COVER PAGE
COVER PAGE - shares | 6 Months Ended | |
Jul. 02, 2022 | Jul. 22, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 02, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-31829 | |
Entity Registrant Name | CARTER’S, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-3912933 | |
Entity Address, Address Line One | Phipps Tower | |
Entity Address, Address Line Two | 3438 Peachtree Road NE | |
Entity Address, Address Line Three | Suite 1800 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30326 | |
City Area Code | 678 | |
Local Phone Number | 791-1000 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | CRI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 38,996,378 | |
Entity Central Index Key | 0001060822 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Current assets: | |||
Cash and cash equivalents | $ 231,339 | $ 984,294 | $ 1,120,901 |
Accounts receivable, net | 183,920 | 231,354 | 163,957 |
Finished goods inventories, net of inventory reserves | 858,258 | 647,742 | 619,617 |
Prepaid expenses and other current assets | 81,482 | 50,131 | 66,549 |
Total current assets | 1,354,999 | 1,913,521 | 1,971,024 |
Property, plant, and equipment, net of accumulated depreciation | 186,778 | 216,004 | 231,944 |
Operating lease assets | 449,350 | 487,748 | 527,121 |
Tradenames, net | 307,518 | 307,643 | 307,768 |
Goodwill | 211,247 | 212,023 | 213,195 |
Customer relationships, net | 32,248 | 33,969 | 35,777 |
Other assets | 31,747 | 30,889 | 29,097 |
Total assets | 2,573,887 | 3,201,797 | 3,315,926 |
Current liabilities: | |||
Accounts payable | 408,006 | 407,044 | 356,826 |
Current operating lease liabilities | 142,981 | 147,537 | 158,270 |
Other current liabilities | 96,102 | 176,449 | 113,240 |
Total current liabilities | 647,089 | 731,030 | 628,336 |
Long-term debt, net | 616,275 | 991,370 | 990,437 |
Deferred income taxes | 45,730 | 40,910 | 58,150 |
Long-term operating lease liabilities | 400,046 | 441,861 | 484,881 |
Other long-term liabilities | 43,881 | 46,440 | 56,618 |
Total liabilities | 1,753,021 | 2,251,611 | 2,218,422 |
Commitments and contingencies - Note 14 | |||
Stockholders’ equity: | |||
Preferred stock; par value $0.01 per share; 100,000 shares authorized; none issued or outstanding at July 2, 2022, January 1, 2022, and July 3, 2021 | 0 | 0 | 0 |
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 39,315,094, 41,148,870, and 44,011,080 shares issued and outstanding at July 2, 2022, January 1, 2022, and July 3, 2021, respectively | 393 | 411 | 440 |
Additional paid-in capital | 0 | 0 | 31,521 |
Accumulated other comprehensive loss | (32,203) | (28,897) | (27,263) |
Retained earnings | 852,676 | 978,672 | 1,092,806 |
Total stockholders’ equity | 820,866 | 950,186 | 1,097,504 |
Total liabilities and stockholders’ equity | $ 2,573,887 | $ 3,201,797 | $ 3,315,926 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Statement of Financial Position [Abstract] | |||
Allowance for credit loss | $ 5,758 | $ 7,281 | $ 7,130 |
Inventory reserves | 18,057 | 14,378 | 15,726 |
Accumulated depreciation of property, plant, and equipment | $ 548,013 | $ 528,926 | $ 545,702 |
Preferred stock; par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock; shares authorized (in shares) | 100,000 | 100,000 | 100,000 |
Preferred stock; shares issued (in shares) | 0 | 0 | 0 |
Preferred stock; shares outstanding (in shares) | 0 | 0 | 0 |
Common stock, voting; par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, voting; shares authorized (in shares) | 150,000,000 | 150,000,000 | 150,000,000 |
Common stock voting; shares issued (in shares) | 39,315,094 | 41,148,870 | 44,011,080 |
Common stock voting; shares outstanding (in shares) | 39,315,094 | 41,148,870 | 44,011,080 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Statement [Abstract] | ||||
Interest income | $ (272) | $ (201) | $ (610) | $ (426) |
Net sales | 700,695 | 746,400 | 1,481,980 | 1,533,761 |
Cost of goods sold | 364,657 | 379,793 | 790,851 | 781,524 |
Adverse purchase commitments (inventory and raw materials), net | 4,799 | (2,100) | 4,848 | (8,430) |
Gross profit | 331,239 | 368,707 | 686,281 | 760,667 |
Royalty income, net | 5,602 | 6,645 | 13,076 | 14,108 |
Selling, general, and administrative expenses | 261,423 | 267,770 | 521,315 | 539,697 |
Operating income | 75,418 | 107,582 | 178,042 | 235,078 |
Interest expense | 8,652 | 15,295 | 23,784 | 30,643 |
Other expense (income), net | 17 | (723) | (494) | (1,640) |
Loss on extinguishment of debt | 19,940 | 0 | 19,940 | 0 |
Income before income taxes | 47,081 | 93,211 | 135,422 | 206,501 |
Income tax provision | 10,111 | 21,608 | 30,519 | 48,702 |
Net income | $ 36,970 | $ 71,603 | $ 104,903 | $ 157,799 |
Basic net income per common share (in USD per share) | $ 0.93 | $ 1.63 | $ 2.60 | $ 3.59 |
Diluted net income per common share (in USD per share) | 0.93 | 1.62 | 2.59 | 3.58 |
Dividend declared and paid per common share (in USD per share) | $ 0.75 | $ 0.40 | $ 1.50 | $ 0.40 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 36,970 | $ 71,603 | $ 104,903 | $ 157,799 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (6,088) | 4,271 | (3,306) | 5,497 |
Comprehensive income | $ 30,882 | $ 75,874 | $ 101,597 | $ 163,296 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings |
Balance at beginning of period (in shares) at Jan. 02, 2021 | 43,780,075 | ||||
Balance at beginning of period at Jan. 02, 2021 | $ 938,033 | $ 438 | $ 17,752 | $ (32,760) | $ 952,603 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options (in shares) | 12,065 | ||||
Exercise of stock options | 811 | $ 0 | 811 | 0 | 0 |
Withholdings from vesting of restricted stock (in shares) | (37,444) | ||||
Withholdings from vesting of restricted stock | (3,588) | $ 0 | (3,588) | 0 | 0 |
Restricted stock activity (in shares) | 192,963 | ||||
Restricted stock activity | 0 | $ 2 | (2) | 0 | 0 |
Stock-based compensation expense | 6,931 | 0 | 6,931 | 0 | 0 |
Comprehensive income | 87,422 | $ 0 | 0 | 1,226 | 86,196 |
Balance at end of period (in shares) at Apr. 03, 2021 | 43,947,659 | ||||
Balance at end of period at Apr. 03, 2021 | 1,029,609 | $ 440 | 21,904 | (31,534) | 1,038,799 |
Balance at beginning of period (in shares) at Jan. 02, 2021 | 43,780,075 | ||||
Balance at beginning of period at Jan. 02, 2021 | 938,033 | $ 438 | 17,752 | (32,760) | 952,603 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income | $ 163,296 | ||||
Balance at end of period (in shares) at Jul. 03, 2021 | 44,011,080 | 44,011,080 | |||
Balance at end of period at Jul. 03, 2021 | $ 1,097,504 | $ 440 | 31,521 | (27,263) | 1,092,806 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividend declared and paid per common share (in USD per share) | $ 0.40 | ||||
Balance at beginning of period (in shares) at Apr. 03, 2021 | 43,947,659 | ||||
Balance at beginning of period at Apr. 03, 2021 | $ 1,029,609 | $ 440 | 21,904 | (31,534) | 1,038,799 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options (in shares) | 57,274 | ||||
Exercise of stock options | 4,336 | $ 0 | 4,336 | 0 | 0 |
Withholdings from vesting of restricted stock (in shares) | (1,057) | ||||
Withholdings from vesting of restricted stock | (110) | $ 0 | (110) | 0 | 0 |
Restricted stock activity (in shares) | 7,204 | ||||
Restricted stock activity | 0 | $ 0 | 0 | 0 | 0 |
Stock-based compensation expense | 5,391 | 0 | 5,391 | 0 | 0 |
Cash dividends declared and paid | (17,596) | 0 | 0 | 0 | (17,596) |
Comprehensive income | $ 75,874 | $ 0 | 0 | 4,271 | 71,603 |
Balance at end of period (in shares) at Jul. 03, 2021 | 44,011,080 | 44,011,080 | |||
Balance at end of period at Jul. 03, 2021 | $ 1,097,504 | $ 440 | 31,521 | (27,263) | 1,092,806 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividend declared and paid per common share (in USD per share) | $ 0.40 | ||||
Balance at beginning of period (in shares) at Jan. 01, 2022 | 41,148,870 | 41,148,870 | |||
Balance at beginning of period at Jan. 01, 2022 | $ 950,186 | $ 411 | 0 | (28,897) | 978,672 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options (in shares) | 5,100 | ||||
Exercise of stock options | 222 | $ 0 | 222 | 0 | 0 |
Withholdings from vesting of restricted stock (in shares) | (70,452) | ||||
Withholdings from vesting of restricted stock | (6,623) | $ 0 | (6,623) | 0 | 0 |
Restricted stock activity (in shares) | 265,412 | ||||
Restricted stock activity | 0 | $ 3 | (3) | 0 | 0 |
Stock-based compensation expense | 5,859 | $ 0 | 5,859 | 0 | 0 |
Repurchase of common stock (in shares) | (793,008) | ||||
Repurchase of common stock | (74,496) | $ (8) | (545) | 0 | (75,033) |
Cash dividends declared and paid | (30,573) | 0 | 0 | 0 | (30,573) |
Comprehensive income | 70,715 | $ 0 | 0 | 2,782 | 67,933 |
Balance at end of period (in shares) at Apr. 02, 2022 | 40,555,922 | ||||
Balance at end of period at Apr. 02, 2022 | $ 915,290 | $ 406 | 0 | (26,115) | 940,999 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividend declared and paid per common share (in USD per share) | $ 0.75 | ||||
Balance at beginning of period (in shares) at Jan. 01, 2022 | 41,148,870 | 41,148,870 | |||
Balance at beginning of period at Jan. 01, 2022 | $ 950,186 | $ 411 | 0 | (28,897) | 978,672 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income | $ 101,597 | ||||
