10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018 OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______

Commission file number:

001-31829

CARTER’S, INC.

(Exact name of Registrant as specified in its charter)

Delaware	13-3912933
(state or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

Phipps Tower

3438 Peachtree Road NE, Suite 1800

Atlanta, Georgia 30326

(Address of principal executive offices, including zip code)

(678) 791-1000

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes (X) No ( )

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer," "accelerated filer," "smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer (X) Accelerated Filer ( )

Non-Accelerated Filer ( ) (Do not check if a smaller reporting company) Smaller Reporting Company ( )

Emerging Growth Company ( )

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (X) No (X)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	Outstanding Shares at July 20, 2018
Common stock, par value $0.01 per share	46,470,329

CARTER’S, INC.

INDEX

			Page
Part I. Financial Information
	Item 1	Financial Statements
		Unaudited Condensed Consolidated Balance Sheets as of June 30, 2018, December 30, 2017 and July 1, 2017	1
		Unaudited Condensed Consolidated Statements of Operations for the fiscal quarter and two fiscal quarters ended June 30, 2018 and July 1, 2017	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarter and two fiscal quarters ended June 30, 2018 and July 1, 2017	3
		Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the two fiscal quarters ended June 30, 2018	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the two fiscal quarters ended June 30, 2018 and July 1, 2017	5
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	47
	Item 4	Controls and Procedures	47
Part II. Other Information
	Item 1	Legal Proceedings	48
	Item 1A	Risk Factors	48
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
	Item 3	Defaults upon Senior Securities	50
	Item 4	Mine Safety Disclosures	50
	Item 5	Other Information	50
	Item 6	Exhibits	50
Signatures			51
Certifications

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARTER’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)

	June 30, 2018			December 30, 2017			July 1, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	183,202		$	178,494		$	173,564
Accounts receivable, net	152,517			240,561			165,183
Finished goods inventories	663,263			548,722			610,423
Prepaid expenses and other current assets	51,955			52,935			46,402
Total current assets	1,050,937			1,020,712			995,572
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	364,223			377,924			382,472
Tradenames, net	365,817			365,551			365,639
Goodwill	228,555			230,424			231,709
Customer relationships, net	46,222			47,996			35,096
Other assets	27,775			28,435			23,246
Total assets	$	2,083,529		$	2,071,042		$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	216,931		$	182,114		$	217,340
Other current liabilities	95,685			149,134			96,460
Total current liabilities	312,616			331,248			313,800
Long-term debt, net	682,778			617,306			661,846
Deferred income taxes	85,755			84,944			133,273
Other long-term liabilities	192,051			180,128			174,867
Total liabilities	$	1,273,200		$	1,213,626		$	1,283,786
Commitments and contingencies - Note 14
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at June 30, 2018, December 30, 2017, and July 1, 2017	—			—			—
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 46,565,443, 47,178,346 and 47,971,577 shares issued and outstanding at June 30, 2018, December 30, 2017 and July 1, 2017, respectively	466			472			480
Accumulated other comprehensive loss	(35,532		)	(29,093		)	(30,653		)
Retained earnings	845,395			886,037			780,121
Total stockholders' equity	810,329			857,416			749,948
Total liabilities and stockholders' equity	$	2,083,529		$	2,071,042		$	2,033,734

See accompanying notes to the unaudited condensed consolidated financial statements.

1

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)

	Fiscal quarter ended						Two fiscal quarters ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales	$	696,197		$	691,751		$	1,451,983		$	1,424,578
Cost of goods sold	386,239			388,504			809,548			805,639
Gross profit	309,958			303,247			642,435			618,939
Royalty income, net	10,355			11,210			18,349			21,768
Selling, general, and administrative expenses	263,343			250,146			543,505			497,940
Operating income	56,970			64,311			117,279			142,767
Interest expense	7,937			7,194			15,922			14,298
Interest income	(225		)	(79		)	(391		)	(219		)
Other expense (income), net	975			(544		)	593			(765		)
Income before income taxes	48,283			57,740			101,155			129,453
Provision for income taxes	11,015			19,947			21,418			45,065
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Basic net income per common share	$	0.80		$	0.78		$	1.70		$	1.74
Diluted net income per common share	$	0.79		$	0.77		$	1.68		$	1.72
Dividend declared and paid per common share	$	0.45		$	0.37		$	0.90		$	0.74

See accompanying notes to the unaudited condensed consolidated financial statements.

