DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 21, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 01, 2023 | |
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 $0.01 per share | |
Trading Symbol | CRI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 37,688,407 | |
Entity Central Index Key | 0001060822 | |
Current Fiscal Year End Date | --12-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 | |
Current assets: | ||||
Cash and cash equivalents, end of period | $ 157,685 | $ 211,748 | $ 702,266 | |
Accounts receivable, net | 223,939 | 198,587 | 265,694 | |
Finished goods inventories, net | 613,921 | 744,573 | 679,729 | |
Prepaid expenses and other current assets | [1] | 47,173 | 33,812 | 51,186 |
Total current assets | 1,042,718 | 1,188,720 | 1,698,875 | |
Property, plant and equipment, net | 180,383 | 189,822 | 197,515 | |
Operating lease assets | 494,969 | 492,335 | 469,354 | |
Tradenames, net | 298,331 | 298,393 | 307,581 | |
Goodwill | 209,601 | 209,333 | 212,518 | |
Customer relationships, net | 29,801 | 30,564 | 33,151 | |
Other assets | 27,524 | 30,548 | 29,084 | |
Total assets | 2,283,327 | 2,439,715 | 2,948,078 | |
Current liabilities: | ||||
Accounts payable | 180,181 | 264,078 | 284,034 | |
Current portion of long-term debt, net | 0 | 0 | 495,743 | |
Current operating lease liabilities | [1] | 139,350 | 142,432 | 133,620 |
Other current liabilities | 91,104 | 122,439 | 111,078 | |
Total current liabilities | 410,635 | 528,949 | 1,024,475 | |
Long-term debt, net | 576,803 | 616,624 | 496,104 | |
Deferred income taxes | 46,090 | 41,235 | 48,450 | |
Long-term operating lease liabilities | 417,012 | 421,741 | 419,493 | |
Other long-term liabilities | 34,894 | 34,757 | 44,266 | |
Total liabilities | 1,485,434 | 1,643,306 | 2,032,788 | |
Commitments and contingencies - Note 12 | ||||
Preferred Stock, Shares Issued | 0 | 0 | 0 | |
Shareholders’ equity: | ||||
Preferred stock; par value $0.01 per share;100,000 shares authorized; none issued or outstanding at April 1, 2023, December 31, 2022, and April 2, 2022 | $ 0 | $ 0 | $ 0 | |
Common stock, voting; par value $0.01 per share; 150,000,000 shares authorized; 37,799,251, 37,692,132, and 40,555,922 shares issued and outstanding at April 1, 2023, December 31, 2022, and April 2, 2022, respectively | 378 | 377 | 406 | |
Additional paid-in capital | 0 | 0 | 0 | |
Accumulated other comprehensive loss | (30,412) | (34,338) | (26,115) | |
Retained earnings | 827,927 | 830,370 | 940,999 | |
Total shareholders’ equity | 797,893 | 796,409 | 915,290 | |
Total liabilities and shareholders’ equity | $ 2,283,327 | $ 2,439,715 | $ 2,948,078 | |
[1]Prepaid expense and other current assets and Current operating lease liabilities as of April 2, 2022 were revised to reflect the presentation for payments of rent before payment due date of $13.2 million. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Statement of Financial Position [Abstract] | |||
Allowance for credit losses | $ 7,425 | $ 7,189 | $ 5,766 |
Inventory valuation reserves | 18,076 | 19,268 | 11,307 |
Accumulated depreciation of property, plant, and equipment | $ 577,183 | $ 569,528 | $ 536,580 |
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 outstanding (in shares) | 0 | 0 | 0 |
Common stock par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 150,000,000 | 150,000,000 | 150,000,000 |
Common stock shares issued (in shares) | 37,799,251 | 37,692,132 | 40,555,922 |
Common stock shares outstanding (in shares) | 37,799,251 | 37,692,132 | 40,555,922 |
Payments of rent before payment due date | $ 13,200 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 695,880 | $ 781,284 |
Cost of goods sold | 386,413 | 426,242 |
Gross profit | 309,467 | 355,042 |
Royalty income, net | 6,519 | 7,474 |
Selling, general, and administrative expenses | 259,632 | 259,893 |
Operating income | 56,354 | 102,623 |
Interest expense | 9,644 | 15,132 |
Interest income | (700) | (338) |
Other income, net | (258) | (512) |
Income before income taxes | 47,668 | 88,341 |
Income tax provision | 11,672 | 20,408 |
Net income | $ 35,996 | $ 67,933 |
Basic net income per common share (in USD per share) | $ 0.95 | $ 1.66 |
Diluted net income per common share (in USD per share) | 0.95 | 1.66 |
Dividend declared and paid per common share (in USD per share) | $ 0.75 | $ 0.75 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 35,996 | $ 67,933 |
Other comprehensive income: | ||
Foreign currency translation adjustments | 3,926 | 2,782 |
Comprehensive income | $ 39,922 | $ 70,715 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' 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. 01, 2022 | 41,148,870 | ||||
Balance at beginning of period at Jan. 01, 2022 | $ 950,186 | $ 411 | $ 0 | $ (28,897) | $ 978,672 |
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 | |
Net income | $ 67,933 | 67,933 | |||
Balance at end of period (in shares) at Apr. 02, 2022 | 40,555,922 | 40,555,922 | |||
Balance at end of period at Apr. 02, 2022 | $ 915,290 | $ 406 | 0 | (26,115) | 940,999 |
Balance at beginning of period (in shares) at Dec. 31, 2022 | 37,692,132 | 37,692,132 | |||
Balance at beginning of period at Dec. 31, 2022 | $ 796,409 | $ 377 | 0 | (34,338) | 830,370 |
Exercise of stock options (in shares) | 1,400 | ||||
Exercise of stock options | 83 | $ 0 | 83 | 0 | 0 |
Withholdings from vesting of restricted stock (in shares) | (61,423) | ||||
Withholdings from vesting of restricted stock | (4,776) | $ (1) | (4,404) | 0 | (371) |
Restricted stock activity (in shares) | 303,015 | ||||
Restricted stock activity | 0 | $ 3 | (3) | 0 | 0 |
Stock-based compensation expense | 4,343 | $ 0 | 4,343 | 0 | 0 |
Repurchase of common stock (in shares) | (135,873) | ||||
Repurchase of common stock | (9,586) | $ (1) | 0 | 0 | (9,585) |
Cash dividends declared and paid | (28,483) | 0 | 0 | 0 | (28,483) |
Comprehensive income | 39,922 | 0 | 0 | 3,926 | |
