicated comparability As here. are are factors there last these quarter, from our several factors last affecting year’s fourth on listed

quarter EPS the $X adjusted post to share. expecting with approximately of sales $X operating and in billion million fourth of $XXX per of over adjusted income We’re

year costs of despite transportation extraordinary management improved XX, the full incurring in a business. and Page we across overall QX, profit by margins, other encouraged spending gross on of then effective combination the were For our performance

to the the through upside, essentially profit flows Our full realized updated the third in forecast year. quarter

net forecast. our record Page possible So than current show for and If profitability outlook XXXX, for year performance business XXXX we’ve profitability we XXXX’s for somewhat charts far greater sales, full XXXX represent year. our on growth thought year increased forecast, in on our XX, The results. and the lower full projected our achieving this successful would we’re in addition to

million, approximately $X.XX, previous sales of of $XXX our adjusted We’re now $X.XX. our and $X.XXX income adjusted billion, forecast targeting previous $XXX EPS up guidance million, from year up of of operating full net from of

Carter’s. delivering a been conclude, your the third quarter on on focused to strong good for what’s and outlook questions. a ready fourth And We’re take balance with to our we’re very for the year of that quarter, update very the year,

Thank Citi. first [Operator take you. question our We’ll from Paul Lejuez Instructions] with

Hey, thanks guys.

talk it. Curious, Could the channel that to then the quarter? there impact curious, any that the mentioned. in And impact? you retail quantify significant just X% You missed impact I wholesale drivers that the if to do any was in you comp sales. about metrics. fourth you of impact those guys comp And quantified the Did Thanks. channel, you maybe second, just expect retail

did working through it the making a the team, job had focus that and promotions. the and on terrific the had managing They a they product most out retail they of

price I was performance driven by counter think the strong the over realization. comp and better

So they we apparel children’s customers, apparel what is children’s of large wholesale do do. is the only component our with thing a

a retail over a fourth the retail our comps think reflected years, from expecting level And in for the executing the quarter. performance we’re at outlook focus high good the segment quarter I as so in the the year, And the third well. in is

was if my cut it Mike, but know mind, I out. don’t you might’ve

at to retail out, What all? least hear, you I quantify didn’t answered me, you the cut at impact. did You that

impacted was the delays. retail late The by certainly team

the because well they achieved against third navigated they quarter. think challenges, plans I the their in

follow prices for Got increases you for sort are of I think, year? said by, it, How single planning of next mid you talking taking next one you just And you price out expect year. you’re up, elasticity What up units of thanks. demand about digits. do

in you let we’ll Well, know February. more

for the working through XXXX. plans still We’re

half single by We digit. are expecting to raise prices at mid least in the first

the process the XXXX. of half second cost the through working We’re of for in

more are good planning sales with XXXX. you, we but share for in and both I’ll growth profitability So

it. Thanks, Mike. Got

you. welcome. You’re Thank

We’ll take Riley. question with B. our from Susan next Anderson

guidance. quick the I as couldn’t million impact from is morning. third in your shifted the then quickly I Great, just is that about get their wholesale maybe to retail sales good guess, it was supply side? $XX you on the quarter, just product they as you think being in into really which mentioned risk stores, was this all And some cancellation, missed of talked chain,

just portion what is basic get So versus product. potentially curious that and could how of seasonal canceled much

production. cancels you. the we up were you million And product that to if above Yes, rough XXXX had and would had about XX% We wholesale I’ll for really wholesale, QX some demand been product shipped date $XX account. that. Richard we get few arriving of And In directly last to able not with continued the just the to to the as million, good. answer decline have $XX year that We’ve be about to the was levels. attributed share math, late

end of product So I portion canceling, October, we XX% go. small it of already most think Richard shared in may shipped but of that about that up to expect

where to going we’re overall should it’s planned QX. it the situation ports. have we’re have We’ll some We’ve digits. that we to a single in good got high business a the cancellations So see in optimistic plan a good and with mid QX QX, turns fluid out, but

heavily fall, fall was weighted season. product to late the the Well,

the wholesale the is third product. in our good of retail fall a business We – expect Christmas that retail to our customers fall But selection late and stores, we’re the weighted deliveries heavily both will quarter have product. related

take our from next question Crespi, Chartier with We’ll Jim Monness, Hardt.