2

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

	Fiscal quarter ended					Two fiscal quarters ended
	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
Net income	$	37,268		$	37,793	$	79,737		$	84,388
Other comprehensive income:
Foreign currency translation adjustments	(4,677		)	3,140		(6,439		)	4,087
Comprehensive income	$	32,591		$	40,933	$	73,298		$	88,475

See accompanying notes to the unaudited condensed consolidated financial statements.

3

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(amounts in thousands, except share amounts)

(unaudited)

	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	142,087		2			7,374			—			—			7,376
Withholdings from vesting of restricted stock	(55,933	)	(1		)	(6,666		)	—			—			(6,667		)
Restricted stock activity	121,570		1			(1		)	—			—			—
Stock-based compensation expense	—		—			10,266			—			—			10,266
Repurchase of common stock	(820,627	)	(8		)	(10,973		)	—			(78,112		)	(89,093		)
Cash dividends declared and paid	—		—			—			—			(42,267		)	(42,267		)
Comprehensive income	—		—			—			(6,439		)	79,737			73,298
Balance at June 30, 2018	46,565,443		$	466		$	—		$	(35,532	)	$	845,395		$	810,329

See accompanying notes to the unaudited condensed consolidated financial statements.

4

CARTER’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Two fiscal quarters ended
	June 30, 2018			July 1, 2017
Cash flows from operating activities:
Net income	$	79,737		$	84,388
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant, and equipment	41,989			39,705
Amortization of intangible assets	1,845			892
Amortization of debt issuance costs	865			749
Stock-based compensation expense	10,266			9,646
Unrealized foreign currency exchange loss (gain), net	202			(555		)
Provisions for doubtful accounts receivable from customers	11,511			605
Loss on disposal of property, plant, and equipment, net of recoveries	478			221
Deferred income taxes	1,400			3,109
Effect of changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	76,364			56,610
Finished goods inventories	(117,469		)	(91,446		)
Prepaid expenses and other assets	129			(13,151		)
Accounts payable and other liabilities	(4,254		)	16,560
Net cash provided by operating activities	103,063			107,333
Cash flows from investing activities:
Capital expenditures	(31,750		)	(34,276		)
Acquisitions of businesses, net of cash acquired	96			(143,704		)
Disposals and recoveries from property, plant, and equipment	373			—
Net cash used in investing activities	(31,281		)	(177,980		)
Cash flows from financing activities:
Borrowings under secured revolving credit facility	150,000			100,000
Payments on secured revolving credit facility	(85,000		)	(18,965		)
Repurchases of common stock	(89,093		)	(98,236		)
Dividends paid	(42,267		)	(35,831		)
Withholdings from vestings of restricted stock	(6,667		)	(5,590		)
Proceeds from exercises of stock options	7,376			3,122
Net cash used in financing activities	(65,651		)	(55,500		)
Effect of exchange rate changes on cash and cash equivalents	(1,423		)	353
Net increase (decrease) in cash and cash equivalents	4,708			(125,794		)
Cash and cash equivalents, beginning of period	178,494			299,358
Cash and cash equivalents, end of period	$	183,202		$	173,564

See accompanying notes to the unaudited condensed consolidated financial statements.

5

CARTER’S, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – THE COMPANY

Carter's, Inc. and its wholly owned subsidiaries (collectively, the "Company," "its," "us" and "our") design, source, and market branded childrenswear and related products under the Carter's, Child of Mine, Just One You, Precious Firsts, 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 June 30, 2018, the Company operated 1,049 retail stores in the United States, Canada, and Mexico.

NOTE 2 – 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 and two fiscal quarters ended June 30, 2018 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 29, 2018.

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 30, 2017 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. As disclosed in Note 2, Basis of Presentation, and Note 3, Revenue Recognition, at the beginning of fiscal 2018 the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers,and related amendments (“ASC 606”) using the full retrospective adoption method. The full retrospective method required the Company to apply the standard to the financial statements for the period of adoption as well as to each prior reporting period presented.

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 2018.

Revenue from Contracts with Customers (ASC No. 606)

At the beginning of fiscal 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and all related amendments (“ASC 606”) using the full retrospective adoption method. Refer to Note 3, Revenue Recognition, for additional information.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company uses the five-step model to recognize revenue:

1) Identify the contract with the customer

2) Identity the performance obligation(s)

3) Determine the transaction price

4) Allocate the transaction price to each performance obligation if multiple obligations exist

5) Recognize the revenue as the performance obligations are satisfied

Performance Obligations

The Company identifies each distinct performance obligation to transfer goods (or bundle of goods). The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods to the customer. Other than inbound and outbound freight and shipping arrangements, the Company does not use third parties to satisfy its performance obligations in revenue arrangements with customers.