Net income | 35,996 | 35,996 | |||
Other | $ (19) | $ 0 | (19) | 0 | 0 |
Balance at end of period (in shares) at Apr. 01, 2023 | 37,799,251 | 37,799,251 | |||
Balance at end of period at Apr. 01, 2023 | $ 797,893 | $ 378 | $ 0 | $ (30,412) | $ 827,927 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividend declared and paid per common share (in USD per share) | $ 0.75 | $ 0.75 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | ||
Statement of Cash Flows [Abstract] | |||
Net income | $ 35,996 | $ 67,933 | |
Adjustments to reconcile net income to net cash provided by ( used in) operating activities: | |||
Depreciation of property, plant, and equipment | 14,799 | 13,282 | |
Amortization of intangible assets | 939 | 932 | |
Recoveries of excess and obsolete inventory, net | (1,256) | (3,109) | |
Gain on partial termination of corporate lease | (4,366) | 0 | |
Other asset impairments and loss on disposal of property, plant and equipment, net of recoveries | 2,632 | 190 | |
Amortization of debt issuance costs | 393 | 787 | |
Stock-based compensation expense | 4,343 | 5,859 | |
Unrealized foreign currency exchange gain, net | (240) | (189) | |
Provisions for (recoveries of) doubtful accounts receivable from customers | 235 | (1,513) | |
Unrealized (gain) loss on investments | (433) | 935 | |
Deferred income taxes | 5,031 | 7,759 | |
Effect of changes in operating assets and liabilities: | |||
Accounts receivable | (24,944) | (32,484) | |
Finished goods inventories | 134,147 | (27,720) | |
Prepaid expenses and other assets | [1],[2] | (12,678) | (42) |
Accounts payable and other liabilities | [1],[2] | (112,401) | (196,427) |
Net cash provided by (used in) operating activities | 42,197 | (163,807) | |
Cash flows from investing activities: | |||
Capital expenditures | (13,827) | (7,652) | |
Net cash used in investing activities | (13,827) | (7,652) | |
Cash flows from financing activities: | |||
Payment of debt issuance costs | 0 | (3) | |
Payments on secured revolving credit facility | (40,000) | 0 | |
Repurchases of common stock | (9,586) | (74,496) | |
Dividends paid | (28,483) | (30,573) | |
Withholdings from vesting of restricted stock | (4,776) | (6,623) | |
Proceeds from exercises of stock options | 83 | 222 | |
Net cash used in financing activities | (82,762) | (111,473) | |
Net effect of exchange rate changes on cash and cash equivalents | 329 | 904 | |
Net decrease in cash and cash equivalents | (54,063) | (282,028) | |
Cash and cash equivalents, beginning of period | 211,748 | 984,294 | |
Cash and cash equivalents, end of period | $ 157,685 | $ 702,266 | |
[1]Cash flows for the fiscal quarter April 2, 2022 were revised to reflect the presentation for payments of rent before payment due date of $13.2 million.[2]Operating lease assets obtained in exchange for operating lease liabilities were $38.7 million and $16.3 million for the fiscal quarter ended April 1, 2023 and the fiscal quarter ended April 2, 2022, respectively. |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Statement of Cash Flows [Abstract] | ||
Payments of rent before payment due date | $ 13,200 | |
Operating lease assets obtained in exchange for operating lease liabilities | $ 38,700 | $ 16,300 |
THE COMPANY
THE COMPANY | 3 Months Ended |
Apr. 01, 2023 | |
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 B’gosh (or “ OshKosh ”), Skip Hop, Child of Mine , Just One You , Simple Joys, Little Planet, and other brands. The Company’s products are sourced through contractual arrangements with manufacturers worldwide for wholesale distribution to leading department stores, national chains, and specialty retailers domestically and internationally and for distribution to the Company’s retail stores and eCommerce sites that market its brand name merchandise and other licensed products manufactured by other companies. Our trademarks that are referred to in this Quarterly Report on Form 10-Q, including Carter’s , OshKosh B’gosh , OshKosh , Child of Mine , Just One You , Simple Joys , Little Planet , and other brands, many of which are registered in the United States and in over 100 other countries and territories, are each the property of one or more subsidiaries of Carter’s, Inc. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Apr. 01, 2023 | |
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 U.S. 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 shareholders’ 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 April 1, 2023 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 30, 2023. 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 and disclosures of contingent 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 from those estimates. The accompanying condensed consolidated balance sheet as of December 31, 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. We have recast the consolidated statement of operations for the fiscal quarter ended April 2, 2022 to conform to our current presentation of combining Adverse purchase commitments within Cost of goods sold. Inventories Our inventories, which consist primarily of finished goods, are stated 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 April 1, 2023 were $613.9 million compared to $679.7 million at April 2, 2022 and $744.6 million at December 31, 2022. The decrease of $65.8 million, or 9.7%, at April 1, 2023 compared to April 2, 2022 is primarily due to decreased in-transit inventory, partially offset by longer holding periods for inventory to be sold in future periods and increased product costs. Due to the seasonal nature of our operations, the inventories balance at April 1, 2023 is not comparable to the inventories balance at December 31, 2022. Adjustments to bring inventory to net realizable value as a result of obsolete, damaged, and excess inventory at April 1, 2023 increased 59.9% compared to April 2, 2022. These adjustments as a percentage of inventory have remained relatively stable due to the overall quality and planned use of the inventory. The liability for adverse inventory and fabric purchase commitments increased from $0.5 million as of April 2, 2022 to $5.0 million as of April 1, 2023, primarily due to lower estimated customer demand. Supply Chain Financing Program We facilitate a voluntary supply chain finance (“SCF”) program through participating financial institutions. This SCF program enables our suppliers to sell their receivables due from the Company to participating financial institutions at their discretion. As of April 1, 2023, the SCF program has a $70.0 million revolving capacity. