x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2019 OR |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______ |
Delaware | 13-3912933 | |
(state or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Common Stock | Outstanding Shares at April 24, 2019 | ||
Common stock, par value $0.01 per share | 45,209,033 |
Page | |||
Unaudited Condensed Consolidated Balance Sheets as of March 30, 2019, December 29, 2018 and March 31, 2018 | |||
Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter ended March 30, 2019 and March 31, 2018 | |||
Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter ended March 30, 2019 and March 31, 2018 | |||
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the fiscal quarter ended March 30, 2019 and March 31, 2018 | |||
Unaudited Condensed Consolidated Statements of Cash Flows for the fiscal quarter ended March 30, 2019 and March 31, 2018 | |||
Item 1 | |||
Item 3 | Defaults upon Senior Securities | ||
March 30, 2019 | December 29, 2018 | March 31, 2018 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 160,149 | $ | 170,077 | $ | 180,256 | |||||
Accounts receivable, net | 239,239 | 258,259 | 221,186 | ||||||||
Finished goods inventories | 519,752 | 574,226 | 479,344 | ||||||||
Prepaid expenses and other current assets | 51,887 | 40,396 | 54,297 | ||||||||
Total current assets | 971,027 | 1,042,958 | 935,083 | ||||||||
Property, plant, and equipment, net of accumulated depreciation of $468,251, $448,898, and $416,153, respectively | 337,475 | 350,437 | 369,064 | ||||||||
Operating lease assets | 704,554 | — | — | ||||||||
Tradenames, net | 365,630 | 365,692 | 365,506 | ||||||||
Goodwill | 228,019 | 227,101 | 230,008 | ||||||||
Customer relationships, net | 43,669 | 44,511 | 47,369 | ||||||||
Other assets | 29,570 | 28,159 | 28,176 | ||||||||
Total assets | $ | 2,679,944 | $ | 2,058,858 | $ | 1,975,206 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 108,221 | $ | 199,076 | $ | 116,310 | |||||
Current operating lease liabilities | 152,157 | — | — | ||||||||
Other current liabilities | 101,376 | 128,345 | 109,626 | ||||||||
Total current liabilities | 361,754 | 327,421 | 225,936 | ||||||||
Long-term debt, net | 625,278 | 593,264 | 617,541 | ||||||||
Deferred income taxes | 90,230 | 87,347 | 87,422 | ||||||||
Long-term operating lease liabilities | 692,056 | — | — | ||||||||
Other long-term liabilities | 61,222 | 181,393 | 189,493 | ||||||||
Total liabilities | $ | 1,830,540 | $ | 1,189,425 | $ | 1,120,392 | |||||
Commitments and contingencies - Note 14 | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at March 30, 2019, December 29, 2018, and March 31, 2018 | $ | — | $ | — | $ | — | |||||
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 45,379,827, 45,629,014 and 47,113,576 shares issued and outstanding at March 30, 2019, December 29, 2018 and March 31, 2018, respectively | 454 | 456 | 471 | ||||||||
Accumulated other comprehensive loss | (39,428 | ) | (40,839 | ) | (30,855 | ) | |||||
Retained earnings | 888,378 | 909,816 | 885,198 | ||||||||
Total stockholders' equity | 849,404 | 869,433 | 854,814 | ||||||||
Total liabilities and stockholders' equity | $ | 2,679,944 | $ | 2,058,858 | $ | 1,975,206 |
Fiscal quarter ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Net sales | $ | 741,057 | $ | 755,786 | |||
Cost of goods sold | 425,190 | 423,309 | |||||
Gross profit | 315,867 | 332,477 | |||||
Royalty income, net | 8,544 | 7,994 | |||||
Selling, general, and administrative expenses | 263,652 | 280,162 | |||||
Operating income | 60,759 | 60,309 | |||||
Interest expense | 9,629 | 7,985 | |||||
Interest income | (228 | ) | (166 | ) | |||
Other expense (income), net | (211 | ) | (382 | ) | |||
Loss on extinguishment of debt | 7,823 | — | |||||
Income before income taxes | 43,746 | 52,872 | |||||
Provision for income taxes | 9,280 | 10,403 | |||||
Net income | $ | 34,466 | $ | 42,469 | |||
Basic net income per common share | $ | 0.76 | $ | 0.90 | |||
Diluted net income per common share | $ | 0.75 | $ | 0.89 | |||
Dividend declared and paid per common share | $ | 0.50 | $ | 0.45 |
Fiscal quarter ended | ||||||||
March 30, 2019 | March 31, 2018 | |||||||
Net income | $ | 34,466 | $ | 42,469 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation adjustments | 2,911 | (1,762 | ) | |||||
Comprehensive income | $ | 37,377 | $ | 40,707 |
Common stock - shares | Common stock - $ | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total stockholders’ equity | |||||||||||||||||
Balance at December 30, 2017 | 47,178,346 | $ | 472 | $ | — | $ | (29,093 | ) | $ | 886,037 | $ | 857,416 | ||||||||||
Exercise of stock options | 95,006 | 1 | 4,768 | — | — | 4,769 | ||||||||||||||||
Withholdings from vesting of restricted stock | (55,164 | ) | (1 | ) | (6,582 | ) | — | — | (6,583 | ) | ||||||||||||
Restricted stock activity | 116,701 | 1 | (1 | ) | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | 4,944 | — | — | 4,944 | ||||||||||||||||
Repurchase of common stock | (221,313 | ) | (2 | ) | (3,129 | ) | — | (22,064 | ) | (25,195 | ) | |||||||||||
Cash dividends declared and paid | — | — | — | — | (21,244 | ) | (21,244 | ) | ||||||||||||||
Comprehensive income | — | — | — | (1,762 | ) | 42,469 | 40,707 | |||||||||||||||
Balance at March 31, 2018 | 47,113,576 | $ | 471 | $ | — | $ | (30,855 | ) | $ | 885,198 | $ | 854,814 | ||||||||||
Balance at December 29, 2018 | 45,629,014 | $ | 456 | $ | — | $ | (40,839 | ) | $ | 909,816 | $ | 869,433 | ||||||||||
Exercise of stock options | 72,192 | 1 | 4,779 | — | — | 4,780 | ||||||||||||||||
Withholdings from vesting of restricted stock | (43,844 | ) | — | (4,077 | ) | — | — | (4,077 | ) | |||||||||||||
Restricted stock activity | 182,722 | 2 | (2 | ) | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | 4,613 | — | — | 4,613 | ||||||||||||||||
Repurchase of common stock | (460,257 | ) | (5 | ) | (5,313 | ) | — | (34,648 | ) | (39,966 | ) | |||||||||||
Cash dividends declared and paid | — | — | — | — | (22,756 | ) | (22,756 | ) | ||||||||||||||
Comprehensive income | — | — | — | 2,911 | 34,466 | 37,377 | ||||||||||||||||
Reclassification of tax effects(*) | — | — | — | (1,500 | ) | 1,500 | — | |||||||||||||||
Balance at March 30, 2019 | 45,379,827 | $ | 454 | $ | — | $ | (39,428 | ) | $ | 888,378 | $ | 849,404 |
(*) | The Company reclassified $1.5 million of tax benefits from "Accumulated other comprehensive loss" to "Retained earnings" for the tax effects resulting from the December 22, 2017 enactment of the Tax Cut and Jobs Act in accordance with the adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income in the first quarter of fiscal 2019. |
Fiscal quarter ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 34,466 | $ | 42,469 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property, plant, and equipment | 22,629 | 21,137 | |||||
Amortization of intangible assets | 937 | 921 | |||||
Amortization of debt issuance costs | 367 | 431 | |||||
Stock-based compensation expense | 4,613 | 4,944 | |||||
Unrealized foreign currency exchange gain, net | (210 | ) | (353 | ) | |||
Provisions for doubtful accounts receivable from customers | (2,562 | ) | 11,051 | ||||
Loss on extinguishment of debt | 7,823 | — | |||||
Loss on disposal of property, plant, and equipment, net of recoveries | 433 | 350 | |||||
Deferred income taxes | 3,242 | 2,968 | |||||
Effect of changes in operating assets and liabilities: | |||||||
Accounts receivable | 21,891 | 8,623 | |||||
Finished goods inventories | 55,852 | 68,294 | |||||
Prepaid expenses and other assets | (717,808 | ) | (1,970 | ) | |||
Accounts payable and other liabilities | 605,350 | (94,758 | ) | ||||