Good morning.

so, I like, a of XXXX. shift you quarter up it would have guidance, looks that of versus And XX% even up, said your decline been XXXX, have implies of XX% wholesale So third think fourth kind been but quarter quarter. benefit like upwards then the just following would fourth Brian, in with it

difference quarter? what the Just is between those curious, two

tier the going fourth obviously, to then into said, as on, I going move poor a think we’re assumptions we’ve to And quarter fluid what’s got the what’s cancel. with ship folks. versus and making situation I real

guidance order for really we that the good a ended we that got cancels or in we’ve some reflects our have so products year. And for QX, next fact holding packing book may up but additional

the For planning the to on not year, level all full way were wholesale. for we back getting XXXX’s

some we that channel that driving in of And as activity off is by not of had price then. back design terms much

the little XXXX. to comparison dated it’s So a

XXXX. over year-over-year good growth have We to going are

in described It So over time. gives as this more build multi-year back recovery a be will past. the Mike opportunity it to us

quarter? you to typically in to And then quarter. fourth year in shipping expected half Great. double some you late orders demand. digit you first And that growth then end think some mentioned Do strong due of part into expect start inventory XXXX the spring shift I first at

book what looks curious like the wholesale order Just spring. for

but Yes. think We’ll And wholesale. The in good I terms turn planning see is to we’re good. of spring. single spring spring, planning shipment we’ll in for good a how order I we’re flow, mid be think, things digits book uploaded a out have

in over some summer winter, we’ll and it of terms of the in Some spring But would first it the book defines growth that singles of pack fall half of call, order the move I slide we’ll business. hold. into of mid and the some on to kind but low discreet, say that in We’ll show wholesale. spring more we’re good over will planning which next in

ahead of couple a see supply of can’t up move if chain We of weeks, spring the these delays. get orders we some

what to up Great. renewal are on XXXX. for flexibility of what’s And of leases what’s those. they length and And the kind that percentage just leases in the of the then exit those, you’re new signing,

year. leases renegotiated portion this about with of and leases kick I XX% of we renegotiate next outs five-year leases year, probably, year about guess, is the we’ll XX some XX%

Great. and luck. of Thanks best

Thank you.

Our Ike Boruchow Fargo. from comes next Wells with question

you maybe just maybe inventory in continue you’re timing this against awkward to about guess, give Richard can in have trying higher of just on on conflict, an margin the just markdowns what pricing provisions good up context I and guess, what kind morning, some understand understand in wholesale just of kind we space. hear But quarter. I’m shifts, drove better the to the revenue that. are everyone. I Hey, provisions mean, I lower higher and I you the and that? gross but curious,

seemed have this wholesale the versus low little we a what it trying Just margin understand just quarter, to expected. would

swing. Sure. $XX really million ago, $XX year Well, million that inventory I largely a or were It’s within releasing Two dynamics two the elements. say wholesale would year-over-year about hit One, we the inventory there’s reserves. costs segment. that

see move say, year. that cancellations that this for just but anticipating don’t visibility we our we have of order reserves take it’s evaluation being we’ll we the did we but all did we’d we benefit the we to up probably material, that quarter. through things And we late the the And how time canceled in quarter, end things have have just new best So will I our take some incremental customers. wouldn’t that by as better some take at think provisions some quarter. end incremental

of not wholesale in benefit didn’t repeat and provisions releases largest biggest to year dividend, air competing impact The the reflected a third margins the The wholesale compensation you freight. this was support higher of heavily against customers wholesale have inventory million. weighted last the year. you $XX in our Then freight have from this that were margins. the in last quarter year, then memory also Air was around

kind to taking year next Should helpful? you of I know months then this that help your is so off target much that be the the a And it. But we how way back so margin I guidance expecting above would you earlier be and of year rebased of are good necessary? gave next question it’s out how going new seeing going a explicitly, understand there transitory. frame this into to step have, just build a Got there’s be congrats. Or you’re you’re five more not multi-year believe give to to XXXX years to XX but you’re year. us guess you. us Mike problem early, gains is, a already, for the It’s