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the SCF program. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the SCF program. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. The amounts payable to the participating financial institution for suppliers who voluntarily participate in the SCF program are included in Accounts payable on our consolidated statement balance sheets. Amounts under the SCF program included in Account payable were $7.8 million, $16.5 million, and $20.7 million as of April 1, 2023, December 31, 2022, and April 2, 2022, respectively. Payments made under the SCF program, like payments of other accounts payable, are a reduction to our operating cash flow. 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. New accounting pronouncements adopted at the beginning of fiscal 2023 are noted below. Recent Accounting Pronouncements Supplier Finance Programs (ASU 2022-04) In September 2022, the FASB issued Accounting Standards Update No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”) . This new guidance is designed to enhance transparency around supplier finance programs by requiring new disclosures that would allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of the rollforward of annual activity, which is effective for fiscal years beginning after December 15, 2023. The effect of the adoption of ASU 2022-04 was not material to the Company’s consolidated financial statements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Apr. 01, 2023 | |
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 (“wholesale channel”). The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the fiscal periods indicated were as follows: Fiscal quarter ended April 1, 2023 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 279,990 $ 38,496 $ 318,486 Direct-to-consumer 323,721 — 53,673 377,394 $ 323,721 $ 279,990 $ 92,169 $ 695,880 Royalty income, net $ 2,078 $ 3,558 $ 883 $ 6,519 Fiscal quarter ended April 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 307,301 $ 50,432 $ 357,733 Direct-to-consumer 366,358 — 57,193 423,551 $ 366,358 $ 307,301 $ 107,625 $ 781,284 Royalty income, net $ 3,240 $ 3,430 $ 804 $ 7,474 Accounts Receivable from Customers and Licensees The components of Accounts receivable, net, were as follows: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Trade receivables from wholesale customers, net $ 222,069 $ 195,078 $ 266,970 Royalties receivable 6,396 5,386 6,923 Other receivables (1) 13,351 14,571 9,282 Total receivables $ 241,816 $ 215,035 $ 283,175 Less: Wholesale accounts receivable reserves (2)(3) (17,877) (16,448) (17,481) Accounts receivable, net $ 223,939 $ 198,587 $ 265,694 (1) Includes tenant allowances, tax, payroll, gift card and other receivables. (2) Includes allowance for chargebacks of $10.5 million, $9.3 million, and $11.7 million for the periods ended April 1, 2023, December 31, 2022, and April 2, 2022, respectively. (3) Includes allowance for credit losses of $7.4 million, $7.2 million, and $5.8 million for the periods ended April 1, 2023, December 31, 2022, and April 2, 2022, 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) April 1, 2023 December 31, 2022 April 2, 2022 Contract liabilities - current: Unredeemed gift cards $ 22,601 $ 23,303 $ 21,026 Unredeemed customer loyalty rewards 5,070 5,276 5,804 Carter’s credit card - upfront bonus (1) 714 714 714 Total contract liabilities - current (2) $ 28,385 $ 29,293 $ 27,544 Contract liabilities - non-current (3) $ 1,250 $ 1,429 $ 1,964 Total contract liabilities $ 29,635 $ 30,722 $ 29,508 (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 sheets. (3) This amount reflects the non-current portion of the Carter’s credit card upfront bonus and is included within Other long-term liabilities on the Company’s consolidated balance sheets. |
ACUMULATED OTHER COMPREHENSIVE
ACUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Apr. 01, 2023 | |
AOCI Attributable to Parent [Abstract] | |
ACUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of Accumulated other comprehensive loss consisted of the following: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Cumulative foreign currency translation adjustments $ (24,900) $ (28,826) $ (18,520) Pension and post-retirement obligations (*) (5,512) (5,512) (7,595) Total accumulated other comprehensive loss $ (30,412) $ (34,338) $ (26,115) (*) Net of income taxes of $1.7 million, $1.7 million, and $2.4 million, for the period ended April 1, 2023, December 31, 2022, and April 2, 2022, respectively. During the first quarter of both fiscal 2023 and fiscal 2022, no amounts were reclassified from Accumulated other comprehensive loss to the statement of operations. |
COMMON STOCK
COMMON STOCK | 3 Months Ended |
Apr. 01, 2023 | |