Net cash provided by operating activities | $ | 37,023 | $ | 64,107 | |||
Cash flows from investing activities: | |||||||
Capital expenditures | $ | (9,371 | ) | $ | (14,744 | ) | |
Disposals and recoveries from property, plant, and equipment | — | 373 | |||||
Net cash used in investing activities | $ | (9,371 | ) | $ | (14,371 | ) | |
Cash flows from financing activities: | |||||||
Proceeds from senior subordinated notes due 2027 | $ | 500,000 | $ | — | |||
Payment of senior subordinated notes due 2021 | (400,000 | ) | — | ||||
Premiums paid to extinguish debt | (5,252 | ) | — | ||||
Payment of debt issuance costs | (5,722 | ) | — | ||||
Borrowings under secured revolving credit facility | 70,000 | 50,000 | |||||
Payments on secured revolving credit facility | (135,000 | ) | (50,000 | ) | |||
Repurchases of common stock | (39,966 | ) | (25,195 | ) | |||
Dividends paid | (22,756 | ) | (21,244 | ) | |||
Withholdings from vestings of restricted stock | (4,077 | ) | (6,583 | ) | |||
Proceeds from exercises of stock options | 4,780 | 4,769 | |||||
Net cash used in financing activities | (37,993 | ) | (48,253 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 413 | 279 | |||||
Net (decrease) / increase in cash and cash equivalents | (9,928 | ) | 1,762 | ||||
Cash and cash equivalents, beginning of period | 170,077 | 178,494 | |||||
Cash and cash equivalents, end of period | $ | 160,149 | $ | 180,256 |
◦ | The Company will not revisit whether a contract is, or contains, a lease under the ASC 842 definition of a lease. |
◦ | Lease classification determined under prior guidance will not be reevaluated under ASC 842. |
◦ | Previously capitalized initial direct costs under prior guidance will be carried forward. Any initial direct costs after the effective date will be included within the ROU asset under ASC 842. |
Fiscal quarter ended March 30, 2019 | ||||||||||||||||
(dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Total | ||||||||||||
Wholesale channel | $ | — | $ | 275,367 | $ | 40,788 | $ | 316,155 | ||||||||
Direct-to-consumer | 377,053 | — | 47,849 | 424,902 | ||||||||||||
$ | 377,053 | $ | 275,367 | $ | 88,637 | $ | 741,057 | |||||||||
Royalty income | $ | 1,991 | $ | 5,850 | $ | 703 | $ | 8,544 |
Fiscal quarter ended March 31, 2018 | ||||||||||||||||
(dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Total | ||||||||||||
Wholesale channel | $ | — | $ | 280,832 | $ | 37,713 | $ | 318,545 | ||||||||
Direct-to-consumer | 383,742 | — | 53,499 | 437,241 | ||||||||||||
$ | 383,742 | $ | 280,832 | $ | 91,212 | $ | 755,786 | |||||||||
Royalty income | $ | 1,585 | $ | 5,845 | $ | 564 | $ | 7,994 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | |||||||||
Trade receivables from wholesale customers, net | $ | 226,455 | $ | 244,258 | $ | 226,348 | ||||||
Royalties receivable | 7,511 | 9,279 | 7,108 | |||||||||
Tenant allowances and other receivables | 15,614 | 16,588 | 10,972 | |||||||||
Total gross receivables | $ | 249,580 | $ | 270,125 | $ | 244,428 | ||||||
Less: | ||||||||||||
Wholesale accounts receivable reserves | (10,341 | ) | (11,866 | ) | (23,242 | ) | ||||||
Accounts receivable, net | $ | 239,239 | $ | 258,259 | $ | 221,186 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | ||||||||
Contract liabilities-current: | |||||||||||
Unredeemed gift cards | $ | 13,724 | $ | 14,471 | $ | 10,903 | |||||
Unredeemed customer loyalty rewards | 8,520 | 7,764 | 8,176 | ||||||||
Total contract liabilities-current(*) | $ | 22,244 | $ | 22,235 | $ | 19,079 |
* | Included with Other current liabilities on the Company's consolidated balance sheet. |
Fiscal quarter ended | |||
(dollars in thousands) | March 30, 2019 | ||
Operating lease cost | $ | 43,219 | |
Variable lease cost (*) | 16,448 | ||
Net lease cost | $ | 59,667 |
(*) | Includes short-term leases, which are immaterial. |
(dollars in thousands) | Operating leases | ||
Remainder of 2019 | $ | 140,659 | |
2020 | 173,972 | ||
2021 | 156,466 | ||
2022 | 134,733 | ||
2023 | 114,224 | ||
After 2023 | 256,141 | ||
Total lease payments | $ | 976,195 | |
Less: Interest | (131,982 | ) | |
Present value of lease liabilities(*) | $ | 844,213 |
(*) | As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. We used the incremental borrowing rate on December 30, 2018, for operating leases that commenced prior to that date. |
(dollars in thousands) | Operating leases | ||
2019 | $ | 163,963 | |
2020 | 150,010 | ||
2021 | 134,203 | ||
2022 | 116,773 | ||
2023 | 102,487 | ||
Thereafter | 235,731 | ||
Total | $ | 903,167 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | ||||||||
Cumulative foreign currency translation adjustments | $ | (30,053 | ) | $ | (32,964 | ) | $ | (23,047 | ) | ||
Pension and post-retirement obligations(*) | (9,375 | ) | (7,875 | ) | (7,808 | ) | |||||
Total accumulated other comprehensive loss | $ | (39,428 | ) | $ | (40,839 | ) | $ | (30,855 | ) |
(*) | Net of income taxes of $2.9 million, $4.4 million, and $4.4 million, respectively. |
March 30, 2019 | December 29, 2018 | ||||||||||||||||||||||||
(dollars in thousands) | Weighted-average useful life | Gross amount | Accumulated amortization | Net amount | Gross amount | Accumulated amortization | Net amount | ||||||||||||||||||
Carter's goodwill | Indefinite | $ | 136,570 | $ | — | $ | 136,570 | $ | 136,570 | $ | — | $ | 136,570 | ||||||||||||
Canada goodwill | Indefinite | 39,704 | — | 39,704 | 38,869 | — | 38,869 | ||||||||||||||||||
Skip Hop goodwill | Indefinite | 45,976 | — | 45,976 | 45,960 | — | 45,960 | ||||||||||||||||||
Carter's Mexico goodwill | Indefinite | 5,769 | — | 5,769 | 5,702 | — | 5,702 | ||||||||||||||||||
Total goodwill | $ | 228,019 | $ | — | $ | 228,019 | $ | 227,101 | $ | — | $ | 227,101 | |||||||||||||
Carter's tradename | Indefinite | $ | 220,233 | $ | — | $ | 220,233 | $ | 220,233 | $ | — | $ | 220,233 | ||||||||||||
OshKosh tradename | Indefinite | 85,500 | — | 85,500 | 85,500 | — | 85,500 | ||||||||||||||||||
Skip Hop tradename | Indefinite | 56,800 | — | 56,800 | 56,800 | — | 56,800 | ||||||||||||||||||
Finite-life tradenames | 5-20 years | 3,911 | $ | 814 | 3,097 | 3,911 | $ | 752 | 3,159 | ||||||||||||||||
Total tradenames, net | $ | 366,444 | $ | 814 | $ | 365,630 | $ | 366,444 | $ | 752 | $ | 365,692 | |||||||||||||
Skip Hop customer relationships | 15 years | $ | 47,300 | $ | 6,274 | $ | 41,026 | $ | 47,300 | $ | 5,480 | $ | 41,820 | ||||||||||||
Carter's Mexico customer relationships | 10 years | 3,179 | 536 | 2,643 | 3,146 | 455 | 2,691 | ||||||||||||||||||
Total customer relationships, net | $ | 50,479 | $ | 6,810 | $ | 43,669 | $ | 50,446 | $ | 5,935 | $ | 44,511 |
March 31, 2018 | |||||||||||||
(dollars in thousands) | Weighted-average useful life | Gross amount | Accumulated amortization | Net amount | |||||||||
Carter's goodwill | Indefinite | $ | 136,570 | $ | — | $ | 136,570 | ||||||
Canada goodwill | Indefinite | 41,106 | — | 41,106 | |||||||||
Skip Hop goodwill | Indefinite | 46,022 | — | 46,022 | |||||||||
Carter's Mexico goodwill | Indefinite | 6,310 | — | 6,310 | |||||||||
Total goodwill | $ | 230,008 | $ | — | $ | 230,008 | |||||||
Carter's tradename | Indefinite | $ | 220,233 | $ | — | $ | 220,233 | ||||||
OshKosh tradename | Indefinite | 85,500 | — | 85,500 | |||||||||
Skip Hop tradename | Indefinite | 56,800 | — | 56,800 | |||||||||
Finite-life tradenames | 5-20 years | 3,550 | $ | 577 | 2,973 | ||||||||
Total tradenames, net | $ | 366,083 | $ | 577 | $ | 365,506 | |||||||
Skip Hop customer relationships, net | 15 years | $ | 47,300 | $ | 3,098 | $ | 44,202 | ||||||
Carter's Mexico customer relationships | 10 years | 3,384 | 217 | 3,167 | |||||||||
