Carter’s, Inc., the largest branded marketer in the United States of apparel exclusively for babies and young children, today reported its fourth quarter and fiscal 2012 results.

“We achieved a record level of sales and earnings in our fourth quarter and fiscal year 2012. Our results reflect the strength of our product offerings, our focus on extending the reach of our brands, and the effectiveness of our growth initiatives,” saidMichael D. Casey, Chairman and Chief Executive Officer. “We are forecasting good growth in sales and earnings in 2013, and are planning a higher level of investments to support our growth strategies in the United States and international markets.”

Fourth Quarter of Fiscal 2012 compared to Fourth Quarter of Fiscal 2011

Consolidated net sales increased $82.6 million, or 13.6%, to $689.3 million. Net domestic sales of the Company’s Carter’sbrands increased $74.6 million, or 16.9%, to $517.0 million. Net domestic sales of the Company’s OshKosh B’gosh brand decreased $2.6 million, or 2.3%, to $107.4 million. Net international sales increased $10.6 million, or 19.5%, to $64.9 million.

Operating income in the fourth quarter of fiscal 2012 was $78.4 million, an increase of $23.3 million, or 42.4%, from $55.0 millionin the fourth quarter of fiscal 2011. Fourth quarter fiscal 2012 pre-tax income includes expenses totaling approximately $7.5 million related to costs associated with the previously-announced office consolidation, the revaluation of contingent consideration associated with the June 2011 acquisition of Bonnie Togs, and costs associated with the previously-announced closure of the Company's Hogansville, Georgia distribution center in fiscal 2013. Fourth quarter fiscal 2011 pre-tax income included approximately $3.0 million of expenses related to the Bonnie Togs acquisition. Excluding the facility consolidation and closure-related costs and the acquisition-related expenses noted above in both 2012 and 2011, adjusted operating income in the fourth quarter of fiscal 2012 was $85.9 million, an increase of $27.9 million, or 48.0%, from the fourth quarter of fiscal 2011.

Net income in the fourth quarter of fiscal 2012 increased $13.9 million, or 40.0%, to $48.7 million, or $0.81 per diluted share, compared to $34.8 million, or $0.59 per diluted share, in the fourth quarter of fiscal 2011. Excluding the facility consolidation and closure-related costs and the acquisition-related expenses noted above, adjusted net income in the fourth quarter of fiscal 2012 increased $16.4 million, or 44.1%, to $53.7 million, or $0.89 per diluted share. This compares to adjusted net income of $37.3 million, or $0.63 per diluted share, in the fourth quarter of fiscal 2011.

A reconciliation of income as reported under accounting principles generally accepted in the United States (“GAAP”) to adjusted income is provided at the end of this release.

Business Segment Results (Fourth Quarter of Fiscal 2012 compared to Fourth Quarter of Fiscal 2011)

Carter’s Segments

Carter’s retail segment sales increased $48.8 million, or 23.7%, to $255.1 million. The increase was driven by incremental sales of $23.8 million from new store openings and $18.6 million from eCommerce sales, as well as a comparable store sales increase of $9.4 million, or 5.2%. This growth was partially offset by a sales decrease of $3.0 million attributed to store closings. In the fourth quarter of fiscal 2012, the Company opened 16 Carter’s retail stores and closed one. As of the end of the fourth quarter, the Company operated 413 Carter’s retail stores in the United States.

Carter’s wholesale segment sales grew $25.8 million, or 10.9%, to $261.9 million, reflecting growth in all related brands.

OshKosh B’gosh Segments

OshKosh retail segment sales decreased $0.3 million, or 0.4%, to $89.0 million. The decrease reflects a comparable store sales decline of $4.8 million, or 6.2%, and $3.6 million attributed to store closings. The decreases were partially offset by incremental sales of $6.1 million from eCommerce and $2.0 million from new store openings. In the fourth quarter of fiscal 2012, the Company opened five OshKosh retail stores and closed four. As of the end of the fourth quarter, the Company operated 168OshKosh retail stores in the United States.

OshKosh wholesale segment sales decreased $2.2 million, or 10.8%, to $18.4 million.

International Segment

International segment sales increased $10.6 million, or 19.5%, to $64.9 million, driven by growth in the Company's Canadian retail stores. In the fourth quarter of fiscal 2012, the Company opened four retail stores in Canada and closed one. As of the end of the fourth quarter, the Company operated 82 retail stores in Canada.

Fiscal 2012 compared to Fiscal 2011

Consolidated net sales increased $272.0 million, or 12.9%, to $2.4 billion. Net domestic sales of the Company’s Carter’s brands increased $189.6 million, or 11.8%, to $1.8 billion. Net domestic sales of the Company’s OshKosh B’gosh brand increased $0.3 million, or 0.1%, to $363.1 million. Net international sales increased $82.0 million to $218.3 million. Consolidated net sales in fiscal 2012 include $46.1 million in off-price channel sales, compared to $79.5 million in fiscal 2011.