Equity [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 April 1, 2023 April 2, 2022 Number of shares repurchased 135,873 793,008 Aggregate cost of shares repurchased (dollars in thousands) (*)` $ 9,586 $ 74,496 Average price per share (*) $ 70.55 $ 93.94 (*) The aggregate cost of share repurchases and average price paid per share excludes excise tax on share repurchases. The total aggregate remaining capacity under outstanding repurchase authorizations as of April 1, 2023, was approximately $739.9 million, based on settled repurchase transactions. 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 revolving credit facility, market conditions, stock price, other investment priorities, and other factors. Dividends In the first quarter of both fiscal 2023 and fiscal 2022, the Board of Directors declared, and the Company paid cash dividends of $0.75 per common share. The Board of Directors will evaluate future dividend declarations based on a number of factors, including restrictions under the Company’s 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, as further described in Note 6, Long-term Debt , to the consolidated financial statements. |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 $500 million 5.625% senior notes due March 15, 2027 $ 500,000 $ 500,000 $ 500,000 Less unamortized issuance-related costs for senior notes (3,197) (3,376) (3,896) Senior notes, net $ 496,803 $ 496,624 $ 496,104 Secured revolving credit facility 80,000 120,000 — Total long-term debt, net $ 576,803 $ 616,624 $ 496,104 Secured Revolving Credit Facility As of April 1, 2023, the Company had $80.0 million outstanding borrowings under its secured revolving credit facility, exclusive of $4.4 million of outstanding letters of credit. As of April 1, 2023, there was approximately $765.6 million available for future borrowing. All 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. The Company’s revolving credit facility provides for an aggregate credit line of $850 million which includes a $750 million U.S. dollar facility and a $100 million multicurrency facility. The credit facility matures in April 2027. The facility contains covenants that restrict the Company’s ability to, among other things: (i) create or incur liens, debt, guarantees or other investments, (ii) engage in mergers and consolidations, (iii) pay dividends or other distributions to, and redemptions and repurchases from, equity holders, (iv) prepay, redeem or repurchase subordinated or junior debt, (v) amend organizational documents, and (vi) engage in certain transactions with affiliates. As of April 1, 2023, the interest rate margins applicable to the secured revolving credit facility were 1.125% for adjusted term Secured Overnight Financing Rate (“SOFR”) rate loans and 0.125% for base rate loans. As of April 1, 2023, 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 an overall borrowing rate of 5.92%. There were no foreign currency borrowings outstanding on April 1, 2023. As of April 1, 2023, the Company was in compliance with its financial and other covenants under the secured revolving credit facility. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Apr. 01, 2023 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company recorded stock-based compensation cost as follows: Fiscal quarter ended (dollars in thousands) April 1, 2023 April 2, 2022 Stock options $ — $ 166 Restricted stock: Time-based awards 4,362 5,159 Performance-based awards (19) 534 Total $ 4,343 $ 5,859 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. During the first quarter of fiscal 2023, the achievement of performance target estimates related to certain performance-based grants were revised resulting in a reversal of $0.4 million of previously recognized stock compensation expense. During the first quarter of fiscal 2023, the Company’s Board of Directors approved the issuance of the following new awards to certain key employees under the Company’s existing stock-based compensation plan, subject to vesting: 254,086 shares of time-based restricted stock awards with an average grant-date fair value of $73.91 and 112,284 shares of performance-based restricted stock awards with an average grant-date fair value of $74.06. Additionally, a total of 151,564 restricted stock awards (time-based) vested during the first quarter of fiscal 2023. There were no vestings of performance-based restricted stock in the first quarter of fiscal 2023. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Apr. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of April 1, 2023, the Company had gross unrecognized income tax benefits of approximately $8.8 million, of which $6.3 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 April 1, 2023 is approximately $2.4 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 2023 along with the effective income tax rate in the quarter in which the benefits are recognized. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Apr. 01, 2023 | |
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 condensed consolidated balance sheets, and their aggregate fair values were approximately $15.5 million, $15.1 million, and $16.6 million at April 1, 2023, December 31, 2022, and April 2, 2022, 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. Gains on the investments in marketable securities were $0.4 million for the first fiscal quarter ended April 1, 2023. Losses on the investments in marketable securities were $0.9 million for the first fiscal quarter ended April 2, 2022. These amounts are included in Other (income) expense, net on the Company’s consolidated statement of operations. Borrowings As of April 1, 2023, the Company had $80.0 million outstanding borrowings under its secured revolving credit facility. The fair value of the Company’s senior notes at April 1, 2023, was approximately $489.0 million. The fair value of these 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. In the fourth quarter of fiscal 2022, impairment charges of $5.6 million, $3.0 million, and $0.4 million were recorded on our indefinite-lived Skip Hop tradename asset in the U.S. Wholesale, International, and U.S. Retail segments, respectively, to reflect the impairment of the value ascribed to the indefinite-lived Skip Hop tradename asset. The carrying value of the indefinite-lived Skip Hop tradename asset as of April 1, 2023 was $6.0 million. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Apr. 01, 2023 | |