Total customer relationships, net | $ | 50,684 | $ | 3,315 | $ | 47,369 |
(dollars in thousands) | Amortization | ||
2020 | $ | 3,744 | |
2021 | $ | 3,744 | |
2022 | $ | 3,744 | |
2023 | $ | 3,701 | |
2024 | $ | 3,671 |
Fiscal quarter ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Number of shares repurchased | 460,257 | 221,313 | |||||
Aggregate cost of shares repurchased (dollars in thousands) | $ | 39,966 | $ | 25,195 | |||
Average price per share | $ | 86.83 | $ | 113.84 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | ||||||||
Senior notes at amounts repayable | $ | 500,000 | $ | 400,000 | $ | 400,000 | |||||
Less unamortized issuance-related costs for senior notes | (5,722 | ) | (2,736 | ) | (3,459 | ) | |||||
Senior notes, net | $ | 494,278 | $ | 397,264 | $ | 396,541 | |||||
Secured revolving credit facility | 131,000 | 196,000 | 221,000 | ||||||||
Total long-term debt, net | $ | 625,278 | $ | 593,264 | $ | 617,541 |
Fiscal quarter ended | |||||||
(dollars in thousands) | March 30, 2019 | March 31, 2018 | |||||
Stock options | $ | 1,347 | $ | 1,344 | |||
Restricted stock: | |||||||
Time-based awards | 2,548 | 2,284 | |||||
Performance-based awards | 718 | 1,316 | |||||
Total | $ | 4,613 | $ | 4,944 |
Fiscal quarter ended | |||||||
March 30, 2019 | March 31, 2018 | ||||||
Weighted-average number of common and common equivalent shares outstanding: | |||||||
Basic number of common shares outstanding | 45,070,796 | 46,772,737 | |||||
Dilutive effect of equity awards | 300,239 | 618,678 | |||||
Diluted number of common and common equivalent shares outstanding | 45,371,035 | 47,391,415 | |||||
Basic net income per common share (in thousands, except per share data): | |||||||
Net income | $ | 34,466 | $ | 42,469 | |||
Income allocated to participating securities | (291 | ) | (325 | ) | |||
Net income available to common shareholders | $ | 34,175 | $ | 42,144 | |||
Basic net income per common share | $ | 0.76 | $ | 0.90 | |||
Diluted net income per common share (in thousands, except per share data): | |||||||
Net income | $ | 34,466 | $ | 42,469 | |||
Income allocated to participating securities | (291 | ) | (323 | ) | |||
Net income available to common shareholders | $ | 34,175 | $ | 42,146 | |||
Diluted net income per common share | $ | 0.75 | $ | 0.89 | |||
Anti-dilutive awards excluded from diluted earnings per share computation | 776,919 | 137,980 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | ||||||||
Accrued salaries and wages | $ | 10,202 | $ | 1,332 | $ | 11,745 | |||||
Income taxes payable | 22,068 | 17,415 | 12,101 | ||||||||
Accrued taxes | 11,156 | 11,226 | 11,857 | ||||||||
Accrued employee benefits | 9,955 | 16,421 | 9,443 | ||||||||
Accrued and deferred rent | 390 | 19,120 | 18,093 |
(dollars in thousands) | March 30, 2019 | December 29, 2018 | March 31, 2018 | ||||||||
Deferred lease incentives | $ | — | $ | 72,345 | $ | 74,608 |
Fiscal quarter ended | |||||||||||||
(dollars in thousands) | March 30, 2019 | % of Total Net Sales | March 31, 2018 | % of Total Net Sales | |||||||||
Net sales: | |||||||||||||
U.S. Retail | $ | 377,053 | 50.9 | % | $ | 383,742 | 50.8 | % | |||||
U.S. Wholesale | 275,367 | 37.2 | % | 280,832 | 37.1 | % | |||||||
International | 88,637 | 12.0 | % | 91,212 | 12.1 | % | |||||||
Total net sales | $ | 741,057 | 100.0 | % | $ | 755,786 | 100.0 | % | |||||
Operating income: | % of Segment Net Sales | % of Segment Net Sales | |||||||||||
U.S. Retail(1) | $ | 23,949 | 6.4 | % | $ | 29,518 | 7.7 | % | |||||
U.S. Wholesale(2) | 55,456 | 20.1 | % | 50,272 | 17.9 | % | |||||||
International(3) | 4,958 | 5.6 | % | 3,762 | 4.1 | % | |||||||
Corporate expenses(4)(5) | (23,604 | ) | (23,243 | ) | |||||||||
Total operating income | $ | 60,759 | 8.2 | % | $ | 60,309 | 8.0 | % |
(1) | Fiscal quarter ended March 31, 2018 includes insurance recovery of approximately $0.4 million associated with storm-related store closures. |
(2) | Includes approximately $12.8 million of charges related to a customer bankruptcy for the first fiscal quarter ended March 31, 2018. |
(3) | Fiscal quarter ended March 30, 2019 includes a benefit of $2.1 million related to sale of inventory previously reserved in China. |
(4) | Fiscal quarter ended March 30, 2019 includes $1.6 million in charges related to organizational restructuring. |
(5) | 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. |
Fiscal quarter ended | |||||
March 30, 2019 | March 31, 2018 | ||||
Net sales | |||||
U.S. Retail | 50.9 | % | 50.8 | % | |
U.S. Wholesale | 37.2 | % | 37.2 | % | |
International | 12.0 | % | 12.1 | % | |
Consolidated net sales | 100.0 | % | 100.0 | % | |
Cost of goods sold | 57.4 | % | 56.0 | % | |
Gross profit | 42.6 | % | 44.0 | % | |
Royalty income | 1.2 | % | 1.1 | % | |
Selling, general, and administrative expenses | 35.6 | % | 37.1 | % | |
Operating income | 8.2 | % | 8.0 | % | |
Interest expense | 1.3 | % | 1.1 | % | |
Interest income | n/m | n/m | |||
Other expense (income), net | n/m | (0.1 | )% | ||
Loss on extinguishment of debt | 1.1 | % | n/m | ||
Income before income taxes | 5.9 | % | 7.0 | % | |
Provision for income taxes | 1.3 | % | 1.4 | % | |
Net income | 4.7 | % | 5.6 | % |
Fiscal quarter ended | |||||||||||||
(dollars in thousands) | March 30, 2019 | % of Total | March 31, 2018 | % of Total | |||||||||
Net sales: | |||||||||||||
U.S. Retail | $ | 377,053 | 50.9 | % | $ | 383,742 | 50.8 | % | |||||
U.S. Wholesale | 275,367 | 37.2 | % | 280,832 | 37.1 | % | |||||||
International | 88,637 | 12.0 | % | 91,212 | 12.1 | % | |||||||
Total net sales | $ | 741,057 | 100.0 | % | $ | 755,786 | 100.0 | % |
Store Count | ||||
Region: | March 30, 2019 | December 29, 2018 | ||
United States | 834 | 844(*) |
(*) | Excludes five temporary Skip Hop stores that were closed in January 2019. |
• | Decrease of $18.6 million in comparable retail store sales, primarily as a result of lower traffic; |
• | Decrease of $6.3 million due to the effect of store closings; |
• | Increase of $12.9 million from new retail stores that are not yet comparable; and |
• | Increase of $4.5 million from eCommerce sales. |
Store Count | |||||
Region: | March 30, 2019 | December 29, 2018 | |||
Canada | 187 | 188 | |||
Mexico | 42 | 42 |
• | Decrease of $5.1 million from our Canada stores and wholesale business, partially offset by eCommerce sales growth; |
• | Decrease of $0.9 million from sales in China, primarily due to transitioning eCommerce and wholesale operations to a full licensing model; and |
• | Increase of $2.8 million from international sales to customers across various regions outside of Canada, Mexico, and China. |
• | $14.0 million decrease in provisions for accounts receivable, primarily attributable to the absence of customer bankruptcy-related charges incurred in the first fiscal quarter of 2018; |
• | $1.8 million decrease in expenses due to the China business model change; |
• | $1.6 million decrease in expenses related to employee benefits; |
• | $1.3 million decrease in marketing expenses; |
• | $1.6 million in severance associated with an organizational restructuring; and |
• | $1.6 million increase in distribution and freight costs. |
(dollars in thousands) | U.S. Retail | U.S. Wholesale | International | Unallocated Corporate Expenses | Consolidated | |||||||||||||||
Operating income (loss) for the first quarter of fiscal 2018 | $ | 29,518 | $ | 50,272 | $ | 3,762 | $ | (23,243 | ) | $ | 60,309 | |||||||||
Favorable (unfavorable) change in the first quarter of fiscal 2019 | ||||||||||||||||||||
Gross profit | (5,301 | ) | (10,386 | ) | (1,160 | ) | 237 | (16,610 | ) | |||||||||||
