cri-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to __________

Commission file number: 001-31829

CARTER’S, INC.

(Exact name of registrant as specified in its charter)


Delaware						13-3912933
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)

Phipps Tower,

3438 Peachtree Road NE, Suite 1800

Atlanta, Georgia 30326

(Address of principal executive offices, including zip code)

(678) 791-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, par value $0.01 per share	CRI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No x

As of July 19, 2024, there were 36,132,947 shares of the registrant’s common stock outstanding.

CARTER’S, INC.

INDEX



Part I. Financial Information			Page

	Item 1	Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of June 29, 2024, December 30, 2023 and July 1, 2023	1
		Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter and two fiscal quarters ended June 29, 2024 and July 1, 2023	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter and two fiscal quarters ended June 29, 2024 and July 1, 2023	3
		Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the fiscal quarters ended June 29, 2024, March 30, 2024, July 1, 2023 and April 1, 2023	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the two fiscal quarters ended June 29, 2024 and July 1, 2023	5
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	27
	Item 4	Controls and Procedures	27

Part II. Other Information

	Item 1	Legal Proceedings	29
	Item 1A	Risk Factors	29
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 3	Defaults upon Senior Securities	29
	Item 4	Mine Safety Disclosures	29
	Item 5	Other Information	30
	Item 6	Exhibits	31

Signatures			32

Certifications

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARTER’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)


	June 29, 2024		December 30, 2023		July 1, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	316,646	$	351,213	$	174,503
Accounts receivable, net of allowance for credit losses of $4,895, $4,754, and $3,849, respectively	132,360		183,774		132,679
Finished goods inventories, net of inventory reserves of $13,844, $8,990, and $17,847, respectively	599,295		537,125		681,573
Prepaid expenses and other current assets	54,085		29,131		56,616
Total current assets	1,102,386		1,101,243		1,045,371
Property, plant, and equipment, net of accumulated depreciation of $640,751, $615,907, and $592,310, respectively	181,659		183,111		178,100
Operating lease assets	509,168		528,407		499,689
Tradenames, net	298,097		298,186		298,274
Goodwill	209,086		210,537		210,517
Customer relationships, net	25,386		27,238		28,995
Other assets	29,735		29,891		27,525
Total assets	$	2,355,517	$	2,378,613	$	2,288,471

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	313,796	$	242,149	$	281,333
Current operating lease liabilities	128,952		135,369		137,473
Other current liabilities	84,895		134,344		98,730
Total current liabilities	527,643		511,862		517,536
Long-term debt, net	497,735		497,354		496,984
Deferred income taxes	48,910		41,470		45,436
Long-term operating lease liabilities	436,575		448,810		420,805
Other long-term liabilities	32,904		33,867		32,701
Total liabilities	$	1,543,767	$	1,533,363	$	1,513,462

Commitments and contingencies - Note 12

Shareholders’ equity:
Preferred stock; par value $0.01 per share; 100,000 shares authorized; none issued or outstanding	$	—	$	—	$	—
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 36,280,056, 36,551,221, and 37,354,464 shares issued and outstanding, respectively	363		366		374
Additional paid-in capital	—		—		—
Accumulated other comprehensive loss	(32,814)		(23,915)		(24,963)
Retained earnings	844,201		868,799		799,598
Total shareholders’ equity	811,750		845,250		775,009
Total liabilities and shareholders’ equity	$	2,355,517	$	2,378,613	$	2,288,471

See accompanying notes to the unaudited condensed consolidated financial statements.

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)


	Fiscal quarter ended				Two fiscal quarters ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	564,434	$	600,199	$	1,225,926	$	1,296,079
Cost of goods sold	281,497		308,303		627,799		694,716

Gross profit	282,937		291,896		598,127		601,363
Royalty income, net	4,004		4,341		9,220		10,860
Selling, general, and administrative expenses	247,489		258,676		512,859		518,308


Operating income	39,452		37,561		94,488		93,915
Interest expense	7,870		8,083		15,775		17,727
Interest income	(3,186)		(1,005)		(6,274)		(1,705)
Other expense (income), net	404		(767)		678		(1,025)

Income before income taxes	34,364		31,250		84,309		78,918
Income tax provision	6,725		7,383		18,637

SEC Form 10-Q filed by Carter's Inc.