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 April 1, 2023 April 2, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 37,104,527 40,270,895 Dilutive effect of equity awards 8,063 77,437 Diluted number of common and common equivalent shares outstanding 37,112,590 40,348,332 Earnings per share: (dollars in thousands, except per share data) Basic net income per common share: Net income $ 35,996 $ 67,933 Income allocated to participating securities (576) (921) Net income available to common shareholders $ 35,420 $ 67,012 Basic net income per common share $ 0.95 $ 1.66 Diluted net income per common share: Net income $ 35,996 $ 67,933 Income allocated to participating securities (576) (920) Net income available to common shareholders $ 35,420 $ 67,013 Diluted net income per common share $ 0.95 $ 1.66 Anti-dilutive awards excluded from diluted earnings per share computation (*) 505,070 172,987 (*) The volume of anti-dilutive awards is, in part, due to the related unamortized compensation costs. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 3 Months Ended |
Apr. 01, 2023 | |
Accrued Liabilities, Current [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities at the end of any comparable period, were as follows: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Unredeemed gift cards $ 22,601 $ 23,303 $ 21,026 Accrued employee benefits 12,604 16,356 11,544 Income taxes payable 12,132 17,484 16,049 Accrued taxes 10,904 10,445 11,962 Accrued salaries and wages 4,163 11,519 4,831 Accrued interest (*) 1,698 8,868 11,782 Other 27,002 34,464 33,884 Other current liabilities $ 91,104 $ 122,439 $ 111,078 (*) Decrease primarily related to the early extinguishment of our $500 million in aggregate principal amount of 5.500% senior notes due May 2025 in the second quarter of fiscal 2022, as well as the timing of interest payments. |
COMMITMENT AND CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT 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, and employee benefit plans. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated: Fiscal quarter ended (dollars in thousands) April 1, 2023 % of consolidated net sales April 2, 2022 % of consolidated net sales Net sales : U.S. Retail $ 323,721 46.5 % $ 366,358 46.9 % U.S. Wholesale 279,990 40.3 % 307,301 39.3 % International 92,169 13.2 % 107,625 13.8 % Consolidated net sales $ 695,880 100.0 % $ 781,284 100.0 % Operating income : % of segment net sales % of segment net sales U.S. Retail $ 26,939 8.3 % $ 49,994 13.6 % U.S. Wholesale 52,092 18.6 % 60,506 19.7 % International 3,124 3.4 % 10,388 9.7 % Corporate expenses (*) (25,801) n/a (18,265) n/a Consolidated operating income $ 56,354 8.1 % $ 102,623 13.1 % (*) 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 April 1, 2023 Charges: U.S. Retail U.S. Wholesale International Organizational restructuring (*) $ (0.8) $ (0.5) $ (0.1) (*) Relates to gains for organizational restructuring and related corporate office lease amendment actions. Additionally, the first fiscal quarter ended April 1, 2023 includes a corporate charge of $2.4 million related to organizational restructuring and related corporate office lease amendment actions. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Apr. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Supplier Finance Programs (ASU 2022-04) In September 2022, the FASB issued Accounting Standards Update No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”) . This new guidance is designed to enhance transparency around supplier finance programs by requiring new disclosures that would allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of the rollforward of annual activity, which is effective for fiscal years beginning after December 15, 2023. The effect of the adoption of ASU 2022-04 was not material to the Company’s consolidated financial statements. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | 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 (“wholesale channel”). The Company also earns royalties from certain of its licensees. Disaggregated revenues from these sources for the fiscal periods indicated were as follows: Fiscal quarter ended April 1, 2023 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 279,990 $ 38,496 $ 318,486 Direct-to-consumer 323,721 — 53,673 377,394 $ 323,721 $ 279,990 $ 92,169 $ 695,880 Royalty income, net $ 2,078 $ 3,558 $ 883 $ 6,519 Fiscal quarter ended April 2, 2022 (dollars in thousands) U.S. Retail U.S. Wholesale International Total Wholesale channel $ — $ 307,301 $ 50,432 $ 357,733 Direct-to-consumer 366,358 — 57,193 423,551 $ 366,358 $ 307,301 $ 107,625 $ 781,284 Royalty income, net $ 3,240 $ 3,430 $ 804 $ 7,474 |
Contract with Customer, Contract Asset, Contract Liability, and Receivable | The components of Accounts receivable, net, were as follows: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Trade receivables from wholesale customers, net $ 222,069 $ 195,078 $ 266,970 Royalties receivable 6,396 5,386 6,923 Other receivables (1) 13,351 14,571 9,282 Total receivables $ 241,816 $ 215,035 $ 283,175 Less: Wholesale accounts receivable reserves (2)(3) (17,877) (16,448) (17,481) Accounts receivable, net $ 223,939 $ 198,587 $ 265,694 (1) Includes tenant allowances, tax, payroll, gift card and other receivables. (2) Includes allowance for chargebacks of $10.5 million, $9.3 million, and $11.7 million for the periods ended April 1, 2023, December 31, 2022, and April 2, 2022, respectively. (3) Includes allowance for credit losses of $7.4 million, $7.2 million, and $5.8 million for the periods ended April 1, 2023, December 31, 2022, and April 2, 2022, respectively. (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Contract liabilities - current: Unredeemed gift cards $ 22,601 $ 23,303 $ 21,026 Unredeemed customer loyalty rewards 5,070 5,276 5,804 Carter’s credit card - upfront bonus (1) 714 714 714 Total contract liabilities - current (2) $ 28,385 $ 29,293 $ 27,544 Contract liabilities - non-current (3) $ 1,250 $ 1,429 $ 1,964 Total contract liabilities $ 29,635 $ 30,722 $ 29,508 (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 sheets. (3) This amount reflects the non-current portion of the Carter’s credit card upfront bonus and is included within Other long-term liabilities on the Company’s consolidated balance sheets. |