Royalty income | 407 | 5 | 138 | — | 550 | |||||||||||||||
SG&A expenses | (675 | ) | 15,565 | 2,218 | (598 | ) | 16,510 | |||||||||||||
Operating income (loss) for the first quarter of fiscal 2019 | $ | 23,949 | $ | 55,456 | $ | 4,958 | $ | (23,604 | ) | $ | 60,759 |
U.S. Retail | U.S. Wholesale | International | ||||||
Operating margin for the first quarter of fiscal 2018 | 7.7 | % | 17.9 | % | 4.1 | % | ||
Favorable (unfavorable) bps change in the first quarter of fiscal 2019 | ||||||||
Gross profit | (40) bps | (320) bps | — | |||||
Royalty income | 10 bps | — | 20 bps | |||||
SG&A expenses | (100) bps | 540 bps | 130 bps | |||||
Operating margin for the first quarter of fiscal 2019 | 6.4 | % | 20.1 | % | 5.6 | % |
• | 40 bps decrease in gross profit, primarily due to higher product costs, including eCommerce shipping costs, partially offset by a higher average price per unit; |
• | 100 bps increase in SG&A expenses, primarily due to a: |
• | 70 bps increase in expenses associated with new retail stores; |
• | 40 bps increase in distribution and freight expense; |
• | 30 bps increase in expenses related to eCommerce growth; and |
• | 30 bps decrease in marketing investments. |
• | 320 bps decrease in gross profit, primarily due to changes in customer mix and higher provisions for inventory; and |
• | 540 bps decrease in SG&A expenses, primarily due to the absence of a provision for a customer bankruptcy that occurred in the first fiscal quarter of 2018. |
• | a 130 bps decrease in SG&A expenses, primarily due to the China business model change, and |
• | consistent period over period gross profit relative to net sales. The benefit from the sale of inventory previously reserved in China during the first quarter of fiscal 2019 was fully offset by increased promotional activity for sales to customers across various regions. |
Period | Total number of shares purchased(1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs(2) | Approximate dollar value of shares that may yet be purchased under the plans or programs(3) | |||||
December 30, 2018 through January 26, 2019 | 177,117 | $81.28 | 177,117 | $378,217,140 | |||||
January 27, 2019 through February 23, 2019 | 157,220 | $83.83 | 126,494 | $367,613,000 | |||||
February 24, 2019 through March 30, 2019 | 169,764 | $95.54 | 156,646 | $352,646,702 | |||||
Total | 504,101 | 460,257 |
(1) | Includes shares of our common stock surrendered by our employees to satisfy required tax withholding upon the vesting of restricted stock awards. There were 43,844 shares surrendered between January 27, 2019 and March 30, 2019. |
(2) | Share purchases during the first quarter of fiscal 2019 were made in compliance with all applicable rules and regulations and in accordance with the share repurchase authorizations described in Note 7, Common Stock, to our accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. |
(3) | Under share repurchase authorizations approved by our Board of Directors. |
Exhibit Number | Description of Exhibits |
1.1 | |
3.1 | |
3.2 | |
4.1 | |
4.2 | |
31.1 | |
31.2 | |
32 | |
101 | Interactive Data File. |
April 30, 2019 | /s/ MICHAEL D. CASEY |
Michael D. Casey | |
Chief Executive Officer | |
(Principal Executive Officer) |
April 30, 2019 | /s/ RICHARD F. WESTENBERGER |
Richard F. Westenberger | |
Executive Vice President and | |
Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Carter’s, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
April 30, 2019 | /s/ MICHAEL D. CASEY |
Michael D. Casey | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Carter’s, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
April 30, 2019 | /s/ RICHARD F. WESTENBERGER |
Richard F. Westenberger | |
Chief Financial Officer |
April 30, 2019 | /s/ MICHAEL D. CASEY |
Michael D. Casey | |
Chief Executive Officer |
April 30, 2019 | /s/ RICHARD F. WESTENBERGER |
Richard F. Westenberger | |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Apr. 24, 2019 |
|
Document Information [Abstract] | ||
Entity Registrant Name | CARTERS INC | |
Entity Central Index Key | 0001060822 | |
Current Fiscal Year End Date | --12-28 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 45,209,033 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Accumulated depreciation | $ 468,251 | $ 448,898 | $ 416,153 |
Preferred stock; par value (USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock; shares authorized | 100,000 | 100,000 | 100,000 |
Preferred stock; issued | 0 | 0 | 0 |
Preferred stock; outstanding | 0 | 0 | 0 |
Common stock, voting; par value (USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, voting; shares authorized | 150,000,000 | 150,000,000 | 150,000,000 |
Common stock voting; shares issued | 45,397,827 | 45,629,014 | 47,113,576 |
Common stock voting; shares outstanding | 45,397,827 | 45,629,014 | 47,113,576 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Net sales | $ 741,057 | $ 755,786 |
Cost of goods sold | 425,190 | 423,309 |
Gross profit | 315,867 | 332,477 |
Selling, general, and administrative expenses | 263,652 | 280,162 |
Operating income | 60,759 | 60,309 |
Interest expense | 9,629 | 7,985 |
Interest income | (228) | (166) |
Other expense (income), net | (211) | (382) |
Loss on extinguishment of debt | 7,823 | 0 |
Income before income taxes | 43,746 | 52,872 |
Provision for income taxes | 9,280 | 10,403 |
Net income | $ 34,466 | $ 42,469 |
Basic net income per common share (USD per share) | $ 0.76 | $ 0.90 |
Diluted net income per common share (USD per share) | 0.75 | 0.89 |
Dividend declared per common share (USD per share) | $ 0.50 | $ 0.45 |
Royalty [Member] | ||
Net sales | $ 8,544 | $ 7,994 |
Royalty income, net | $ 8,544 | $ 7,994 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 34,466 | $ 42,469 |
Other comprehensive income: | ||
Foreign currency translation adjustments | 2,911 | (1,762) |
Comprehensive income | $ 37,377 | $ 40,707 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive (Loss) Income [Member] |
Retained Earnings [Member] |
||
---|---|---|---|---|---|---|---|
Balance at Dec. 30, 2017 | $ 857,416 | $ 472 | $ 0 | $ (29,093) | $ 886,037 | ||
Balance (in shares) at Dec. 30, 2017 | 47,178,346 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options | 4,769 | $ 1 | 4,768 | 0 | 0 | ||
Exercise of stock options (in shares) | 95,006 | ||||||
Withholdings from vesting of restricted stock | (6,583) | $ (1) | (6,582) | 0 | 0 | ||
Withholdings from vesting of restricted stock (in shares) | (55,164) | ||||||
Restricted stock activity | 0 | $ 1 | (1) | 0 | 0 | ||
Restricted stock activity (in shares) | 116,701 | ||||||
Stock-based compensation expense | 4,944 | $ 0 | 4,944 | 0 | 0 | ||
Repurchase of common stock | (25,195) | $ (2) | (3,129) | 0 | (22,064) | ||
Repurchase of common stock (in shares) | (221,313) | ||||||
Cash dividends declared and paid | (21,244) | $ 0 | 0 | 0 | (21,244) | ||
Comprehensive income | 40,707 | 0 | 0 | (1,762) | 42,469 | ||
Balance at Mar. 31, 2018 | $ 854,814 | $ 471 | 0 | (30,855) | 885,198 | ||
Balance (in shares) at Mar. 31, 2018 | 47,113,576 | 47,113,576 | |||||
Balance at Dec. 29, 2018 | $ 869,433 | $ 456 | 0 | (40,839) | 909,816 | ||
Balance (in shares) at Dec. 29, 2018 | 45,629,014 | 45,629,014 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options | $ 4,780 | $ 1 | 4,779 | 0 | 0 | ||
Exercise of stock options (in shares) | 72,192 | ||||||
Withholdings from vesting of restricted stock | (4,077) | $ 0 | (4,077) | 0 | 0 | ||
Withholdings from vesting of restricted stock (in shares) | (43,844) | ||||||
Restricted stock activity | 0 | $ 2 | (2) | 0 | 0 | ||