Balance at end of period (in shares) at Jul. 02, 2022 | 39,315,094 | 39,315,094 | |||
Balance at end of period at Jul. 02, 2022 | $ 820,866 | $ 393 | 0 | (32,203) | 852,676 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividend declared and paid per common share (in USD per share) | $ 1.50 | ||||
Balance at beginning of period (in shares) at Apr. 02, 2022 | 40,555,922 | ||||
Balance at beginning of period at Apr. 02, 2022 | $ 915,290 | $ 406 | 0 | (26,115) | 940,999 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options (in shares) | 1,500 | ||||
Exercise of stock options | 89 | $ 0 | 89 | 0 | 0 |
Withholdings from vesting of restricted stock (in shares) | (705) | ||||
Withholdings from vesting of restricted stock | (58) | $ 0 | (58) | 0 | 0 |
Restricted stock activity (in shares) | 30,731 | ||||
Restricted stock activity | 0 | $ 0 | 0 | 0 | 0 |
Stock-based compensation expense | 6,359 | $ 0 | 6,359 | 0 | 0 |
Repurchase of common stock (in shares) | (1,272,354) | ||||
Repurchase of common stock | (101,810) | $ (13) | 6,390 | 0 | (95,407) |
Cash dividends declared and paid | (29,886) | 0 | 0 | 0 | (29,886) |
Comprehensive income | $ 30,882 | $ 0 | 0 | (6,088) | 36,970 |
Balance at end of period (in shares) at Jul. 02, 2022 | 39,315,094 | 39,315,094 | |||
Balance at end of period at Jul. 02, 2022 | $ 820,866 | $ 393 | $ 0 | $ (32,203) | $ 852,676 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividend declared and paid per common share (in USD per share) | $ 0.75 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 104,903 | $ 157,799 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation of property, plant, and equipment | 29,838 | 44,613 |
Amortization of intangible assets | 1,865 | 1,866 |
Provisions for excess and obsolete inventory | 3,709 | 1,451 |
Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries | 246 | 2,056 |
Amortization of debt issuance costs | 1,173 | 1,497 |
Stock-based compensation expense | 12,218 | 12,322 |
Unrealized foreign currency exchange (gain) loss, net | (32) | 61 |
(Recoveries of) provisions for doubtful accounts receivable from customers | (1,520) | 1,206 |
Unrealized loss (gain) on investments | 1,867 | (1,279) |
Loss on extinguishment of debt | 19,940 | 0 |
Deferred income taxes expense | 4,762 | 5,817 |
Other | 1,019 | 0 |
Effect of changes in operating assets and liabilities: | ||
Accounts receivable | 48,973 | 21,620 |
Finished goods inventories | (215,519) | (19,663) |
Prepaid expenses and other assets | (32,308) | (8,724) |
Accounts payable and other liabilities | (74,729) | (171,119) |
Net cash (used in) provided by operating activities | (93,595) | 49,523 |
Cash flows from investing activities: | ||
Capital expenditures | (16,313) | (20,506) |
Proceeds from sale of investments | 0 | 5,000 |
Net cash used in investing activities | (16,313) | (15,506) |
Cash flows from financing activities: | ||
Payment of senior notes due 2025 | (500,000) | 0 |
Premiums paid to extinguish debt | (15,678) | 0 |
Payment of debt issuance costs | (2,420) | (223) |
Borrowings under secured revolving credit facility | 120,000 | 0 |
Repurchases of common stock | (176,306) | 0 |
Dividends paid | (60,460) | (17,596) |
Withholdings from vesting of restricted stock | (6,681) | (3,698) |
Proceeds from exercises of stock options | 311 | 5,147 |
Other | (321) | 0 |
Net cash used in financing activities | (641,555) | (16,370) |
Net effect of exchange rate changes on cash and cash equivalents | (1,492) | 931 |
Net (decrease) increase in cash and cash equivalents | (752,955) | 18,578 |
Cash and cash equivalents, beginning of period | 984,294 | 1,102,323 |
Cash and cash equivalents, end of period | $ 231,339 | $ 1,120,901 |
THE COMPANY
THE COMPANY | 6 Months Ended |
Jul. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY | THE COMPANY Carter’s, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) design, source, and market branded childrenswear under the Carter’s, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter’s My First Love, Little Planet, and other brands. The Company’s products are sourced through contractual arrangements with manufacturers worldwide for: 1) wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and 2) distribution to the Company’s own retail stores and eCommerce sites that market its brand name merchandise and other licensed products manufactured by other companies. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jul. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income, statement of stockholders’ equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the fiscal quarter ended July 2, 2022 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 31, 2022. The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The accompanying condensed consolidated balance sheet as of January 1, 2022 was derived from the Company’s audited consolidated financial statements included in its most recently filed Annual Report on Form 10-K. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q. Inventories Our inventories, which consist primarily of finished goods, are stated approximately at the lower of cost (first-in, first-out basis for wholesale inventory and average cost for retail inventories) or net realizable value. Inventories at July 2, 2022 were $858.3 million compared to $619.6 million at July 3, 2021 and $647.7 million at January 1, 2022. The increase of $238.7 million, or 38.5%, at July 2, 2022 compared to July 3, 2021 is primarily due to planned earlier inventory ownership to offset transportation delays, longer holding periods for inventory to be sold in future periods, increased product costs, and lower than projected net sales. Due to the seasonal nature of our operations, the inventories balance at July 2, 2022 is not comparable to the inventories balance at January 1, 2022. Inventory reserves at July 2, 2022 increased 14.8% compared to July 3, 2021. Although inventory levels have increased as of July 2, 2022, excess inventory reserve rates have remained relatively stable due to the overall health and planned use of the inventory. The liability for adverse inventory and fabric purchase commitments increased from $0.8 million as of July 3, 2021 to $5.2 million as of July 2, 2022 primarily due to reduced forward inventory commitments to better align with estimated lower customer demand. The Company anticipates an increased supply of inventory to continue for the remainder of fiscal 2022. Accounting Policies The accounting policies the Company follows are set forth in its most recently filed Annual Report on Form 10-K. There have been no material changes to these accounting policies. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jul. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company’s revenues are earned from contracts or arrangements with retail and wholesale customers and licensees. Contracts include written agreements, as well as arrangements that are implied by customary practices or law. Disaggregation of Revenue The Company sells its products directly to consumers (“direct-to-consumer”) and to other retail companies and partners that subsequently sell the products directly to their own retail customers. The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the second quarter and two quarters ended fiscal 2022 and 2021 were as follows: Fiscal quarter ended July 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 224,016 $ 37,019 $ 261,035 Direct-to-consumer 379,097 — 60,563 439,660 $ 379,097 $ 224,016 $ 97,582 $ 700,695 Royalty income, net $ 1,317 $ 2,885 $ 1,400 $ 5,602 Two fiscal quarters ended July 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 531,317 $ 87,452 $ 618,769 Direct-to-consumer 745,455 — 117,756 863,211 $ 745,455 $ 531,317 $ 205,208 $ 1,481,980 Royalty income, net $ 4,558 $ 6,315 $ 2,203 $ 13,076 Fiscal quarter ended July 3, 2021 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 231,630 $ 33,610 $ 265,240 Direct-to-consumer 423,627 — 57,533 481,160 $ 423,627 $ 231,630 $ 91,143 $ 746,400 Royalty income, net $ 2,360 $ 2,876 $ 1,409 $ 6,645 Two fiscal quarters ended July 3, 2021 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 515,007 $ 76,402 $ 591,409 Direct-to-consumer 830,694 — 111,658 942,352 $ 830,694 $ 515,007 $ 188,060 $ 1,533,761 Royalty income, net $ 5,430 $ 6,651 $ 2,027 $ 14,108 Accounts Receivable from Customers and Licensees The components of Accounts receivable, net, were as follows: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Trade receivables from wholesale customers, net $ 182,253 $ 233,928 $ 164,591 Royalties receivable 5,203 5,769 5,991 Tenant allowances and other receivables 10,671 10,352 9,478 Total gross receivables $ 198,127 $ 250,049 $ 180,060 Less: Wholesale accounts receivable reserves (*) (14,207) (18,695) (16,103) Accounts receivable, net $ 183,920 $ 231,354 $ 163,957 (*) Includes allowance for credit losses of $5.8 million, $7.3 million, and $7.1 million for the periods ended July 2, 2022, January 1, 2022, and July 3, 2021, respectively. Contract Assets and Liabilities The Company’s contract assets are not material. Contract Liabilities The Company recognizes a contract liability when it has received consideration from a customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Contract liabilities - current: Unredeemed gift cards $ 21,251 $ 21,619 $ 18,049 Unredeemed customer loyalty rewards 4,456 5,659 4,829 Carter’s credit card - upfront bonus (1) 714 714 714 Total contract liabilities - current (2) $ 26,421 $ 27,992 $ 23,592 Contract liabilities - non-current (3) $ 1,786 $ 2,143 $ 2,500 Total contract liabilities $ 28,207 $ 30,135 $ 26,092 (1) The Company received an upfront signing bonus from a third-party financial institution, which will be recognized as revenue on a straight-line basis over the term of the agreement. This amount reflects the current portion of this bonus to be recognized as revenue over the next twelve months. (2) Included with Other current liabilities on the Company’s consolidated balance sheet. |