ACUMULATED OTHER COMPREHENSIV_2
ACUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
AOCI Attributable to Parent [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of Accumulated other comprehensive loss consisted of the following: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Cumulative foreign currency translation adjustments $ (24,900) $ (28,826) $ (18,520) Pension and post-retirement obligations (*) (5,512) (5,512) (7,595) Total accumulated other comprehensive loss $ (30,412) $ (34,338) $ (26,115) |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Equity [Abstract] | |
Open Market Repurchases | The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated: Fiscal quarter ended April 1, 2023 April 2, 2022 Number of shares repurchased 135,873 793,008 Aggregate cost of shares repurchased (dollars in thousands) (*)` $ 9,586 $ 74,496 Average price per share (*) $ 70.55 $ 93.94 (*) The aggregate cost of share repurchases and average price paid per share excludes excise tax on share repurchases. |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 $500 million 5.625% senior notes due March 15, 2027 $ 500,000 $ 500,000 $ 500,000 Less unamortized issuance-related costs for senior notes (3,197) (3,376) (3,896) Senior notes, net $ 496,803 $ 496,624 $ 496,104 Secured revolving credit facility 80,000 120,000 — Total long-term debt, net $ 576,803 $ 616,624 $ 496,104 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Recorded Stock-based Compensation Cost | The Company recorded stock-based compensation cost as follows: Fiscal quarter ended (dollars in thousands) April 1, 2023 April 2, 2022 Stock options $ — $ 166 Restricted stock: Time-based awards 4,362 5,159 Performance-based awards (19) 534 Total $ 4,343 $ 5,859 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding: Fiscal quarter ended April 1, 2023 April 2, 2022 Weighted-average number of common and common equivalent shares outstanding: Basic number of common shares outstanding 37,104,527 40,270,895 Dilutive effect of equity awards 8,063 77,437 Diluted number of common and common equivalent shares outstanding 37,112,590 40,348,332 Earnings per share: (dollars in thousands, except per share data) Basic net income per common share: Net income $ 35,996 $ 67,933 Income allocated to participating securities (576) (921) Net income available to common shareholders $ 35,420 $ 67,012 Basic net income per common share $ 0.95 $ 1.66 Diluted net income per common share: Net income $ 35,996 $ 67,933 Income allocated to participating securities (576) (920) Net income available to common shareholders $ 35,420 $ 67,013 Diluted net income per common share $ 0.95 $ 1.66 Anti-dilutive awards excluded from diluted earnings per share computation (*) 505,070 172,987 (*) The volume of anti-dilutive awards is, in part, due to the related unamortized compensation costs. |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities at the end of any comparable period, were as follows: (dollars in thousands) April 1, 2023 December 31, 2022 April 2, 2022 Unredeemed gift cards $ 22,601 $ 23,303 $ 21,026 Accrued employee benefits 12,604 16,356 11,544 Income taxes payable 12,132 17,484 16,049 Accrued taxes 10,904 10,445 11,962 Accrued salaries and wages 4,163 11,519 4,831 Accrued interest (*) 1,698 8,868 11,782 Other 27,002 34,464 33,884 Other current liabilities $ 91,104 $ 122,439 $ 111,078 (*) Decrease primarily related to the early extinguishment of our $500 million in aggregate principal amount of 5.500% senior notes due May 2025 in the second quarter of fiscal 2022, as well as the timing of interest payments. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated: Fiscal quarter ended (dollars in thousands) April 1, 2023 % of consolidated net sales April 2, 2022 % of consolidated net sales Net sales : U.S. Retail $ 323,721 46.5 % $ 366,358 46.9 % U.S. Wholesale 279,990 40.3 % 307,301 39.3 % International 92,169 13.2 % 107,625 13.8 % Consolidated net sales $ 695,880 100.0 % $ 781,284 100.0 % Operating income : % of segment net sales % of segment net sales U.S. Retail $ 26,939 8.3 % $ 49,994 13.6 % U.S. Wholesale 52,092 18.6 % 60,506 19.7 % International 3,124 3.4 % 10,388 9.7 % Corporate expenses (*) (25,801) n/a (18,265) n/a Consolidated operating income $ 56,354 8.1 % $ 102,623 13.1 % (*) 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 April 1, 2023 Charges: U.S. Retail U.S. Wholesale International Organizational restructuring (*) $ (0.8) $ (0.5) $ (0.1) (*) Relates to gains for organizational restructuring and related corporate office lease amendment actions. Additionally, the first fiscal quarter ended April 1, 2023 includes a corporate charge of $2.4 million related to organizational restructuring and related corporate office lease amendment actions. |
THE COMPANY (Details)
THE COMPANY (Details) | Apr. 01, 2023 Countries_and_Territories |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Trademarks countries and territories | 100 |
BASIS OF PRESENTATION - Invento
BASIS OF PRESENTATION - Inventories (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Finished goods inventories, net | $ 613,921 | $ 744,573 | $ 679,729 |
Amount of change in Inventory | $ (65,800) | ||
Percentage change in Inventory | (9.70%) | ||
Percentage Change In Inventory Reserves | 59.90% | ||
Liability for adverse inventory and fabric purchase commitments | $ 5,000 | $ 500 |
BASIS OF PRESENTATION - Supply
BASIS OF PRESENTATION - Supply Chain Financing Program (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |||