Operating income in fiscal 2012 was $262.0 million, an increase of $74.5 million, or 39.8%, from $187.5 million in fiscal 2011. Fiscal 2012 pre-tax income includes expenses totaling approximately $13.1 million related to costs associated with the previously-announced office consolidation, the revaluation of contingent consideration associated with the acquisition of Bonnie Togs, and the previously-announced closure of the Company's Hogansville, Georgia distribution center. Fiscal 2011 pre-tax income included approximately $12.2 million of expenses related to the Bonnie Togs acquisition. Excluding the facility consolidation and closure-related costs and the acquisition-related expenses noted above in both 2012 and 2011, adjusted operating income in fiscal 2012 was $275.1 million, an increase of $75.4 million, or 37.8%, from fiscal 2011.

Net income in fiscal 2012 increased $47.1 million, or 41.3%, to $161.2 million, or $2.69 per diluted share, compared to $114.0 million, or $1.94 per diluted share, in fiscal 2011. Excluding the facility consolidation and closure-related costs and the acquisition-related expenses noted above, adjusted net income in fiscal 2012 increased $47.5 million, or 38.5%, to $170.7 million, or $2.85 per diluted share. This compares to adjusted net income of $123.2 million, or $2.09 per diluted share, in fiscal 2011.

A reconciliation of income as reported under GAAP to adjusted income is provided at the end of this release.

Cash flow from operations in fiscal 2012 was $278.6 million compared to cash flow from operations of $81.1 million in fiscal 2011. The increase was primarily due to favorable net changes in working capital and increased earnings.

Business Segment Results (Fiscal 2012 compared to Fiscal 2011)

Carter’s Segments

Carter’s retail segment sales increased $147.3 million, or 21.9%, to $818.9 million, driven by incremental sales of $77.3 milliongenerated by new store openings and $54.3 million from eCommerce sales, as well as a comparable store sales increase of$23.5 million, or 3.9%. This growth was partially offset by a sales decrease of $7.8 million attributed to store closings. In fiscal 2012, the Company opened 63 Carter’s retail stores and closed nine.

Carter’s wholesale segment sales increased $42.3 million, or 4.5%, to $981.4 million, reflecting growth in all segment brands, partially offset by lower off-price channel sales.

OshKosh B’gosh Segments

OshKosh retail segment sales increased $2.4 million, or 0.9%, to $283.3 million, driven by incremental sales of $15.1 milliongenerated by eCommerce and $3.8 million generated by new store openings, partially offset by a decrease of $11.4 millionattributed to store closings and a comparable store sales decrease of $5.1 million, or 2.0%. In fiscal 2012, the Company opened eight OshKosh retail stores and closed ten.

OshKosh wholesale segment sales decreased $2.1 million, or 2.6%, to $79.8 million.

International Segment

International segment sales increased $82.0 million to $218.3 million, principally reflecting the contribution of the Company's business in Canada and higher wholesale sales in other countries. In fiscal 2012, the Company opened 18 retail stores inCanada and closed one.

Japan Operations

Consistent with its strategy to extend the reach of its brands, on February 1, 2013, the Company closed on a transaction with a former licensee in Japan. The Company currently sells Carter's and OshKosh B’gosh branded products through 97 retail locations, which include 14 branded stores and 83 additional retail points of distribution.

Japan, the third largest children's apparel market in the world, provided the largest international contribution to the Company's royalty income in 2012. To support direct retail operations, the Company has engaged a new leadership team in Japan and has retained substantially all of the former licensee's retail employees.

The Company's near-term priorities for its new operations in Japan include strengthening brand presentation and retail execution, and leveraging its supply chain capabilities to improve product costs and profitability. In 2013, the Company expects this acquisition to generate net sales of approximately $15 million to $17 million and to be approximately $0.10 dilutive to adjusted earnings per share.

2013 Business Outlook

For fiscal 2013, the Company projects net sales will increase approximately 8% to 10% over fiscal 2012. The Company expects adjusted diluted earnings per share, excluding expenses of approximately $32 million to $36 million related to the previously-announced corporate office consolidation, expenses totaling approximately $4 million to $5 million related to the Bonnie Togs acquisition and the previously-announced distribution center closure, or other items the Company believes to be nonrepresentative of underlying business performance, to increase approximately 15% compared to adjusted diluted earnings per share of $2.85 in fiscal 2012.

For the first quarter of fiscal 2013, the Company expects net sales will increase approximately 5% over the first quarter of fiscal 2012. The Company expects adjusted diluted earnings per share, excluding expenses of approximately $8 million to $10 millionrelated to the previously-announced corporate office consolidation, expenses totaling approximately $1 million to $2 millionrelated to the Bonnie Togs acquisition and the previously-announced distribution center closure, or other items the Company believes to be nonrepresentative of underlying business performance, to increase approximately 20% compared to adjusted diluted earnings per share of $0.56 in the first quarter of fiscal 2012.