LEASES
LEASES | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company has operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. The Company’s leases generally have initial terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to early terminate the lease. As of the periods presented, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows. The following components of lease expense are included in Selling, general, and administrative expenses on the Company’s consolidated statements of operations for the second quarter and first two quarters of fiscal 2022 and 2021: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Operating lease cost $ 39,169 $ 42,100 $ 78,626 $ 84,798 Variable lease cost (*) 17,173 16,276 34,241 32,674 Net lease cost $ 56,342 $ 58,376 $ 112,867 $ 117,472 (*) Includes short-term leases, which are not material, and operating lease asset impairment charges. As of July 2, 2022, the weighted average remaining operating lease term was 4.7 years, and the weighted average discount rate for operating leases was 3.32%. Cash paid for amounts included in the measurement of operating lease liabilities in the second quarter and first two quarters of fiscal 2022 were $42.5 million and $85.8 million, respectively. Operating lease assets obtained in exchange for operating lease liabilities in the second quarter and first two quarters of fiscal 2022 were $14.5 million and $30.8 million, respectively. As of July 2, 2022, the maturities of lease liabilities were as follows: (dollars in thousands) Operating leases Remainder of 2022 $ 81,872 2023 148,893 2024 120,016 2025 85,642 2026 61,239 2027 39,305 After 2027 51,565 Total lease payments $ 588,532 Less: Interest (45,505) Present value of lease liabilities (*) $ 543,027 (*) As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate is applied based on information available at commencement date to determine the present value of lease payments. As of July 2, 2022, the minimum rental commitments for additional operating lease contracts, primarily for retail stores, that have not yet commenced are $21.7 million. These operating leases will commence between fiscal year 2022 and fiscal year 2023 with lease terms of 3 years to 10 years. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 6 Months Ended |
Jul. 02, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of Accumulated other comprehensive loss consisted of the following: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Cumulative foreign currency translation adjustments $ (24,608) $ (21,302) $ (15,810) Pension and post-retirement obligations (*) (7,595) (7,595) (11,453) Total accumulated other comprehensive loss $ (32,203) $ (28,897) $ (27,263) (*) Net of income taxes of $2.4 million, $2.4 million, and $3.5 million for the period ended July 2, 2022, January 1, 2022, and July 3, 2021, respectively. During the first two quarters of both fiscal 2022 and fiscal 2021, no amounts were reclassified from Accumulated other comprehensive loss to the consolidated statement of operations. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The balances and changes in the carrying amount of Goodwill attributable to each segment were as follows: (dollars in thousands) U.S. Retail U.S. Wholesale International Total Balance at January 2, 2021 $ 83,934 $ 74,454 $ 53,388 $ 211,776 Foreign currency impact — — 1,419 1,419 Balance at July 3, 2021 (*) $ 83,934 $ 74,454 $ 54,807 $ 213,195 Balance at January 1, 2022 $ 83,934 $ 74,454 $ 53,635 $ 212,023 Foreign currency impact — — (776) (776) Balance at July 2, 2022 (*) $ 83,934 $ 74,454 $ 52,859 $ 211,247 (*) Goodwill for the International reporting unit is net of accumulated impairment losses of $17.7 million. A summary of the carrying value of the Company’s intangible assets were as follows: July 2, 2022 January 1, 2022 (dollars in thousands) Weighted-average useful life Gross amount Accumulated amortization Net amount Gross amount Accumulated amortization Net amount Carter’s tradename Indefinite $ 220,233 $ — $ 220,233 $ 220,233 $ — $ 220,233 OshKosh tradename Indefinite 70,000 — 70,000 70,000 — 70,000 Skip Hop tradename Indefinite 15,000 — 15,000 15,000 — 15,000 Finite-life tradenames 5-20 years 3,911 1,626 2,285 3,911 1,501 2,410 Total tradenames, net $ 309,144 $ 1,626 $ 307,518 $ 309,144 $ 1,501 $ 307,643 Skip Hop customer relationships 15 years $ 47,300 $ 16,598 $ 30,702 $ 47,300 $ 15,010 $ 32,290 Carter’s Mexico customer relationships 10 years 3,066 1,520 1,546 3,047 1,368 1,679 Total customer relationships, net $ 50,366 $ 18,118 $ 32,248 $ 50,347 $ 16,378 $ 33,969 July 3, 2021 (dollars in thousands) Weighted-average useful life Gross amount Accumulated amortization Net amount Carter’s tradename Indefinite $ 220,233 $ — $ 220,233 OshKosh tradename Indefinite 70,000 — 70,000 Skip Hop tradename Indefinite 15,000 — 15,000 Finite-life tradenames 5-20 years 3,911 1,376 2,535 Total tradenames, net $ 309,144 $ 1,376 $ 307,768 Skip Hop customer relationships 15 years $ 47,300 $ 13,422 $ 33,878 Carter’s Mexico customer relationships 10 years 3,116 1,217 1,899 Total customer relationships, net $ 50,416 $ 14,639 $ 35,777 Amortization expense for intangible assets subject to amortization was approximately $0.9 million for both the second quarter of fiscal 2022 and the second quarter of fiscal 2021. Amortization expense was approximately $1.9 million for both the first two quarters of fiscal 2022 and the first two quarters of fiscal 2021. The estimated amortization expense for the next five fiscal years is as follows: (dollars in thousands) Amortization expense Remainder of 2022 $ 1,865 2023 $ 3,688 2024 $ 3,658 2025 $ 3,658 2026 $ 3,658 2027 $ 3,532 |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jul. 02, 2022 | |
Stockholders' Equity Note [Abstract] | |
COMMON STOCK | COMMON STOCK Open Market Share Repurchases The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated: Fiscal quarter ended Two fiscal quarters ended July 2, 2022 July 3, 2021 (*) July 2, 2022 July 3, 2021 (*) Number of shares repurchased 1,272,354 — 2,065,362 — Aggregate cost of shares repurchased (dollars in thousands) $ 101,810 $ — $ 176,306 $ — Average price per share $ 80.02 $ — $ 85.36 $ — (*) As a result of actions taken in connection with the COVID-19 pandemic, the Company did not repurchase or retire any shares in open market transactions in the first two quarters of fiscal 2021. On February 24, 2022, the Company’s Board of Directors authorized share repurchases up to $1.00 billion, inclusive of approximately $301.9 million remaining under previous authorizations. The total aggregate remaining capacity under outstanding repurchase authorizations as of July 2, 2022 was approximately $872.9 million. The share repurchase authorizations have no expiration date. Future repurchases may occur from time to time in the open market, in privately negotiated transactions, or otherwise. The timing and amount of any repurchases will be at the discretion of the Company subject to restrictions under the Company’s secured revolving credit facility and considerations given to market conditions, stock price, other investment priorities, and other factors. Dividends In the second quarter and first two quarters of fiscal 2022, the Board of Directors declared and the Company paid cash dividends per common share of $0.75 and $1.50, respectively. In the second quarter of fiscal 2021, the Board of Directors declared and the Company paid cash dividends per common share of $0.40. As a result of actions taken in connection with the COVID-19 pandemic, the Board of Directors did not declare and the Company did not pay cash dividends for the first quarter of fiscal 2021. The Board of Directors will evaluate future dividend declarations based on a number of factors, including restrictions under the Company’s secured revolving credit facility, business conditions, the Company’s financial performance, and other considerations. Provisions in the Company’s secured revolving credit facility could have the effect of restricting the Company’s ability to pay cash dividends on, or make future repurchases of, its common stock . |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jul. 02, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 $500 million 5.500% senior notes due May 15, 2025 $ — $ 500,000 $ 500,000 $500 million 5.625% senior notes due March 15, 2027 500,000 500,000 500,000 Total senior notes $ 500,000 $ 1,000,000 $ 1,000,000 Less unamortized issuance-related costs for senior notes (3,725) (8,630) (9,563) Senior notes, net $ 496,275 $ 991,370 $ 990,437 Secured revolving credit facility 120,000 — — Total long-term debt, net $ 616,275 $ 991,370 $ 990,437 On April 4, 2022, the Company, through its wholly-owned subsidiary, The William Carter Company (“TWCC”) redeemed the $500 million principal amount of senior notes, bearing interest at a rate of 5.500% per annum, and originally maturing on May 15, 2025. Pursuant to the optional redemption provisions described in the Indenture dated as of May 11, 2020, TWCC paid the outstanding principal plus accrued interest and an Applicable Premium as defined in the Indenture. This debt redemption resulted in a loss on extinguishment of debt of approximately $19.9 million, primarily consisting of $15.7 million of the Applicable Premium and $4.3 million related to the write-off of unamortized debt issuance costs. Secured Revolving Credit Facility As of July 2, 2022, the Company had $120.