Supply chain finance revolving capacity | $ 70,000 | ||
Accounts payable | 180,181 | $ 264,078 | $ 284,034 |
SCF Member [Member] | |||
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |||
Accounts payable | $ 7,800 | $ 16,500 | $ 20,700 |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Disaggregated Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 695,880 | $ 781,284 | |
Royalty income, net | 6,519 | 7,474 | |
Total receivables | 241,816 | 283,175 | $ 215,035 |
Less: Wholesale accounts receivable reserves | (7,425) | (5,766) | (7,189) |
Accounts receivable, net | 223,939 | 265,694 | 198,587 |
Trade receivables from wholesale customers, net | |||
Disaggregation of Revenue [Line Items] | |||
Total receivables | 222,069 | 266,970 | 195,078 |
Royalties receivable | |||
Disaggregation of Revenue [Line Items] | |||
Total receivables | 6,396 | 6,923 | 5,386 |
Other receivables | |||
Disaggregation of Revenue [Line Items] | |||
Total receivables | 13,351 | 9,282 | 14,571 |
SEC Schedule, 12-09, Allowance, Credit Loss | |||
Disaggregation of Revenue [Line Items] | |||
Less: Wholesale accounts receivable reserves | (17,877) | (17,481) | $ (16,448) |
U.S. Retail | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 323,721 | 366,358 | |
U.S. Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 279,990 | 307,301 | |
International | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 92,169 | 107,625 | |
Wholesale channel | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 318,486 | 357,733 | |
Wholesale channel | U.S. Retail | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 0 | 0 | |
Wholesale channel | U.S. Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 279,990 | 307,301 | |
Wholesale channel | International | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 38,496 | 50,432 | |
Direct-to-consumer | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 377,394 | 423,551 | |
Direct-to-consumer | U.S. Retail | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 323,721 | 366,358 | |
Direct-to-consumer | U.S. Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 0 | 0 | |
Direct-to-consumer | International | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 53,673 | 57,193 | |
Licensing Agreements | |||
Disaggregation of Revenue [Line Items] | |||
Royalty income, net | 6,519 | 7,474 | |
Licensing Agreements | U.S. Retail | |||
Disaggregation of Revenue [Line Items] | |||
Royalty income, net | 2,078 | 3,240 | |
Licensing Agreements | U.S. Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Royalty income, net | 3,558 | 3,430 | |
Licensing Agreements | International | |||
Disaggregation of Revenue [Line Items] | |||
Royalty income, net | $ 883 | $ 804 |
REVENUE RECOGNITION - Schedul_2
REVENUE RECOGNITION - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Revenue from Contract with Customer [Abstract] | |||
Unredeemed gift cards | $ 22,601 | $ 23,303 | $ 21,026 |
Unredeemed customer loyalty rewards | 5,070 | 5,276 | 5,804 |
Carter's credit card - upfront bonus | 714 | 714 | 714 |
Total contract liabilities - current | 28,385 | 29,293 | 27,544 |
Contract liabilities - non-current | 1,250 | 1,429 | 1,964 |
Total contract liabilities | 29,635 | 30,722 | 29,508 |
Allowance For Chargebacks | 10,500 | 9,300 | 11,700 |
Allowance for credit losses | $ 7,425 | $ 7,189 | $ 5,766 |
ACUMULATED OTHER COMPREHENSIV_3
ACUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
AOCI Attributable to Parent [Abstract] | |||
Cumulative foreign currency translation adjustments | $ (24,900) | $ (18,520) | $ (28,826) |
Pension and post-retirement obligations | (5,512) | (7,595) | (5,512) |
Accumulated other comprehensive loss | (30,412) | (26,115) | (34,338) |
Net income taxes attributable to pension plan | $ 1,700 | $ 2,400 | $ 1,700 |
COMMON STOCK - Schedule of Shar
COMMON STOCK - Schedule of Shares (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Equity [Abstract] | ||
Number of share repurchased (in shares) | 135,873 | 793,008 |
Aggregate cost of shares repurchased | $ 9,586 | $ 74,496 |
Average price per share (in USD per share) | $ 70.55 | $ 93.94 |
Aggregate remaining capacity under repurchase authorization | $ 739,900 |
COMMON STOCK - Dividends (Detai
COMMON STOCK - Dividends (Details) - $ / shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Equity [Abstract] | ||
Dividend declared and paid per common share (in USD per share) | $ 0.75 | $ 0.75 |
LONG-TERM DEBT - Schedule of Lo
LONG-TERM DEBT - Schedule of Long-term Debt (Details) - USD ($) | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Debt Instrument [Line Items] | |||
Less unamortized issuance-related costs for senior notes | $ (3,197,000) | $ (3,376,000) | $ (3,896,000) |
Long-term debt, net | 576,803,000 | 616,624,000 | 496,104,000 |
Total Senior Notes | |||
Debt Instrument [Line Items] | |||
Notional and carrying value of senior notes | 500,000,000 | ||
Senior notes, net | 496,803,000 | 496,624,000 | 496,104,000 |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Secured revolving credit facility | 80,000,000 | 120,000,000 | 0 |
5.625% senior notes due 2027 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Notional and carrying value of senior notes | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 |
Interest rate | 5.625% |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Debt Instrument [Line Items] | |||
Outstanding letters of credit | $ 4,400,000 | ||
Secured Overnight Financing Rate (SOFR) | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.125% | ||
Secured Overnight Financing Rate (SOFR) | United States Dollar Credit Facility - Amendment No.4 | |||
Debt Instrument [Line Items] | |||
Borrowing rate | 5.92% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | $ 80,000,000 | $ 120,000,000 | $ 0 |
Remaining borrowing capacity | 765,600,000 | ||
Revolving credit facility borrowing capacity | 850,000,000 | ||