Restricted stock activity (in shares) | 182,722 | ||||||
Stock-based compensation expense | 4,613 | $ 0 | 4,613 | 0 | 0 | ||
Repurchase of common stock | (39,966) | $ (5) | (5,313) | 0 | (34,648) | ||
Repurchase of common stock (in shares) | (460,257) | ||||||
Cash dividends declared and paid | (22,756) | $ 0 | 0 | 0 | (22,756) | ||
Comprehensive income | 37,377 | 0 | 0 | 2,911 | 34,466 | ||
Reclassification of tax effects | [1] | 1,500 | (1,500) | 1,500 | |||
Balance at Mar. 30, 2019 | $ 849,404 | $ 454 | $ 0 | $ (39,428) | $ 888,378 | ||
Balance (in shares) at Mar. 30, 2019 | 45,397,827 | 45,379,827 | |||||
|
THE COMPANY |
3 Months Ended |
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Mar. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY | THE COMPANY Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," "its," "us" and "our") design, source, and market branded childrenswear under the Carter's, Child of Mine, Just One You, Precious Firsts, Precious Baby, Simple Joys, OshKosh B'gosh ("OshKosh"), Skip Hop 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. As of March 30, 2019, the Company operated 1,063 retail stores in the United States, Canada, and Mexico. |
BASIS OF PRESENTATION |
3 Months Ended | ||||||||||||
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Mar. 30, 2019 | |||||||||||||
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 March 30, 2019 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 28, 2019. 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 December 29, 2018 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. 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, except as noted below for new accounting pronouncements adopted at the beginning of fiscal 2019. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASC No. 842, Leases, a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use ("ROU") assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. At the beginning of fiscal 2019, the Company adopted the provisions of ASC No. 842, Leases, using a modified retrospective approach as an optional transition method. This approach allows the Company to apply the standard and related disclosures to the financial statements for the period of adoption and to apply the old guidance in the comparative periods. The standard had a material impact on our consolidated balance sheets, but did not have a material impact on our consolidated income statements or statement of cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Finance leases are not material to the Company's consolidated balance sheets, consolidated income statements or statement of cash flows. Financial Presentation The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The operating lease ROU asset also includes initial direct costs and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. Certain of our lease agreements include variable rental payments based on a percentage of retail sales over contractual levels and others include variable rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Policy Elections Practical Expedient Package: The Company has elected the following expedients and apply them consistently to all leases:
Portfolio approach - In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term. Non-lease component - The Company has lease agreements with lease and non-lease components. The Company elected a policy to account for lease and non-lease components as a single component for all asset classes. Short-term lease - Leases with an initial term of 12 months or less are not recorded on the balance sheet. Discount rate - As most of the Company's leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Renewal options - The Company evaluates the inclusion of renewal options on a lease by lease basis. In general, for leased retail real estate, the Company does not include renewal options in the underlying lease term. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) In first quarter of fiscal 2019, the Company adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). The adoption of ASU 2018-02 allowed the Company to move "stranded" tax amounts from its accumulated other comprehensive loss to retained earnings. The effect of the adoption of ASU 2018-02 was not material to the Company's financial position and did not have an effect on the Company's consolidated results of operations or cash flows. |
REVENUE RECOGNITION (Notes) |
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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 its licensees. Disaggregated revenues from these sources for the first quarter ended fiscal 2019 and 2018 were as follows:
Accounts Receivable from Customers and Licensees The components of Accounts receivable, net, were as follows:
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 the customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee,Leases | LEASES We have operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. Our leases have remaining lease terms of 1 year to 20 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 March 30, 2019, the Company's finance leases were not material to the consolidated balance sheets, consolidated statements of operations or statement 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:
As of March 30, 2019, the weighted-average remaining operating lease term was 6.3 years and the weighted-average discount rate for operating leases was 4.48%. Cash paid for amounts included in the measurement of operating lease liabilities in the first quarter of fiscal 2019 was $47.3 million. As of March 30, 2019, the maturities of lease liabilities were as follows:
As of March 30, 2019, the minimum rental commitments for additional operating lease contracts that have not yet commenced, primarily for retail stores, is $12.1 million. These operating leases will commence in fiscal year 2019 with lease terms of 5 years to 10 years. As of December 29, 2018, the minimum annual rental commitments under current non-cancellable operating leases were as follows:
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ACCUMULATED OTHER COMPREHENSIVE LOSS |
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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:
During the first quarter of both fiscal 2019 and fiscal 2018, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations. |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The Company's goodwill and intangible assets were as follows:
Amortization expense for intangible assets subject to amortization was approximately $0.9 million and $1.0 million for the first fiscal quarter ended March 30, 2019 and first fiscal quarter ended March 31, 2018, respectively. The estimated amortization expense for the next five fiscal years is as follows:
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COMMON STOCK |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON STOCK | COMMON STOCK Open Market Share Repurchases The total aggregate remaining capacity under outstanding repurchase authorizations as of March 30, 2019 was approximately $352.6 million, based on settled repurchase transactions. The authorizations have no expiration date. The Company repurchased and retired shares in open market transactions in the following amounts for the fiscal periods indicated:
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 determined by the Company's management, based on its evaluation of market conditions, share price, other investment priorities, and other factors. Dividends In the first fiscal quarter ended March 30, 2019 and March 31, 2018, the Company declared and paid cash dividends per share of $0.50 and $0.45, respectively. Future declarations of dividends and the establishment of future record and payment dates are at the discretion of the Company's Board of Directors and are based on a number of factors, including the Company's future financial performance and other investment priorities. Provisions in the Company's secured revolving credit facility could have the effect of restricting the Company's ability to pay future cash dividends on, or make future repurchases of, its common stock, as described in the Company's Annual Report on Form 10-K for the 2018 fiscal year ended December 29, 2018. |
LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following:
Secured Revolving Credit Facility As of March 30, 2019, the Company had $131.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $5.0 million of outstanding letters of credit. As of March 30, 2019, approximately $614.0 million remained 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 sheet because of the contractual repayment terms under the credit facility. As of March 30, 2019, the interest rate margins applicable to the secured revolving credit facility were 1.375% for LIBOR (London Interbank Offered Rate) rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 1.125% to 1.875%) and 0.375% for base rate loans (which may be adjusted based on a leverage-based pricing grid ranging from 0.125% to 0.875%). As of March 30, 2019, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable margin, which resulted in a weighted-average borrowing rate of 3.87%. There were no Canadian borrowings outstanding on March 30, 2019. As of March 30, 2019, the Company was in compliance with the financial and other covenants under the secured revolving credit facility. Senior Notes On March 14, 2019, the Company's wholly-owned subsidiary, The William Carter Company ("TWCC"), redeemed $400 million principal amount of senior notes, bearing interest at a rate of 5.25% per annum, and maturing on August 15, 2021, pursuant to the optional redemption provisions of the notes, which required that TWCC pay the outstanding principal plus accrued interest and an early redemption premium of 1.31% of the outstanding principal amounts of the senior notes. This debt redemption resulted in a loss on extinguishment of debt of $7.8 million, consisting of $5.2 million of early redemption premiums and $2.6 million of unamortized debt issuance costs. Concurrently, TWCC issued $500 million principal amount of senior notes at par, bearing interest at a rate of 5.625% per annum, and maturing on March 15, 2027, all of which were outstanding as of March 30, 2019. TWCC received net proceeds from the offering of the senior notes of approximately $494.8 million, after deducting underwriting fees, which TWCC used to redeem the senior notes discussed above and repay borrowings outstanding under the Company's secured revolving credit facility. Approximately $5.7 million, including both bank fees and other third party expenses, has been capitalized in connection with the issuance and is being amortized over the term of the senior notes. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company recorded stock-based compensation expense as follows:
On February 13, 2019, 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: 159,484 shares of time-based restricted stock awards with a grant-date fair value of $88.87 each; and 61,350 shares of performance-based restricted stock awards with a grant-date fair value of $88.87 each. During the first fiscal quarter of 2019, a total of 107,388 restricted stock awards (time- and performance-based) vested. |
INCOME TAXES |
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Mar. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of March 30, 2019, the Company had gross unrecognized income tax benefits of approximately $14.3 million, of which $12.3 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 March 30, 2019 were approximately $2.9 million of reserves for which the statute of limitations is expected to expire within the next fiscal year. If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective income tax rate for fiscal 2019 or fiscal 2020 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. During the fiscal quarter ended March 30, 2019 and the fiscal quarter ended March 31, 2018, interest expense recorded on uncertain tax positions was not material. The Company had approximately $2.1 million, $1.8 million, and $1.1 million of interest accrued on uncertain tax positions as of March 30, 2019, December 29, 2018, and March 31, 2018, respectively. |
FAIR VALUE MEASUREMENTS |
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Mar. 30, 2019 | |
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 $17.3 million, $15.7 million, and $16.7 million at March 30, 2019, December 29, 2018, and March 31, 2018, respectively. These investments are classified as Level 1 within the fair value hierarchy. Gains on the investments in marketable securities were $1.7 million for the first fiscal quarter ended March 30, 2019 and were not material for the first fiscal quarter ended March 31, 2018. These amounts are included in Other expense (income), net on the Company's consolidated statement of operations. Foreign Exchange Forward Contracts Fair values of any unsettled foreign exchange forward contracts are calculated by using readily observable market inputs (market-quoted currency exchange rates in effect between the U.S. dollar and the currencies of Canada and Mexico) and are classified as Level 2 within the fair value hierarchy. Any unsettled foreign exchange forward contracts are included in other current assets or other current liabilities on the Company's consolidated balance sheet at the end of each fiscal reporting period. As of March 30, 2019 and December 29, 2018, there were no open foreign currency contracts. As of March 31, 2018, the fair value of open foreign currency contracts was not material. Borrowings As of March 30, 2019, the fair value of the Company's $131.0 million in outstanding borrowings under its secured revolving credit facility approximated the carrying value. The fair value of the Company's senior notes at March 30, 2019 was approximately $518 million. The fair value of these senior notes with a notional value and carrying value (gross of debt cost) of $500 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. |
EARNINGS PER SHARE |
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EARNINGS PER SHARE | EARNINGS PER SHARE The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:
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OTHER CURRENT AND LONG-TERM LIABILITIES |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT AND LONG-TERM LIABILITIES | OTHER CURRENT AND LONG-TERM LIABILITIES Other current liabilities that exceeded five percent of total current liabilities, at the end of any comparable period, were as follows:
Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period, were as follows:
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COMMITMENTS AND CONTINGENCIES |
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Mar. 30, 2019 | |
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 also include obligations associated with leases, the secured revolving credit agreement, senior notes, employee benefit plans, and facility consolidations/closures as disclosed elsewhere in the notes to the consolidated financial statements. |
SEGMENT INFORMATION |
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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.
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PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS |
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Mar. 30, 2019 | |
Accounting Policies [Abstract] | |
PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS Credit Losses (ASU 2016-13) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, an entity will recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. ASU 2016-13 will be effective for the Company at the beginning of fiscal 2020 with early adoption permitted for fiscal 2019, including interim periods therein. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable. Goodwill Impairment Testing (ASU 2017-04) In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 will eliminate the requirement to calculate the implied fair value of goodwill (step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an affected reporting unit. ASU 2017-04 will not change the current guidance for completing Step 1 of the goodwill impairment test, and an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. Upon adoption, ASU 2017-04 will be applied prospectively. Adoption for the Company will be effective for annual and interim impairment tests performed beginning in fiscal 2020. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The impact that ASU 2017-04 may have on the Company's financial condition or results of operations will depend on the circumstances of any goodwill impairment event that may occur after adoption. |
BASIS OF PRESENTATION (Policies) |
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Mar. 30, 2019 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Lessee, Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASC No. 842, Leases, a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use ("ROU") assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. At the beginning of fiscal 2019, the Company adopted the provisions of ASC No. 842, Leases, using a modified retrospective approach as an optional transition method. This approach allows the Company to apply the standard and related disclosures to the financial statements for the period of adoption and to apply the old guidance in the comparative periods. The standard had a material impact on our consolidated balance sheets, but did not have a material impact on our consolidated income statements or statement of cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Finance leases are not material to the Company's consolidated balance sheets, consolidated income statements or statement of cash flows. Financial Presentation The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The operating lease ROU asset also includes initial direct costs and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. Certain of our lease agreements include variable rental payments based on a percentage of retail sales over contractual levels and others include variable rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Policy Elections Practical Expedient Package: The Company has elected the following expedients and apply them consistently to all leases:
Portfolio approach - In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term. Non-lease component - The Company has lease agreements with lease and non-lease components. The Company elected a policy to account for lease and non-lease components as a single component for all asset classes. Short-term lease - Leases with an initial term of 12 months or less are not recorded on the balance sheet. Discount rate - As most of the Company's leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Renewal options - The Company evaluates the inclusion of renewal options on a lease by lease basis. In general, for leased retail real estate, the Company does not include renewal options in the underlying lease term. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) In first quarter of fiscal 2019, the Company adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). The adoption of ASU 2018-02 allowed the Company to move "stranded" tax amounts from its accumulated other comprehensive loss to retained earnings. The effect of the adoption of ASU 2018-02 was not material to the Company's financial position and did not have an effect on the Company's consolidated results of operations or cash flows. |
REVENUE RECOGNITION (Tables) |
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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. The Company also earns royalties from its licensees. Disaggregated revenues from these sources for the first quarter ended fiscal 2019 and 2018 were as follows:
Accounts Receivable from Customers and Licensees The components of Accounts receivable, net, were as follows:
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Contract with Customer, Asset and Liability | 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 the customer and has a future obligation to transfer goods to the customer. Total contract liabilities consisted of the following amounts:
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LEASES (Tables) |
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Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The following components of lease expense are included in Selling, general and administrative expenses on the Company's consolidated statements of operations:
As of March 30, 2019, the weighted-average remaining operating lease term was 6.3 years and the weighted-average discount rate for operating leases was 4.48%. |
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Lessee, Operating Lease, Liability, Maturity | aturities of lease liabilities were as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | As of December 29, 2018, the minimum annual rental commitments under current non-cancellable operating leases were as follows:
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
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Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The estimated amortization expense for the next five fiscal years is as follows:
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Intangible assets table | The Company's goodwill and intangible assets were as follows:
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COMMON STOCK (Tables) |
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Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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LONG-TERM DEBT (Tables) |
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Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consisted of the following:
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STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of recorded stock-based compensation cost | The Company recorded stock-based compensation expense as follows:
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EARNINGS PER SHARE (Tables) |
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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:
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OTHER CURRENT AND LONG-TERM LIABILITIES (Tables) |
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Mar. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other current liabilities | Other current liabilities that exceeded five percent of total current liabilities, at the end of any comparable period, were as follows:
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Schedule of other long-term liabilities | Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period, were as follows:
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information | The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated.