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $3.6 million of outstanding letters of credit. As of July 2, 2022, approximately $726.4 million remained available for future borrowing. Any outstanding borrowings under the Company’s secured revolving credit facility are classified as non-current liabilities on the Company’s consolidated balance sheets because of the contractual repayment terms under the credit facility. On April 11, 2022, the Company, through TWCC entered into Amendment No. 4 to its fourth amended and restated credit agreement (“Amendment No. 4”) that, among other things, increased the borrowing capacity of the secured revolving credit facility to $850.0 million (combined U.S. dollar and multicurrency facility borrowings), extended the maturity from September 2023 to April 2027, and reduced the number of financial maintenance covenants from two to one. In particular, Amendment No. 4 provides for the following: • increases the borrowing capacity of the secured revolving credit facility from $750 million to $850 million - the U.S. Dollar facility commitment increases to $750 million from $650 million and the multicurrency facility commitment remains at $100 million; • extends the maturity of the secured revolving credit facility from September 2023 to April 2027; • adds a Springing Maturity Date provision, which states that if the Company has not redeemed or refinanced at least $250 million of the senior notes due 2027 prior to the 91st day before the maturity of the senior notes due March 15, 2027, then the maturity date of the secured revolving credit facility will be the 91st day before the original maturity of the senior notes due 2027; • reduces the number of financial maintenance covenants from two to one - the Lease Adjusted Leverage Ratio has been simplified to a Consolidated Total Leverage Ratio and the Consolidated Fixed Charge Coverage Ratio has been eliminated. The Consolidated Total Leverage Ratio maximum permitted shall be 3.50:1.00 and temporarily increases to 4.00:1:00 in the event of a Material Acquisition; • Term Benchmark Loans bear interest at a rate determined by reference to the Adjusted Term SOFR (Secured Overnight Financing Rate), CDOR (Canadian Dollar Offered Rate), or the Adjusted EURIBOR (Euro Interbank Offered Rate). Each Term Benchmark Loan is subject to interest charges equal to the per annum respective benchmark rate plus an initial applicable rate of 1.375% which may be adjusted from 1.125% to 1.625% based upon a leverage-based pricing schedule; and • Other Base, Prime, and Overnight Rate Loans are subject to interest charges equal to the per annum, respective, benchmark rate plus an initial applicable rate of 0.375% which may be adjusted from 0.125% to 0.625% based upon a leverage-based pricing schedule. An Applicable Commitment Fee initially equal to 0.20% per annum and ranging from 0.15% per annum to 0.25% per annum, based upon a leverage-based pricing grid, is payable quarterly in arrears with respect to the average daily unused portion of the revolving loan commitments. Capitalized items are Defined Terms pursuant to Amendment No. 4, dated as of April 11, 2022. Approximately $2.4 million, including both bank fees and other third-party expenses, has been capitalized in connection with Amendment No. 4 and is being amortized over the remaining term of the secured revolving credit facility. As of July 2, 2022, the interest rate margins applicable to the secured revolving credit facility were 1.375% for adjusted term SOFR rate loans and 0.375% for base rate loans. As of July 2, 2022, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at an adjusted term SOFR rate plus the applicable margin, which resulted in a weighted-average borrowing rate of 2.95%. There were no Canadian dollar or other foreign currency borrowings outstanding on July 2, 2022. As of July 2, 2022, the Company was in compliance with its financial and other covenants under the secured revolving credit facility. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jul. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company recorded stock-based compensation expense as follows: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Stock options $ 12 $ 300 $ 178 $ 774 Restricted stock: Time-based awards 4,296 3,504 9,455 7,404 Performance-based awards 345 347 879 2,904 Stock awards 1,706 1,240 1,706 1,240 Total $ 6,359 $ 5,391 $ 12,218 $ 12,322 The Company recognizes compensation cost ratably over the applicable performance periods based on the estimated probability of achievement of its performance targets at the end of each period. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of July 2, 2022, the Company had gross unrecognized income tax benefits of approximately $11.3 million, of which $7.9 million, if ultimately recognized, may affect the Company’s effective income tax rate in the periods settled. The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions. Included in the reserves for unrecognized tax benefits at July 2, 2022 is approximately $2.8 million of reserves for which the statute of limitations is expected to expire within the next 12 months. If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective income tax rate for fiscal 2022 and/or fiscal 2023 along with the effective income tax rate in the quarter in which the benefits are recognized. The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and recognizes penalties related to unrecognized income tax benefits as a component of income tax expense. Interest expense recorded on uncertain tax positions was not material for the second fiscal quarter ended July 2, 2022 and July 3, 2021. Interest expense recorded on uncertain tax positions was $0.3 million and $0.2 million for the first two quarters of fiscal 2022 and fiscal 2021, respectively. The Company had approximately $2.1 million, $1.8 million, and $2.2 million of interest accrued on uncertain tax positions as of July 2, 2022, January 1, 2022, and July 3, 2021, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jul. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Investments The Company invests in marketable securities, principally equity-based mutual funds, to mitigate the risk associated with the investment return on employee deferrals of compensation. All of the marketable securities are included in Other assets on the accompanying consolidated balance sheets, and their aggregate fair values were approximately $15.7 million, $17.5 million, and $16.5 million at July 2, 2022, January 1, 2022, and July 3, 2021, respectively. These investments are classified as Level 1 within the fair value hierarchy. The change in the aggregate fair values of marketable securities is due to the net activity of gains and losses and any contributions and distributions during the period. Losses on investments in marketable securities were $0.9 million and $1.9 million for the second quarter and the first two quarters of fiscal 2022, respectively. Gains on investments in marketable securities were $1.1 million and $1.3 million for the second quarter and the first two quarters of fiscal 2021, respectively. These amounts are included in Other (income) expense, net on the Company’s consolidated statement of operations. Borrowings As of July 2, 2022, the Company had $120.0 million in outstanding borrowings under its secured revolving credit facility. The fair value of the Company’s senior notes at July 2, 2022 was approximately $471.0 million. The fair value of the senior notes with a notional value and carrying value (gross of debt issuance costs) of $500.0 million was estimated using a quoted price as provided in the secondary market, which considers the Company’s credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy. Goodwill, Intangible, and Long-Lived Tangible Assets Some assets are not measured at fair value on a recurring basis but are subject to fair value adjustments only in certain circumstances. These assets can include goodwill, indefinite-lived intangible assets, and long-lived tangible assets that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jul. 02, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding: Fiscal quarter ended Two fiscal quarters ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 39,344,834 43,445,780 39,807,354 43,408,262 Dilutive effect of equity awards 29,153 169,631 48,274 151,468 Diluted number of common and common equivalent shares outstanding 39,373,987 43,615,411 39,855,628 43,559,730 Earnings per share: (dollars in thousands, except per share data) Basic net income per common share: Net income $ 36,970 $ 71,603 $ 104,903 $ 157,799 Income allocated to participating securities (536) (860) (1,480) (1,896) Net income available to common shareholders $ 36,434 $ 70,743 $ 103,423 $ 155,903 Basic net income per common share $ 0.93 $ 1.63 $ 2.60 $ 3.59 Diluted net income per common share: Net income $ 36,970 $ 71,603 $ 104,903 $ 157,799 Income allocated to participating securities (536) (857) (1,479) (1,890) Net income available to common shareholders $ 36,434 $ 70,746 $ 103,424 $ 155,909 Diluted net income per common share $ 0.93 $ 1.62 $ 2.59 $ 3.58 Anti-dilutive awards excluded from diluted earnings per share computation (*) 532,432 171,653 288,800 288,122 (*) The volume of anti-dilutive awards is, in part, due to the related unamortized compensation costs. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jul. 02, 2022 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities at the end of any comparable period, were as follows: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Unredeemed gift cards $ 21,251 $ 21,619 $ 18,049 Accrued employee benefits 12,208 26,517 18,970 Accrued salaries and wages 11,644 10,821 10,974 Accrued taxes 8,782 12,883 9,954 Accrued interest 8,724 11,942 12,078 Income taxes payable 5,904 13,850 — Accrued bonuses and incentive compensation 3,199 47,363 17,168 Accrued other 24,390 31,454 26,047 Other current liabilities $ 96,102 $ 176,449 $ 113,240 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jul. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently a party to any legal proceedings that it believes would have a material adverse impact on its financial position, results of operations, or cash flows. The Company’s contractual obligations and commitments include obligations associated with leases, the secured revolving credit agreement, senior notes, employee benefit plans. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The tables below presents certain information for the Company’s reportable segments and unallocated corporate expenses for the periods indicated: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 % of July 3, 2021 % of July 2, % of July 3, % of Net sales : U.S. Retail $ 379,097 54.1 % $ 423,627 56.8 % $ 745,455 50.3 % $ 830,694 54.2 % U.S. Wholesale 224,016 32.0 % 231,630 31.0 % 531,317 35.9 % 515,007 33.6 % International 97,582 13.9 % 91,143 12.2 % 205,208 13.8 % 188,060 12.2 % Consolidated net sales $ 700,695 100.0 % $ 746,400 100.0 % $ 1,481,980 100.0 % $ 1,533,761 100.0 % Operating income : % of % of segment net sales % of % of U.S. Retail $ 55,540 14.7 % $ 87,080 20.6 % $ 105,534 14.2 % $ 163,600 19.7 % U.S. Wholesale 33,593 15.0 % 40,592 17.5 % 94,099 17.7 % 110,650 21.5 % International 12,163 12.5 % 9,007 9.9 % 22,551 11.0 % 18,741 10.0 % Corporate expenses (*) (25,878) n/a (29,097) n/a (44,142) n/a (57,913) n/a Consolidated operating income $ 75,418 10.8 % $ 107,582 14.4 % $ 178,042 12.0 % $ 235,078 15.3 % (*) Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting fees, and audit fees. (dollars in millions) Fiscal quarter ended July 3, 2021 Two fiscal quarters ended July 3, 2021 Charges: U.S. Retail U.S. Wholesale International U.S. Retail U.S. Wholesale International Incremental costs associated with COVID-19 pandemic $ 0.5 $ 0.4 $ 0.1 $ 1.6 $ 1.3 $ 0.3 Organizational restructuring (1) (0.6) — 2.3 (0.6) 0.1 2.3 Gain on modification of retail store leases (2) (0.4) — — (1.9) — — Total charges (3) $ (0.5) $ 0.4 $ 2.4 $ (0.9) $ 1.4 $ 2.6 (1) Fiscal quarter and two fiscal quarters ended July 3, 2021 include $2.3 million of costs associated with the early exit of the Canada corporate office lease. Fiscal quarter and two fiscal quarters ended July 3, 2021 also includes corporate charges related to organizational restructuring of $0.5 million and $0.9 million, respectively. (2) Related to gains on the modification of previously impaired retail store leases. (3) Total charges for two fiscal quarters ended July 3, 2021 exclude a customer bankruptcy recovery of $38,000. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Disaggregated revenues from these sources for the second quarter and two quarters ended fiscal 2022 and 2021 were as follows: Fiscal quarter ended July 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 224,016 $ 37,019 $ 261,035 Direct-to-consumer 379,097 — 60,563 439,660 $ 379,097 $ 224,016 $ 97,582 $ 700,695 Royalty income, net $ 1,317 $ 2,885 $ 1,400 $ 5,602 Two fiscal quarters ended July 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 531,317 $ 87,452 $ 618,769 Direct-to-consumer 745,455 — 117,756 863,211 $ 745,455 $ 531,317 $ 205,208 $ 1,481,980 Royalty income, net $ 4,558 $ 6,315 $ 2,203 $ 13,076 Fiscal quarter ended July 3, 2021 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 231,630 $ 33,610 $ 265,240 Direct-to-consumer 423,627 — 57,533 481,160 $ 423,627 $ 231,630 $ 91,143 $ 746,400 Royalty income, net $ 2,360 $ 2,876 $ 1,409 $ 6,645 Two fiscal quarters ended July 3, 2021 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 515,007 $ 76,402 $ 591,409 Direct-to-consumer 830,694 — 111,658 942,352 $ 830,694 $ 515,007 $ 188,060 $ 1,533,761 Royalty income, net $ 5,430 $ 6,651 $ 2,027 $ 14,108 Accounts Receivable from Customers and Licensees The components of Accounts receivable, net, were as follows: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Trade receivables from wholesale customers, net $ 182,253 $ 233,928 $ 164,591 Royalties receivable 5,203 5,769 5,991 Tenant allowances and other receivables 10,671 10,352 9,478 Total gross receivables $ 198,127 $ 250,049 $ 180,060 Less: Wholesale accounts receivable reserves (*) (14,207) (18,695) (16,103) Accounts receivable, net $ 183,920 $ 231,354 $ 163,957 (*) Includes allowance for credit losses of $5.8 million, $7.3 million, and $7.1 million for the periods ended July 2, 2022, January 1, 2022, and July 3, 2021, respectively. |
Contract with Customer, Asset and Liability | Total contract liabilities consisted of the following amounts: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Contract liabilities - current: Unredeemed gift cards $ 21,251 $ 21,619 $ 18,049 Unredeemed customer loyalty rewards 4,456 5,659 4,829 Carter’s credit card - upfront bonus (1) 714 714 714 Total contract liabilities - current (2) $ 26,421 $ 27,992 $ 23,592 Contract liabilities - non-current (3) $ 1,786 $ 2,143 $ 2,500 Total contract liabilities $ 28,207 $ 30,135 $ 26,092 (1) The Company received an upfront signing bonus from a third-party financial institution, which will be recognized as revenue on a straight-line basis over the term of the agreement. This amount reflects the current portion of this bonus to be recognized as revenue over the next twelve months. (2) Included with Other current liabilities on the Company’s consolidated balance sheet. |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Lease Cost and Supplementary Information | The following components of lease expense are included in Selling, general, and administrative expenses on the Company’s consolidated statements of operations for the second quarter and first two quarters of fiscal 2022 and 2021: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Operating lease cost $ 39,169 $ 42,100 $ 78,626 $ 84,798 Variable lease cost (*) 17,173 16,276 34,241 32,674 Net lease cost $ 56,342 $ 58,376 $ 112,867 $ 117,472 |
Lessee, Operating Lease, Liability, Maturity | As of July 2, 2022, the maturities of lease liabilities were as follows: (dollars in thousands) Operating leases Remainder of 2022 $ 81,872 2023 148,893 2024 120,016 2025 85,642 2026 61,239 2027 39,305 After 2027 51,565 Total lease payments $ 588,532 Less: Interest (45,505) Present value of lease liabilities (*) $ 543,027 (*) As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate is applied based on information available at commencement date to determine the present value of lease payments. |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The components of Accumulated other comprehensive loss consisted of the following: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Cumulative foreign currency translation adjustments $ (24,608) $ (21,302) $ (15,810) Pension and post-retirement obligations (*) (7,595) (7,595) (11,453) Total accumulated other comprehensive loss $ (32,203) $ (28,897) $ (27,263) (*) Net of income taxes of $2.4 million, $2.4 million, and $3.5 million for the period ended July 2, 2022, January 1, 2022, and July 3, 2021, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill by Segment | The balances and changes in the carrying amount of Goodwill attributable to each segment were as follows: (dollars in thousands) U.S. Retail U.S. Wholesale International Total Balance at January 2, 2021 $ 83,934 $ 74,454 $ 53,388 $ 211,776 Foreign currency impact — — 1,419 1,419 Balance at July 3, 2021 (*) $ 83,934 $ 74,454 $ 54,807 $ 213,195 Balance at January 1, 2022 $ 83,934 $ 74,454 $ 53,635 $ 212,023 Foreign currency impact — — (776) (776) Balance at July 2, 2022 (*) $ 83,934 $ 74,454 $ 52,859 $ 211,247 |