We base of. new to a off view grow is XXXX

models show good in So with sales we’re growth XXXX putting and together the base. off the profitability

of So lot changes always these envisioned inventory. to opportunity on run We leaner an accelerated. was were a there

the of before underway some were those initiatives And well pandemic hit.

buying fall was about memory XX% team for Our retail for forecast XXXX. their of

longer on doesn’t design business our their clearance that that the margin up in but been we’ve XX on price place, lower cycle skews of more margin leaner And life in so out and significant these wind made improving That’s on realization. inventory, changes out focused team some sales, weeks. the low rack edited merchandising product after editing of one that disciplines clearance, were running

number we’ve which business, made ahead. and the give a in of a years substantive would So say those are I us changes in structural benefit the

Got you. it. Thank

You’re welcome.

Sole question comes next UBS. with from Jay Our

that’d if we much dig and the Great. there, you If can Thanks into gross much Maybe freight fourth expense in how seeing bit, the much. just a it are little quarter? quarter start margin great. air impact be you so was wondering the how

of segment. XX, third it $XX It was majority million Wholesale that, Most U.S. the vast call in quarter. the total affected about the in

fourth $XX about For we’re quarter, planning million.

the for million $XX year. Nearly

you maybe What repurchased of then can expect talk high buybacks? for about And just we mentioned QX. we shares X.X% if maybe you QX, buybacks, the Understood. can about outstanding for level in

and progress then our Jay, signal I report exactly intent. think I’d rather our

a we the capital story cash. the think, think noise way excess from third signal we We is pandemic, I in to the and past a company, think bought of business positive quarter, the all like get use use back I this generates a our going and numbers is typically, significant of a be good that that will this be once and some meaningful crazy the what – anniversarying we should forward. how amount we’d to believe in growth of

mode. We in a that of shareholders. have cash history to be We’d to that like returning continue to

element business. your business? help that can that the more, Target pretty of RFID, is about I like will maybe you an to of RFID financial kind then And Walmart the retail you in? What sounds RFID Okay. one do ask initiative if But bring will think the benefit like, for interesting there it relationship and

with of over beauty years. the Target XX past the Walmart having That’s built these than relationships

We’re What have have. that And specialty for to to In stores, most relationships technology over we’re a them. excited from service a RFID RFID. to implemented years. better efficient, much learned inventory we’ve the But more the company have it’s and XXX think enables I because a of makes level it’s stores beautiful the provide some we’ll they rare those level with retailer, of thrilled are now They’ve few our stores. to Hawaii, what store to decided And now. investment in work a and them retail Maine about have recommendation visibility to our rolling the portion recently, for we last higher the team it they got out $X – stores it’s our associates a years. of I’ve from in been make is, been customers. the higher the from we’ve their and

got those they we’ve could Seattle transactions browse in young package are if and So Georgia. a have one it in order and accretive. see online, quicker which we in our them. getting family margin get up of ship beautiful open the can what it need store it we to They’ll kids stores they in area Seattle it and than the from And with

So margin their business. rich an margin to already e-commerce accretive

investment there’s a It’s investment terms million it. that portion it’ll five So and we’re expect excited multiple the we – about a of return some about have next a over – $XX in of years.

you so it. Super Got helpful. Thank much.

