Carter's, Inc. (CRI) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Carter's annual shareholders meeting. On the call with us today are our Board of Directors and our leadership team. Others joining us are Todd Stroup, the audit partner from PricewaterhouseCoopers; Keith Townsend, our Legal Counsel with King & Spalding; and James Hagan of Broadridge Financial Solutions. Mr. Hagan will serve as the inspector of election and will tally the votes for us today. We've received an affidavit of mailing from Broadridge. It indicates that notice of today's meeting was given on or about the 8th of April 2021 to each shareholder of record as of the 22nd of March 2021. Mr. Hagan has confirmed that the holders of approximately 94% of the issued and outstanding shares of our common stock entitled to vote are present virtually or by proxy at this meeting. Based on this report, I attest that proper notice of the meeting has been given, a quorum is present and the meeting has been properly convened. The polls are now open for voting online. There are 3 proposals submitted for shareholder approval this morning. The first proposal is the election of 9 directors nominated by our Board of Directors. Those directors are Hali Borenstein, Giusy Buonfantino, Bruce Cleverly, Jevin Eagle, Mark Hipp, William Montgoris, David Pulver, Gretchen Schar and me. Each of us would serve until the next annual meeting in 2022, or until our earlier resignation, death or removal. The second proposal is a nonbinding advisory vote on the compensation of our named executive officers. And the third proposal is the ratification of our Board's appointment of PricewaterhouseCoopers as our company's independent accounting firm for 2021. Additional information on each of these proposals is provided in our proxy statement. Every shareholder who owned their shares on the record date is entitled to vote on today's proposals. Any shareholder participating online who's already voted or given their proxy does not need to vote again. Any shareholders joining us online who have not already submitted a proxy and wish to vote their shares may do so now by clicking on the Vote Here button on your screen. While those votes are being cast, I'd like to share some thoughts on our business with you. 2020 got off to a good start for us with mid-single-digit growth in sales through February. Our annual forecast through February last year suggested we were on track to achieve our 32nd consecutive year of sales growth. By mid-March, a global pandemic and national emergency had been declared and the lives of people throughout the world were disrupted. In the months that followed, we worked to keep our employees and our store customers safe from the virus. We temporarily closed all of our stores for several weeks, reduced spending, negotiated lower product costs and improved liquidity. We significantly reduced our exposure to excess inventories caused by temporary store closures. And by curtailing inventory commitments, we were able to improve price realization and gross profit margins last year. When the pandemic hit, we accelerated the execution of new capabilities to support the same-day pickup of e-commerce orders in our stores, curbside pickup and the direct shipment of e-commerce orders from our stores. We developed new ways to partner remotely with our largest wholesale customers, leveraged our investments in digital product imagery and secured higher bookings for our beautiful product offerings. We also engaged more deeply and effectively with consumers through social media, building a virtual community with families with young children. During the pandemic, we added over 2 million new e-commerce customers in the United States. Together with the support of our wholesale customers, the online sales of our brands last year exceeded $1 billion. And through good working capital management, together with the support of our landlords, suppliers and lenders, we achieved a record level of operating cash flow last year and ended 2020 with a strong balance sheet, including $1.8 billion of liquidity. Thankfully, Carter's is off to a very good start in 2021. First quarter sales and earnings were meaningfully better than we had planned, and we're projecting good growth in sales and profitability this year. We have a strong portfolio of brands, including 2 of the best known and trusted brand names in young children's apparel, Carter's and OshKosh B'gosh. We offer essential everyday products for families with young children at very affordable prices. We are the largest supplier of young children's apparel to the largest retailers in North America, and we are the largest specialty retailer focused on young children's apparel. We have a very long track record of strong operating margins and very good cash flow generation. Given the collective strength of our brands and broad market distribution, we believe we are well positioned to grow and gain market share in the years ahead. My remarks this morning include forward-looking statements. There are risks inherent in our business, and those risks are disclosed in our SEC filings. The polls are now closed for voting. Mr. Hagan has shared the preliminary voting results with me. Based on these results, I'm happy to report that the shareholders voting today through the virtual meeting portal or by proxy have elected Hali Borenstein, Giusy Buonfantino, Bruce Cleverly, Jevin Eagle, Mark Hipp, William Montgoris, David Pulver, Gretchen Schar and me to serve until the next annual meeting in 2022. Our shareholders have approved the compensation of our named executive officers, and they have approved the ratification of our Board's appointment of PricewaterhouseCoopers as our company's independent accounting firm for 2021. These preliminary voting results are subject to final tabulation and certification by the inspector of election. We will report the final voting results in a Form 8-K filed with the SEC within 4 business days. I'd like to thank all of you for joining us this morning and for your investment in Carter's. The business of this meeting has been completed, and the meeting is now adjourned. At this time, we would be very happy to address any questions you may have about our business. I'll pause for a moment if there are any questions. Okay. There are no questions currently. We're always available to our shareholders. If you have any questions following the meeting, we'd be happy to hear from you. I want to thank you all for joining us this morning. We look forward to updating you on our progress in July. Goodbye, everyone.