Intangible Assets Table | A summary of the carrying value of the Company’s intangible assets were as follows: July 2, 2022 January 1, 2022 (dollars in thousands) Weighted-average useful life Gross amount Accumulated amortization Net amount Gross amount Accumulated amortization Net amount Carter’s tradename Indefinite $ 220,233 $ — $ 220,233 $ 220,233 $ — $ 220,233 OshKosh tradename Indefinite 70,000 — 70,000 70,000 — 70,000 Skip Hop tradename Indefinite 15,000 — 15,000 15,000 — 15,000 Finite-life tradenames 5-20 years 3,911 1,626 2,285 3,911 1,501 2,410 Total tradenames, net $ 309,144 $ 1,626 $ 307,518 $ 309,144 $ 1,501 $ 307,643 Skip Hop customer relationships 15 years $ 47,300 $ 16,598 $ 30,702 $ 47,300 $ 15,010 $ 32,290 Carter’s Mexico customer relationships 10 years 3,066 1,520 1,546 3,047 1,368 1,679 Total customer relationships, net $ 50,366 $ 18,118 $ 32,248 $ 50,347 $ 16,378 $ 33,969 July 3, 2021 (dollars in thousands) Weighted-average useful life Gross amount Accumulated amortization Net amount Carter’s tradename Indefinite $ 220,233 $ — $ 220,233 OshKosh tradename Indefinite 70,000 — 70,000 Skip Hop tradename Indefinite 15,000 — 15,000 Finite-life tradenames 5-20 years 3,911 1,376 2,535 Total tradenames, net $ 309,144 $ 1,376 $ 307,768 Skip Hop customer relationships 15 years $ 47,300 $ 13,422 $ 33,878 Carter’s Mexico customer relationships 10 years 3,116 1,217 1,899 Total customer relationships, net $ 50,416 $ 14,639 $ 35,777 |
Schedule of Future Amortization Expense | The estimated amortization expense for the next five fiscal years is as follows: (dollars in thousands) Amortization expense Remainder of 2022 $ 1,865 2023 $ 3,688 2024 $ 3,658 2025 $ 3,658 2026 $ 3,658 2027 $ 3,532 |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Shares Repurchased and Retired | The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated: Fiscal quarter ended Two fiscal quarters ended July 2, 2022 July 3, 2021 (*) July 2, 2022 July 3, 2021 (*) Number of shares repurchased 1,272,354 — 2,065,362 — Aggregate cost of shares repurchased (dollars in thousands) $ 101,810 $ — $ 176,306 $ — Average price per share $ 80.02 $ — $ 85.36 $ — (*) As a result of actions taken in connection with the COVID-19 pandemic, the Company did not repurchase or retire any shares in open market transactions in the first two quarters of fiscal 2021. |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 $500 million 5.500% senior notes due May 15, 2025 $ — $ 500,000 $ 500,000 $500 million 5.625% senior notes due March 15, 2027 500,000 500,000 500,000 Total senior notes $ 500,000 $ 1,000,000 $ 1,000,000 Less unamortized issuance-related costs for senior notes (3,725) (8,630) (9,563) Senior notes, net $ 496,275 $ 991,370 $ 990,437 Secured revolving credit facility 120,000 — — Total long-term debt, net $ 616,275 $ 991,370 $ 990,437 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Summary of recorded stock-based compensation cost | The Company recorded stock-based compensation expense as follows: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Stock options $ 12 $ 300 $ 178 $ 774 Restricted stock: Time-based awards 4,296 3,504 9,455 7,404 Performance-based awards 345 347 879 2,904 Stock awards 1,706 1,240 1,706 1,240 Total $ 6,359 $ 5,391 $ 12,218 $ 12,322 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding | The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding: Fiscal quarter ended Two fiscal quarters ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 39,344,834 43,445,780 39,807,354 43,408,262 Dilutive effect of equity awards 29,153 169,631 48,274 151,468 Diluted number of common and common equivalent shares outstanding 39,373,987 43,615,411 39,855,628 43,559,730 Earnings per share: (dollars in thousands, except per share data) Basic net income per common share: Net income $ 36,970 $ 71,603 $ 104,903 $ 157,799 Income allocated to participating securities (536) (860) (1,480) (1,896) Net income available to common shareholders $ 36,434 $ 70,743 $ 103,423 $ 155,903 Basic net income per common share $ 0.93 $ 1.63 $ 2.60 $ 3.59 Diluted net income per common share: Net income $ 36,970 $ 71,603 $ 104,903 $ 157,799 Income allocated to participating securities (536) (857) (1,479) (1,890) Net income available to common shareholders $ 36,434 $ 70,746 $ 103,424 $ 155,909 Diluted net income per common share $ 0.93 $ 1.62 $ 2.59 $ 3.58 Anti-dilutive awards excluded from diluted earnings per share computation (*) 532,432 171,653 288,800 288,122 (*) The volume of anti-dilutive awards is, in part, due to the related unamortized compensation costs. |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of other current liabilities | Other current liabilities at the end of any comparable period, were as follows: (dollars in thousands) July 2, 2022 January 1, 2022 July 3, 2021 Unredeemed gift cards $ 21,251 $ 21,619 $ 18,049 Accrued employee benefits 12,208 26,517 18,970 Accrued salaries and wages 11,644 10,821 10,974 Accrued taxes 8,782 12,883 9,954 Accrued interest 8,724 11,942 12,078 Income taxes payable 5,904 13,850 — Accrued bonuses and incentive compensation 3,199 47,363 17,168 Accrued other 24,390 31,454 26,047 Other current liabilities $ 96,102 $ 176,449 $ 113,240 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Schedule of segment information | The tables below presents certain information for the Company’s reportable segments and unallocated corporate expenses for the periods indicated: Fiscal quarter ended Two fiscal quarters ended (dollars in thousands) July 2, 2022 % of July 3, 2021 % of July 2, % of July 3, % of Net sales : U.S. Retail $ 379,097 54.1 % $ 423,627 56.8 % $ 745,455 50.3 % $ 830,694 54.2 % U.S. Wholesale 224,016 32.0 % 231,630 31.0 % 531,317 35.9 % 515,007 33.6 % International 97,582 13.9 % 91,143 12.2 % 205,208 13.8 % 188,060 12.2 % Consolidated net sales $ 700,695 100.0 % $ 746,400 100.0 % $ 1,481,980 100.0 % $ 1,533,761 100.0 % Operating income : % of % of segment net sales % of % of U.S. Retail $ 55,540 14.7 % $ 87,080 20.6 % $ 105,534 14.2 % $ 163,600 19.7 % U.S. Wholesale 33,593 15.0 % 40,592 17.5 % 94,099 17.7 % 110,650 21.5 % International 12,163 12.5 % 9,007 9.9 % 22,551 11.0 % 18,741 10.0 % Corporate expenses (*) (25,878) n/a (29,097) n/a (44,142) n/a (57,913) n/a Consolidated operating income $ 75,418 10.8 % $ 107,582 14.4 % $ 178,042 12.0 % $ 235,078 15.3 % (*) Corporate expenses include expenses related to incentive compensation, stock-based compensation, executive management, severance and relocation, finance, office occupancy, information technology, certain legal fees, consulting fees, and audit fees. (dollars in millions) Fiscal quarter ended July 3, 2021 Two fiscal quarters ended July 3, 2021 Charges: U.S. Retail U.S. Wholesale International U.S. Retail U.S. Wholesale International Incremental costs associated with COVID-19 pandemic $ 0.5 $ 0.4 $ 0.1 $ 1.6 $ 1.3 $ 0.3 Organizational restructuring (1) (0.6) — 2.3 (0.6) 0.1 2.3 Gain on modification of retail store leases (2) (0.4) — — (1.9) — — Total charges (3) $ (0.5) $ 0.4 $ 2.4 $ (0.9) $ 1.4 $ 2.6 (1) Fiscal quarter and two fiscal quarters ended July 3, 2021 include $2.3 million of costs associated with the early exit of the Canada corporate office lease. Fiscal quarter and two fiscal quarters ended July 3, 2021 also includes corporate charges related to organizational restructuring of $0.5 million and $0.9 million, respectively. (2) Related to gains on the modification of previously impaired retail store leases. (3) Total charges for two fiscal quarters ended July 3, 2021 exclude a customer bankruptcy recovery of $38,000. |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Inventory, Net | $ 858,258 | $ 647,742 | $ 619,617 |
Increase in Inventory, net | $ 238,700 | ||
Percentage change in Inventory, net | 38.50% | ||
Percentage change in Inventory Reserves | 14.80% | ||
Adverse inventory and fabric purchase commitments | $ 5,200 | $ 800 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Net sales | $ 700,695 | $ 746,400 | $ 1,481,980 | $ 1,533,761 | |
Total gross receivables | 198,127 | 180,060 | 198,127 | 180,060 | $ 250,049 |
Less: Wholesale accounts receivable reserves | (5,758) | (7,130) | (5,758) | (7,130) | (7,281) |
Accounts receivable, net | 183,920 | 163,957 | 183,920 | 163,957 | 231,354 |
Trade receivables from wholesale customers, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Total gross receivables | 182,253 | 164,591 | 182,253 | 164,591 | 233,928 |
Royalties receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Total gross receivables | 5,203 | 5,991 | 5,203 | 5,991 | 5,769 |
Tenant allowances and other receivables | |||||
Disaggregation of Revenue [Line Items] | |||||
Total gross receivables | 10,671 | 9,478 | 10,671 | 9,478 | 10,352 |
Allowance for credit loss | |||||
Disaggregation of Revenue [Line Items] | |||||
Less: Wholesale accounts receivable reserves | (14,207) | (16,103) | (14,207) | (16,103) | $ (18,695) |
Wholesale channel | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 261,035 | 265,240 | 618,769 | 591,409 | |
Direct-to-consumer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 439,660 | 481,160 | 863,211 | 942,352 | |
Royalty income, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 5,602 | 6,645 | 13,076 | 14,108 | |
U.S. Retail | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 379,097 | 423,627 | 745,455 | 830,694 | |
U.S. Retail | Wholesale channel | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 0 | 0 | 0 | 0 | |
U.S. Retail | Direct-to-consumer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 379,097 | 423,627 | 745,455 | 830,694 | |