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THE COMPANY (Details) |
Mar. 30, 2019
store
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of stores | 1,063 |
REVENUE RECOGNITION Contract Liabilities (Details) - USD ($) $ in Thousands |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
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Revenue from Contract with Customer [Abstract] | |||
Unredeemed gift cards | $ 13,724 | $ 14,471 | $ 10,903 |
Unredeemed customer loyalty rewards | 8,520 | 7,764 | 8,176 |
Total contract liabilities-current | $ 22,244 | $ 22,235 | $ 19,079 |
LEASES Additional Information (Details) $ in Millions |
3 Months Ended |
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Mar. 30, 2019
USD ($)
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Lessee, Lease, Description [Line Items] | |
Operating Lease, Weighted Average Remaining Lease Term | 6 years 3 months |
Operating Lease, Weighted Average Discount Rate, Percent | 4.48% |
Lessee, Operating Lease, Lease Not yet Commenced, Liability Incurred | $ 12.1 |
Operating cash flows from operating leases | $ 47.3 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee Operating Remaining Lease Term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee Operating Remaining Lease Term | 20 years |
Lessee, Operating Lease, Option to Extend | 5 years |
LEASES Lease Cost (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 43,219 |
Variable lease cost | 16,448 |
Net lease cost | $ 59,667 |
LEASES Lease Maturity (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
2019 | $ 140,659 |
2020 | 173,972 |
2021 | 156,466 |
2022 | 134,733 |
2023 | 114,224 |
After 2023 | 256,141 |
Total lease payments | 976,195 |
Less: Interest | (131,982) |
Present value of lease liabilities | $ 844,213 |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee Operating Remaining Lease Term | 20 years |
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee Operating Remaining Lease Term | 1 year |
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 5 years |
LEASES Lease Commitments (Details) $ in Thousands |
Dec. 29, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 163,963 |
2020 | 150,010 |
2021 | 134,203 |
2022 | 116,773 |
2023 | 102,487 |
Thereafter | 235,731 |
Total | $ 903,167 |
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
Dec. 29, 2018 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | $ (39,428) | $ (30,855) | $ (40,839) |
Foreign currency translation adjustments | 2,911 | (1,762) | |
Cumulative Foreign Currency Translation Adjustments [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | (30,053) | (23,047) | (32,964) |
Pension and Post-retirement Liability Adjustment [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | (9,375) | (7,808) | (7,875) |
Tax impact | $ 2,900 | $ 4,400 | $ 4,400 |
COMMON STOCK (Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Stockholders' Equity Note [Abstract] | ||
Remaining capacity under authorization | $ 352,600 | |
Number of shares repurchased (shares) | 460,257 | 221,313 |
Aggregate cost of shares repurchased | $ 39,966 | $ 25,195 |
Average price per share (USD per share) | $ 86.83 | $ 113.84 |
Dividend declared per common share (USD per share) | $ 0.50 | $ 0.45 |
LONG-TERM DEBT (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Long-term debt | $ 625,278 | $ 593,264 | $ 617,541 |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 500,000 | 400,000 | 400,000 |
Less unamortized issuance-related costs for senior notes | (5,722) | (2,736) | (3,459) |
Senior notes, net | 494,278 | 397,264 | 396,541 |
Secured revolving credit facility [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 131,000 | $ 196,000 | $ 221,000 |
INCOME TAXES (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Income Tax Disclosure [Abstract] | |||
Gross unrecognized tax benefits | $ 14.3 | ||
Unrecognized tax benefits that if recognized would impact effective tax rate | 12.3 | ||
Reserves for unrecognized tax benefits | 2.9 | ||
Interest accrued on uncertain tax positions | $ 2.1 | $ 1.8 | $ 1.1 |
FAIR VALUE MEASUREMENTS Fair Value measurements (Hierarchy) (Details) - USD ($) $ in Millions |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Fair Value, Inputs, Level 1 [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Investments | $ 17.3 | $ 15.7 | $ 16.7 |
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Investments) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 30, 2019
USD ($)
| |
Fair Value Disclosures [Abstract] | |
Gain (Loss) on Investments | $ 1.7 |
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Borrowings) (Details) - USD ($) |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 625,278,000 | $ 593,264,000 | $ 617,541,000 |
Secured revolving credit facility [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | 131,000,000 | 196,000,000 | 221,000,000 |
Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | 500,000,000 | $ 400,000,000 | $ 400,000,000 |
Debt Instrument, face amount | 500,000,000 | ||
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member] | Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt | $ 518,000,000 |
OTHER CURRENT AND LONG-TERM LIABILITIES (Other Current Liabilities) (Details) - USD ($) $ in Thousands |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Other Liabilities Disclosure [Abstract] | |||
Accrued salaries and wages | $ 10,202 | $ 1,332 | $ 11,745 |
Income taxes payable | 22,068 | 17,415 | 12,101 |
Accrued taxes | 11,156 | 11,226 | 11,857 |
Accrued employee benefits | 9,955 | 16,421 | 9,443 |
Accrued and deferred rent | $ 390 | $ 19,120 | $ 18,093 |
OTHER CURRENT AND LONG-TERM LIABILITIES (Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands |
Mar. 30, 2019 |
Dec. 29, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Other Liabilities Disclosure [Abstract] | |||
Deferred lease incentives | $ 0 | $ 72,345 | $ 74,608 |
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