Revolving Credit Facility | United States Dollar Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility borrowing capacity | 750,000,000 | ||
Revolving Credit Facility | Multicurrency Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility borrowing capacity | $ 100,000,000 | ||
Revolving Credit Facility | Base Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.125% |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Performance-based awards | ||
Stock-based compensation expense | $ 4,343 | $ 5,859 |
Stock options | ||
Performance-based awards | ||
Stock-based compensation expense | 0 | 166 |
Time-based awards | ||
Performance-based awards | ||
Stock-based compensation expense | $ 4,362 | 5,159 |
Time-based awards issued (in shares) | 254,086 | |
Average grant-date fair value of shares issued (in USD per share) | $ 73.91 | |
Time-based awards vested (in shares) | 151,564 | |
Performance-based awards | ||
Performance-based awards | ||
Stock-based compensation expense | $ (19) | $ 534 |
Reversal of previously recognized stock compensation expense | $ 400 | |
Time-based awards issued (in shares) | 112,284 | |
Average grant-date fair value of shares issued (in USD per share) | $ 74.06 | |
Time-based awards vested (in shares) | 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefits | $ 8.8 | ||
Unrecognized tax benefits, impact on effective tax rate | 6.3 | ||
Reserves that statue of limitations is expected to expire | 2.4 | ||
Interest accrued on uncertain tax positions | $ 1.6 | $ 1.5 | $ 2 |
FAIR VALUE MEASUREMENTS - Inves
FAIR VALUE MEASUREMENTS - Investments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Gains (losses) on investments | $ 0.4 | $ (0.9) | |
Fair Value, Inputs, Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Marketable securities | $ 15.5 | $ 16.6 | $ 15.1 |
FAIR VALUE MEASUREMENTS - Borro
FAIR VALUE MEASUREMENTS - Borrowings (Details) - USD ($) | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | $ 80,000,000 | $ 120,000,000 | $ 0 |
Total Senior Notes | |||
Debt Instrument [Line Items] | |||
Fair value of senior notes | 489,000,000 | ||
Notional and carrying value of senior notes | $ 500,000,000 |
FAIR VALUE MEASUREMENTS - Goodw
FAIR VALUE MEASUREMENTS - Goodwill, Intangible, and Long-Lived Tangible Assets (Details) - Skip Hop Trade Name - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2022 | Apr. 01, 2023 | |
Goodwill and Other Intangible Assets [Line Items] | ||
Carrying value of indefinite-lived intangible assets | $ 6 | |
U.S. Wholesale | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Intangible asset impairment | $ 5.6 | |
International | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Intangible asset impairment | 3 | |
U.S. Retail | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Intangible asset impairment | $ 0.4 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Weighted-average number of common and common equivalent shares outstanding: | ||
Basic number of common shares outstanding (in shares) | 37,104,527 | 40,270,895 |
Dilutive effect of equity awards (in shares) | 8,063 | 77,437 |
Diluted number of common and common equivalent shares outstanding (in shares) | 37,112,590 | 40,348,332 |
Earnings per share: | ||
Net income | $ 35,996 | $ 67,933 |
Income allocated to participating securities | (576) | (921) |
Net income available to common shareholders | $ 35,420 | $ 67,012 |
Basic net income per common share (in USD per share) | $ 0.95 | $ 1.66 |
Diluted net income per common share: | ||
Net income | $ 35,996 | $ 67,933 |
Income allocated to participating securities | (576) | (920) |
Net income available to common shareholders | $ 35,420 | $ 67,013 |
Diluted net income per common share (in USD per share) | $ 0.95 | $ 1.66 |
Anti-dilutive awards excluded from dilutive earnings per share computation (in shares) | 505,070 | 172,987 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 04, 2022 | Apr. 02, 2022 |
Debt Instrument [Line Items] | ||||
Unredeemed gift cards | $ 22,601 | $ 23,303 | $ 21,026 | |
Accrued employee benefits | 12,604 | 16,356 | 11,544 | |
Income taxes payable | 12,132 | 17,484 | 16,049 | |
Accrued taxes | 10,904 | 10,445 | 11,962 | |
Accrued salaries and wages | 4,163 | 11,519 | 4,831 | |
Accrued interest | 1,698 | 8,868 | 11,782 | |
Other | 27,002 | 34,464 | 33,884 | |
Other current liabilities | $ 91,104 | $ 122,439 | $ 111,078 | |
Senior Notes | 5.500% Senior Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount of senior notes | $ 500,000 | |||
Interest rate | 550% |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 695,880 | $ 781,284 |
% of consolidated net sales | 100% | 100% |
Operating income | $ 56,354 | $ 102,623 |
Corporate expenses | $ (25,801) | $ (18,265) |
% of segment net sales | 8.10% | 13.10% |
U.S. Retail | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 323,721 | $ 366,358 |
U.S. Wholesale | ||
Segment Reporting Information [Line Items] | ||
Net sales | 279,990 | 307,301 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Organizational restructuring | 2,400 | |
Operating Segments | U.S. Retail | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 323,721 | $ 366,358 |
% of consolidated net sales | 46.50% | 46.90% |
Operating income | $ 26,939 | $ 49,994 |
% of segment net sales | 8.30% | 13.60% |
Gain on Organizational Restructuring | $ (800) | |
Operating Segments | U.S. Wholesale | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 279,990 | $ 307,301 |
% of consolidated net sales | 40.30% | 39.30% |
Operating income | $ 52,092 | $ 60,506 |
% of segment net sales | 18.60% | 19.70% |
Gain on Organizational Restructuring | $ (500) | |
Operating Segments | International | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 92,169 | $ 107,625 |
% of consolidated net sales | 13.20% | 13.80% |
Operating income | $ 3,124 | $ 10,388 |
% of segment net sales | 3.40% | 9.70% |
Gain on Organizational Restructuring | $ (100) |