U.S. Retail | Royalty income, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 1,317 | 2,360 | 4,558 | 5,430 | |
U.S. Wholesale | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 224,016 | 231,630 | 531,317 | 515,007 | |
U.S. Wholesale | Wholesale channel | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 224,016 | 231,630 | 531,317 | 515,007 | |
U.S. Wholesale | Direct-to-consumer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 0 | 0 | 0 | 0 | |
U.S. Wholesale | Royalty income, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 2,885 | 2,876 | 6,315 | 6,651 | |
International | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 97,582 | 91,143 | 205,208 | 188,060 | |
International | Wholesale channel | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 37,019 | 33,610 | 87,452 | 76,402 | |
International | Direct-to-consumer | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | 60,563 | 57,533 | 117,756 | 111,658 | |
International | Royalty income, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Net sales | $ 1,400 | $ 1,409 | $ 2,203 | $ 2,027 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Liabilities (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Revenue from Contract with Customer [Abstract] | |||
Unredeemed gift cards | $ 21,251 | $ 21,619 | $ 18,049 |
Unredeemed customer loyalty rewards | 4,456 | 5,659 | 4,829 |
Carter's credit card - upfront bonus | 714 | 714 | 714 |
Total contract liabilities-current | 26,421 | 27,992 | 23,592 |
Contract liabilities - non-current | 1,786 | 2,143 | 2,500 |
Total contract liabilities | $ 28,207 | $ 30,135 | $ 26,092 |
LEASES - Operating lease Terms
LEASES - Operating lease Terms of Contract (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jul. 02, 2022 USD ($) | Jul. 02, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Weighted average remaining operating lease term | 4 years 8 months 12 days | 4 years 8 months 12 days |
Weighted average discount rate for operating leases | 3.32% | 3.32% |
Operating lease payments | $ 42.5 | $ 85.8 |
Non-cash transaction | 14.5 | 30.8 |
Minimum rental commitments for lease not yet commenced | $ 21.7 | $ 21.7 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Initial term of lease | 1 year | |
Term for leases not yet commenced | 3 years | 3 years |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Initial term of lease | 10 years | |
Lease term extension option | 5 years | |
Term for leases not yet commenced | 10 years | 10 years |
LEASES - Cost and Supplementary
LEASES - Cost and Supplementary Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 39,169 | $ 42,100 | $ 78,626 | $ 84,798 |
Variable lease cost | 17,173 | 16,276 | 34,241 | 32,674 |
Net lease cost | $ 56,342 | $ 58,376 | $ 112,867 | $ 117,472 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
Leases [Abstract] | |
Remainder of 2022 | $ 81,872 |
2023 | 148,893 |
2024 | 120,016 |
2025 | 85,642 |
2026 | 61,239 |
2027 | 39,305 |
After 2027 | 51,565 |
Total lease payments | 588,532 |
Less: Interest | (45,505) |
Present value of lease liabilities | $ 543,027 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | $ (32,203) | $ (27,263) | $ (28,897) |
Cumulative foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | (24,608) | (15,810) | (21,302) |
Pension and post-retirement obligations | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | (7,595) | (11,453) | (7,595) |
Tax impact on accumulated other comprehensive loss | $ 2,400 | $ 3,500 | $ 2,400 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill by Segment (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | Jan. 02, 2021 | |
Goodwill [Roll Forward] | ||||
Gross goodwill | $ 212,023 | $ 211,776 | ||
Foreign currency impact | $ (776) | $ 1,419 | ||
Goodwill | 211,247 | 213,195 | 212,023 | |
U.S. Retail | ||||
Goodwill [Roll Forward] | ||||
Gross goodwill | 83,934 | 83,934 | ||
Foreign currency impact | 0 | 0 | ||
Goodwill | 83,934 | 83,934 | ||
U.S. Wholesale | ||||
Goodwill [Roll Forward] | ||||
Gross goodwill | 74,454 | 74,454 | ||
Foreign currency impact | 0 | 0 | ||
Goodwill | 74,454 | 74,454 | ||
International | ||||
Goodwill [Roll Forward] | ||||
Gross goodwill | $ 53,635 | $ 53,388 | ||
Foreign currency impact | (776) | 1,419 | ||
Goodwill | 52,859 | 54,807 | ||
Accumulated impairment losses on goodwill | $ 17,700 | $ 17,700 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Goodwill and Other Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | $ 50,416 | $ 50,416 | |||
Accumulated amortization | 14,639 | 14,639 | |||
Finite-lived intangible assets, net | 35,777 | 35,777 | |||
Amortization expense of intangible assets | $ 900 | 900 | $ 1,865 | 1,866 | |
Carter’s tradename | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | 220,233 | 220,233 | 220,233 | 220,233 | $ 220,233 |
OshKosh tradename | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | 70,000 | 70,000 | 70,000 | 70,000 | 70,000 |
Skip Hop tradename | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 |
Finite-life tradenames | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | 3,911 | 3,911 | 3,911 | 3,911 | 3,911 |
Accumulated amortization | 1,626 | 1,376 | 1,626 | 1,376 | 1,501 |
Finite-lived intangible assets, net | 2,285 | 2,535 | $ 2,285 | $ 2,535 | 2,410 |
Finite-life tradenames | Minimum | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Weighted-average useful life | 5 years | 5 years | |||
Finite-life tradenames | Maximum | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Weighted-average useful life | 20 years | 20 years | |||
Total tradenames, net | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Intangible assets, gross | 309,144 | 309,144 | $ 309,144 | $ 309,144 | 309,144 |
Accumulated amortization | 1,626 | 1,376 | 1,626 | 1,376 | 1,501 |
Indefinite-lived intangible assets, net | $ 307,518 | $ 307,768 | 307,518 | 307,768 | 307,643 |
Skip Hop customer relationships | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Weighted-average useful life | 15 years | 15 years | |||
Finite-lived intangible assets, gross | $ 47,300 | $ 47,300 | 47,300 | 47,300 | 47,300 |
Accumulated amortization | 16,598 | 13,422 | 16,598 | 13,422 | 15,010 |
Finite-lived intangible assets, net | $ 30,702 | $ 33,878 | 30,702 | 33,878 | 32,290 |
Carter’s Mexico customer relationships | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Weighted-average useful life | 10 years | 10 years | |||
Finite-lived intangible assets, gross | $ 3,066 | $ 3,116 | 3,066 | 3,116 | 3,047 |
Accumulated amortization | 1,520 | 1,217 | 1,520 | 1,217 | 1,368 |
Finite-lived intangible assets, net | 1,546 | $ 1,899 | 1,546 | $ 1,899 | 1,679 |
Total customer relationships, net | |||||
Goodwill and Other Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | 50,366 | 50,366 | 50,347 | ||
Accumulated amortization | 18,118 | 18,118 | 16,378 | ||
Finite-lived intangible assets, net | $ 32,248 | $ 32,248 | $ 33,969 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Estimated Amortization Expense (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2022 | $ 1,865 |
2023 | 3,688 |
2024 | 3,658 |
2025 | 3,658 |
2026 | 3,658 |
2027 | $ 3,532 |
COMMON STOCK - Share Repurchase
COMMON STOCK - Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2022 | Apr. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Feb. 24, 2022 | |
Stockholders' Equity Note [Abstract] | ||||||
Number of shares repurchased (in shares) | 1,272,354 | 0 | 2,065,362 | 0 | ||
Aggregate cost of shares repurchased (dollars in thousands) | $ 101,810 | $ 0 | $ 176,306 | $ 0 | ||
Average price per share (in USD per share) | $ 80.02 | $ 0 | $ 85.36 | $ 0 | ||
Share repurchase program, authorized amount | $ 1,000,000 | |||||
Remaining capacity under authorization | $ 872,900 | $ 872,900 | $ 301,900 | |||
Dividend declared and paid per common share (in USD per share) | $ 0.75 | $ 0.75 | $ 0.40 | $ 1.50 | $ 0.40 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Apr. 11, 2022 | Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Apr. 04, 2022 | Jan. 01, 2022 | |
Debt Instrument [Line Items] | |||||||
Total long-term debt, net | $ 616,275,000 | $ 990,437,000 | $ 616,275,000 | $ 990,437,000 | $ 991,370,000 | ||
Loss on extinguishment of debt | 19,940,000 | 0 | 19,940,000 | 0 | |||
Outstanding letters of credit | $ 3,600,000 | 3,600,000 | |||||
Springing maturity date provision amount | $ 250,000,000 | ||||||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | ||||||
Premiums paid to extinguish debt | $ 15,678,000 | 0 | |||||
Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Line of Credit Facility, Commitment Fee Percentage | 0.25% | ||||||
Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Line of Credit Facility, Commitment Fee Percentage | 0.15% | ||||||
Secured Overnight Financing Rate (SOFR) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 1.375% | 1.375% | 1.375% | ||||
Amendment No. 4 | |||||||
Debt Instrument [Line Items] | |||||||
bank fees and other third-party expenses | $ 2,400,000 | $ 2,400,000 | |||||
U.S Dollar Credit Facility - Amendment No.4 | Secured Overnight Financing Rate (SOFR) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Effective interest rate (as a percentage) | 2.95% | 2.95% | |||||