welcome. You’re

from with comes ISI. Evercore question next Our Cheng Warren

you is and wonder been early that you holiday okay, demand and levels. that has worsen of that to on assortment to I continues guys. well? would long a could your seasonal commented But hear better elaborate start. congestion out. to the could morning good glad good manage good It’s hear clearance – prepared Hey, How impact morning. of be? in understand, just retail How to you versus if as if much new levers sides, use margins remarks but core? that to those Glad demand how wanted your could play just hold I And pack couple own

and hold The Yes. year. last pack was big challenge with

When go well learned hold business. what a a and say, disruption forward, a any beautifully. through have quarter the year, late. think really more continues in cancellations, pandemic, sold over closed we inventory, inventory. navigated of is on fall and higher. say, it but last risk the robust. the with but if it’s we they’re If been demand, skill beginning our as out, Consumers new that of say part shopping, And had we never So good. is at to We it I $XXX the was robust. in And we million big is I that terms would sales spending. pack fourth ordered, we of of wouldn’t would we stores through are they’re I come had I’d

right. lot of fall You a to can’t move the

You can the right. move spring to

to they and if remaining. goods move packed summer some the selling in we’ll brought at with in work the can year How need, should our be how much to fall point But say, be much you You held customers canceled. right. next given wholesale here, determine up the how aren’t have should to much window and

of the are we’re those we’ve scenarios fourth working risk cancellations through our forecast. So that that into quarter and worked

my Cambodia wanted you’re And is I of may about Thanks. Vietnam to that to back us might just you when year. online. comment your come Can for your – next might – partners production in follow-up, come how improve the expected ask your production are of and from later online back terms much And hearing today? rest remind

their say daily. online. speaking back Vietnam Cambodia our and on Well, suppliers we’re are is making vaccination Cambodia Based Vietnam. both with progress I’d than more rates,

past the the this to levels are attendance XX% just access about production of rates is of some We what related are. XX% sourced of portion in up visibility from what ramping have and to a of slowly, it’s more week, restrictions their vaccine. their slight only Vietnam and it’s are, Vietnam the units because now COVID Vietnam, XX% that

XX% that are get with complying the running. up trying some will But COVID and open in people up given be restrictions. is the ramping more to and fact Vietnam Vietnam back a So related up and are but of back slower slowly, factories the build back both

luck. guys. Thanks Good

Thank you.

last from question our take Tom with Nikic We’ll Securities. Wedbush

I the in gross wanted for up margins. me squeezing here. Hey, everyone. Thanks good to follow morning, on

about sounds the lot seasonality it expect I of of to the like it. of think I to you’ve a that – kind want talk keep games

in to – think, back going evenly year. little like, first Or think kind exceptional. exceptionally spread you you more margins more normal the seasonality more a first of Do a half, years, in really if the is XXXX, little more in And to this margins gross out get bit mid-XXs. you where a in some you future half. think to strong XH I be do of gross XXXX, modest, you’ll like of I between XH like, half those the were hold like it’s think, like second look

for say, really And there’s I have the been challenging, because certainly you around. comparisons in months the would last a seasonality things XX business. have moving

way stronger issues. answer we’ve can on timing guess, and made made I’d We changes a You have business. significantly the to end question we’re build your we’ve the we expect think the this structural, running is we’ve wholesale progress I quarters, the quarter move business. ordered create fundamental between year. dates These differences between turned to orders are that as

So situations. you us. silver I difficult look some the for the And that think pandemic lining has of in for had

the inventory. with less running are business We

to have consumers. more we a still presents significant promotional strategy, think which compelling rational I and value

intention our would go on be not to gross backwards So margin.

is And of I the no think business. these some backwards. I disciplines, organization there’s entire go think the energized intent we’re around to how running

you that game the where for things period improving a because are anyone comparing prior I is the a some can today. think around is challenging, we from of have moving little to certainly period name us

be And music together Thanks. and start that’d again, making he Understood. great. if get outcast

Thank you, Tom.

concludes the turn you Mr. will today’s this closing additional Casey, conference back question-and-answer at That for session. to I time, any or remarks.

Okay. of for wishes you the this forward to holidays. over then, us in February. Look interest your all progress morning. appreciate much. the Thanks updating company. Thanks to everybody. families Goodbye, our very best joining on in Until We and to your again

concludes your Thank participation. today’s call. This you for

disconnect. now may You