#1carter's, inc. First Quarter 2016 Business Update April 28, 2016#2First Quarter 2016 Highlights ● ● Net Sales $684.8 2015 +6% $724.1 2016 $ in millions, except EPS Adjusted Operating Income* (Adjusted Operating Margin) $87.3 12.7% of Net Sales 2015 +8% * Results are stated on an adjusted basis; see reconciliation to GAAP on pages 26 and 27. $94.0 13.0% of Net Sales 2016 $0.97 2015 carter's OSHKOSH 1 Bgosh Adjusted EPS* +8% • Net sales +6% driven by growth in our U.S. Retail, Carter's Wholesale, and International business Adjusted operating margin +30 bps, driven by stronger gross margin Adjusted EPS growth +8% $1.05 2016 2#3First Quarter 2016 Net Sales $684.8 Q1 2015 Growth vs. 2015 Total Carter's +5% $14.6 $7.0 Stores eCommerce 7.6 Retail¹ Comp (0.1%) Carter's Retail +5.7% $10.8 Carter's Wholesale +4.0% ¹Retail Comp is defined as the combination of store and eCommerce comparable sales. 2Calculated in local currency. $ in millions Total OshKosh +5% $8.7 Stores $5.9 eCommerce 2.8 Retail¹ Comp +2.7% OshKosh Retail +11.9% ($4.1) OshKosh Wholesale (25.8%) $9.3 Canada Retail Comp¹,2 +14.9% International 13.6% Constant +20.1% Currency carter's OSHKOSH Bgosh 1 +6% $724.1 Q1 2016 +5.7% +6.4% 3#4First Quarter 2016 Adjusted Results* $ in millions, except EPS Net sales Gross profit Adjusted SG&A* Royalty income Adjusted operating income* Interest and other, net Income taxes Adjusted net income* Adjusted diluted EPS* Weighted average shares outstanding Adjusted EBITDA* * Results are stated on an adjusted basis; see reconciliation to GAAP on pages 26-28. Note: Results may not be additive due to rounding. Q1 2016 $724.1 310.9 42.9% % of Sales 228.0 31.5% (11.1) (1.5%) 94.0 13.0% 9.7 29.7 $54.6 $1.05 51.6 $108.0 1.3% 4.1% Q1 2015 $684.8 284.1 208.4 (11.6) 87.3 8.5 27.0 % of Sales 41.5% 30.4% (1.7%) 12.7% 1.2% 3.9% 7.5% $51.7 7.6% $0.97 52.6 14.9% $100.2 14.6% carter's OSHKOSH 1 Bgosh Increase / (Decrease) 6% 9% 9% (5%) 8% 14% 10% 6% 8% (2%) 8% 4#5Balance Sheet and Cash Flow Balance Sheet (at Q1 end) Cash Flow (Q1) 2016 $395 Accounts Receivable 193 Inventory 376 Accounts Payable Long-Term Debt Cash $ in millions 1 Non-GAAP measure Note: Results may not be additive due to rounding. 90 580 2015 $377 196 358 94 580 2016 2015 Operating Cash Flow $128 $87 Capital Expenditures (26) (21) Free Cash Flow¹ $103 $66 • Strong liquidity • Inventory +5% vs. LY due to business growth • Returned $89 million to shareholders in Q1 $72 million in share repurchases - $17 million in dividends ● carter's OSHKOSH 1 Bgosh - Additional $54 million in share repurchases Q2 QTD Total of $125 million in share repurchases YTD (through 4/27/16) - Approximately $449 million remaining on share repurchase authorizations • Free cash flow improvement reflects higher earnings and favorable changes in net working capital, offset in part by increased capital expenditures 01 5#6Business Segment Performance M.I.P. 59 6#7First Quarter Adjusted Business Segment Performance* Carter's Wholesale (a) Carter's Retail (b) Total Carter's OshKosh Wholesale OshKosh Retail (b) Total OshKosh International (c)(d) Total before corporate expenses Corporate expenses (d) Total (d) $ 2016 Net Sales 94 78 724 2015 280 $ 269 272 258 552 527 12 16 82 73 89 69 685 $ in millions * Results are stated on an adjusted basis; see reconciliation to GAAP on page 27. Note: Results may not be additive due to rounding. $ Growth 25 (4) 9 5 9 39 $ 724 $ 685 $ 39 $ 11 $ 66 $ 58 15 41 44 107 102 2 3 (2) (1) 2 7 111 5 (24) 2 $ 87 $ 7 Adjusted Operating Income (Loss)* 2016 $ 2015 8 116 (22) 94 $ Growth $ 8 (3) 5 (1) (1) (2) 1 carter's OSHKOSH Bgosh Adjusted Operating Margin* 2016 23.6% 15.1% 19.5% 18.5% (2.2%) 0.4% 10.8% 16.1% (3.1%) 13.0% (a) Includes U.S. wholesale sales of Carter's, Child of Mine, Just One You, and Precious Firsts. (b) Includes U.S. stores and eCommerce results. (c) Includes international stores, eCommerce, and wholesale sales. Adjusted operating income includes international licensing income. (d) See reconciliation of reported (GAAP) results to adjusted results. 2015 21.5% 17.3% 19.4% 18.6% (1.3%) 2.3% 10.2% 16.3% (3.5%) 12.7% 7#8First Quarter Highlights - Carter's Wholesale XXX LA LO Segment Margin 21.5% ● ● ● $ in millions Segment Net Sales & Operating Income $280 $269 $58 carter's OSHKOSH 1 Bgosh Q1 2015 ■Operating Income $66 Q1 2016 Net Sales Sales +4% Segment Margin 23.6% Net sales +4%, reflecting increased product demand, in part due to timing of orders, and new playwear initiative Segment operating margin increase reflects strong product demand, lower product costs, favorable distribution expenses, and lower bad debt provisions Fall 2016 bookings up modestly vs. prior year 2016 full-year net sales outlook: low single digit growth 8#9Introducing Little Baby Basics There's a moment for every parent when they fall in love. Maybe it's hearing that first giggle. Or feeling that first kick. Or that fresh new baby smell. At Carter's, we put that love into everything we designed for our newest arrival little baby basics. babysoft knits color-coordinated sets aww-inspiring quality little baby basics Fall in love. shop the entire new collection now at carters.com/babybasics carter's OSHKOSH Bgosh 1 rt 9#10Introducing Little Baby Basics I love MOMMY To see more, visit carters.com our arrival newest little baby basics I love MOMMY VERO carter's OSHKOSH Bgosh 1 little lambie collection neutral nice Heathered oatmeal and gray with a little lamb for boy, girl or surprise-to-be. 10