Total senior notes | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, gross | $ 500,000,000 | 1,000,000,000 | $ 500,000,000 | 1,000,000,000 | 1,000,000,000 | ||
Less unamortized issuance-related costs for senior notes | (3,725,000) | (9,563,000) | (3,725,000) | (9,563,000) | (8,630,000) | ||
Senior notes, net | 496,275,000 | 990,437,000 | 496,275,000 | 990,437,000 | 991,370,000 | ||
Secured revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Secured revolving credit facility | 120,000,000 | 0 | 120,000,000 | 0 | 0 | ||
Remaining borrowing capacity | $ 726,400,000 | $ 726,400,000 | |||||
Secured revolving credit facility | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 0.375% | 0.375% | 0.375% | ||||
Secured revolving credit facility | Amendment No. 4 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 850,000,000 | ||||||
Secured revolving credit facility | Amendment No. 3 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 750,000,000 | ||||||
Secured revolving credit facility | U.S Dollar Credit Facility - Amendment No.4 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 750,000,000 | ||||||
Secured revolving credit facility | U.S. Dollar Credit Facility - Amendment No.3 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 650,000,000 | ||||||
Secured revolving credit facility | Multicurrency Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Secured revolving credit facility | $ 0 | $ 0 | |||||
Maximum borrowing capacity | 100,000,000 | $ 100,000,000 | |||||
5.500% Senior Notes due 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.50% | ||||||
Loss on extinguishment of debt | 19,900,000 | ||||||
Applicable premium | (15,700,000) | ||||||
Write off of Deferred Debt Issuance Cost | $ 4,300,000 | ||||||
5.500% Senior Notes due 2025 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.50% | 5.50% | |||||
Senior notes, gross | $ 0 | 500,000,000 | $ 0 | 500,000,000 | $ 500,000,000 | 500,000,000 | |
5.625% Senior Notes due 2027 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.625% | 5.625% | |||||
Senior notes, gross | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||
Secured revolving credit facility | Secured Overnight Financing Rate (SOFR) [Member] | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 162.50% | ||||||
Secured revolving credit facility | Secured Overnight Financing Rate (SOFR) [Member] | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.125% | ||||||
Secured revolving credit facility | Base Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 62.50% | ||||||
Secured revolving credit facility | Base Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.125% |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 6,359 | $ 5,391 | $ 12,218 | $ 12,322 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 12 | 300 | 178 | 774 |
Time-based awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 4,296 | 3,504 | 9,455 | 7,404 |
Performance-based awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 345 | 347 | 879 | 2,904 |
Stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 1,706 | $ 1,240 | $ 1,706 | $ 1,240 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Income Tax Disclosure [Abstract] | |||
Gross unrecognized tax benefits | $ 11.3 | ||
Unrecognized tax benefits that if recognized would impact effective tax rate | 7.9 | ||
Reserves for unrecognized tax benefits | 2.8 | ||
Interest expense recorded on uncertain tax positions | 0.3 | $ 0.2 | |
Interest accrued on uncertain tax positions | $ 2.1 | $ 2.2 | $ 1.8 |
FAIR VALUE MEASUREMENTS - Inves
FAIR VALUE MEASUREMENTS - Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||
Gain (loss) on investments | $ (0.9) | $ 1.1 | $ (1.9) | $ 1.3 | |
Fair Value, Inputs, Level 1 | |||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||
Investments | $ 15.7 | $ 16.5 | $ 15.7 | $ 16.5 | $ 17.5 |
FAIR VALUE MEASUREMENTS - Borro
FAIR VALUE MEASUREMENTS - Borrowings (Details) - USD ($) | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Total long-term debt, net | $ 616,275,000 | $ 991,370,000 | $ 990,437,000 |
Secured revolving credit facility | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Secured revolving credit facility | 120,000,000 | $ 0 | $ 0 |
Senior Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt Instrument, face amount | 500,000,000 | ||
Fair Value | Fair Value, Inputs, Level 2 | Senior Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Total long-term debt, net | $ 471,000,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Weighted-average number of common and common equivalent shares outstanding: | ||||
Basic number of common shares outstanding (in shares) | 39,344,834 | 43,445,780 | 39,807,354 | 43,408,262 |
Dilutive effect of equity awards (in shares) | 29,153 | 169,631 | 48,274 | 151,468 |
Diluted number of common and common equivalent shares outstanding (in shares) | 39,373,987 | 43,615,411 | 39,855,628 | 43,559,730 |
Basic net income per common share: | ||||
Net income | $ 36,970 | $ 71,603 | $ 104,903 | $ 157,799 |
Income allocated to participating securities | (536) | (860) | (1,480) | (1,896) |
Net income available to common shareholders | $ 36,434 | $ 70,743 | $ 103,423 | $ 155,903 |
Basic net income per common share (in USD per share) | $ 0.93 | $ 1.63 | $ 2.60 | $ 3.59 |
Diluted net income per common share: | ||||
Net income | $ 36,970 | $ 71,603 | $ 104,903 | $ 157,799 |
Income allocated to participating securities | (536) | (857) | (1,479) | (1,890) |
Net income available to common shareholders | $ 36,434 | $ 70,746 | $ 103,424 | $ 155,909 |
Diluted net income per common share (in USD per share) | $ 0.93 | $ 1.62 | $ 2.59 | $ 3.58 |
Anti-dilutive awards excluded from diluted earnings per share computation (in shares) | 532,432 | 171,653 | 288,800 | 288,122 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Jul. 03, 2021 |
Other Liabilities Disclosure [Abstract] | |||
Unredeemed gift cards | $ 21,251 | $ 21,619 | $ 18,049 |
Accrued employee benefits | 12,208 | 26,517 | 18,970 |
Accrued salaries and wages | 11,644 | 10,821 | 10,974 |
Accrued taxes | 8,782 | 12,883 | 9,954 |
Accrued interest | 8,724 | 11,942 | 12,078 |
Income taxes payable | 5,904 | 13,850 | 0 |
Accrued bonuses and incentive compensation | 3,199 | 47,363 | 17,168 |
Accrued other | 24,390 | 31,454 | 26,047 |
Other current liabilities | $ 96,102 | $ 176,449 | $ 113,240 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 700,695 | $ 746,400 | $ 1,481,980 | $ 1,533,761 |
Consolidated operating income | $ 75,418 | $ 107,582 | $ 178,042 | $ 235,078 |
% of segment net sales | 10.80% | 14.40% | 12% | 15.30% |
U.S. Retail | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 379,097 | $ 423,627 | $ 745,455 | $ 830,694 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | 97,582 | 91,143 | 205,208 | 188,060 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 700,695 | $ 746,400 | $ 1,481,980 | $ 1,533,761 |
% of consolidated net sales | 100% | 100% | 100% | 100% |
Operating Segments | U.S. Retail | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 379,097 | $ 423,627 | $ 745,455 | $ 830,694 |
% of consolidated net sales | 54.10% | 56.80% | 50.30% | 54.20% |
Consolidated operating income | $ 55,540 | $ 87,080 | $ 105,534 | $ 163,600 |
% of segment net sales | 14.70% | 20.60% | 14.20% | 19.70% |
Operating Segments | U.S. Wholesale | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 224,016 | $ 231,630 | $ 531,317 | $ 515,007 |
% of consolidated net sales | 32% | 31% | 35.90% | 33.60% |
Consolidated operating income | $ 33,593 | $ 40,592 | $ 94,099 | $ 110,650 |
% of segment net sales | 15% | 17.50% | 17.70% | 21.50% |
Operating Segments | International | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated net sales | $ 97,582 | $ 91,143 | $ 205,208 | $ 188,060 |
% of consolidated net sales | 13.90% | 12.20% | 13.80% | 12.20% |
Consolidated operating income | $ 12,163 | $ 9,007 | $ 22,551 | $ 18,741 |
% of segment net sales | 12.50% | 9.90% | 11% | 10% |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Corporate expenses | $ (25,878) | $ (29,097) | $ (44,142) | $ (57,913) |
SEGMENT INFORMATION SEGMENT CHA
SEGMENT INFORMATION SEGMENT CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Segment Reporting Information [Line Items] | |||
Organizational restructuring | $ 500 | $ 900 | |
Early exit cost, corporate lease | 2,300 | 2,300 | |
(Recoveries of) provisions for doubtful accounts receivable from customers | $ (1,520) | 1,206 | |
U.S. Retail | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Incremental costs associated with COVID-19 pandemic | 500 | 1,600 | |
Organizational restructuring | (600) | (600) | |
Gain on modification of retail store leases | (400) | (1,900) | |
Total charges | (500) | (900) | |
U.S. Wholesale | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Incremental costs associated with COVID-19 pandemic | 400 | 1,300 | |
Organizational restructuring | 0 | 100 | |
Gain on modification of retail store leases | 0 | 0 | |
Total charges | 400 | 1,400 | |
(Recoveries of) provisions for doubtful accounts receivable from customers | 38 | ||
International | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Incremental costs associated with COVID-19 pandemic | 100 | 300 | |
Organizational restructuring | 2,300 | 2,300 | |
Gain on modification of retail store leases | 0 | 0 | |
Total charges | $ 2,400 | $ 2,600 |