When Performance Obligations Are Satisfied

Wholesale Revenues - The Company typically transfers control upon shipment. However, in certain arrangements where the Company retains the risk of loss during shipment, satisfaction of the performance obligation occurs when the goods reach the customer.

Retail Revenues - For transactions in stores, the Company satisfies its performance obligation at point of sale when the customer takes possession of the goods and tenders payment. The redemption of loyalty points under the Company's rewards program and redemptions of gift cards may be part of a transaction. For purchases made through the Company’s eCommerce channel, revenue is recognized when the goods are physically delivered to the customer.

The Company satisfies its performance obligations with licensees over time as customers have the right to use the intellectual property over the contract period.

Significant Payment Terms

Retail customers tender a form of payment, such as cash or a credit/debit card, at point of sale. For wholesale customers and licensees, payment is due based on established terms.

Returns and Refunds

The Company establishes return provisions for retail customers. It is the Company's policy not to accept returns from wholesale customers.

Significant Judgments

Sale of Goods - The Company relies on shipping terms to determine when performance obligations are satisfied. When goods are shipped to wholesale customers “FOB Shipping Point,” control of the goods is transferred to the customer at the time of shipment if there are no remaining performance obligations. The Company recognizes the revenue once control passes to the customer. For retail transactions, no significant judgments are involved since revenue is recognized at the point of sale when tender is exchanged and the customer receives the goods.

Royalty Revenues - The Company transfers the right-to-use benefit to the licensee for the contract term and therefore the Company satisfies its performance obligation over time. Revenue recognized for each reporting period is based on the greater of: 1) the royalties owed on actual net sales by the licensee and 2) a minimum royalty guarantee, if applicable.

Transaction Price - The transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company may offer sales incentives to wholesale and retail customers, including discounts. For retail transactions, the Company has significant experience with return patterns and relies on this experience to estimate expected returns when determining the transaction price.

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Standalone Selling Prices - For arrangements that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation on a relative standalone selling price basis.

Costs Incurred to Obtain a Contract - Incremental costs to obtain contracts are not material to the Company.

Policy Elections

In addition to those previously disclosed, the Company has made the following accounting policy elections and practical expedients:

Portfolio Approach - The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes - The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges - Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money - The Company's payment terms are less than one year from the transfer of goods. Therefore, the Company does not adjust promised amounts of consideration for the effects of the time value of money.

Disclosure of Remaining Performance Obligations - The Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts that are one year or less in term.

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans (ASU 2017-07)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost ("ASU 2017-07").  ASU 2017-07 changes how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer's statement of operations presents service cost arising in the current period in the same statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, are presented on the statement of operations on a line item outside (or below) operating income. ASU 2017-07 affects only the classification of certain costs on the statement of operations, not the determination of costs. Net periodic pension costs related to the Company's frozen defined benefit pension plan and post-retirement medical benefit plan were not material for the second quarter of fiscal 2018, two fiscal quarters of 2018, or prior periods. Prior period results have not been reclassified on the Company's statement of operations due to materiality.

Modifications to Share-based Compensation Awards (ASU 2017-09)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-09, Compensation-Stock Compensation Topic 718-Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies when changes to the terms and conditions of share-based payment awards must be accounted for as modifications. Entities apply the modification accounting guidance if the value, vesting conditions, or classification of an award changes. The Company has not modified any share-based payment awards. Should the Company modify share-based payment awards in the future, it will apply the provisions of ASU 2017-09.

Definition of a Business (ASU 2017-01)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 assists entities in determining if acquired assets constitute the acquisition of a business or the acquisition of assets for accounting and reporting purposes. This distinction is important because goodwill can only be recognized in an acquisition of a business. Prior to ASU 2017-01, if revenues were generated immediately before and after a transaction, the acquisition was typically considered a business. Under ASU 2017-01, entities are required to further assess the substance of the processes they acquire. Should the Company commence or complete an acquisition in future periods, it will apply the provisions of ASU 2017-01.

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Statement of Cash Flows (ASU 2016-15)

At the beginning of fiscal 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). ASU 2016-15 represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that, if present, can impact classifications on the statement of cash flows. The guidance requires application using a retrospective transition method. The adoption of ASU 2016-15 only impacted the classification of certain insurance proceeds on the Company's consolidated statement of cash flows for the first two quarters of fiscal 2018.  

NOTE 3 - 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.

At the beginning of fiscal 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and related amendments ("ASC 606") using the full retrospective adoption method. Under the full retrospective method, the Company adjusted all periods in fiscal 2017 and fiscal 2016 to reflect the provisions of ASC 606, and retained earnings at January 2, 2016 (beginning of fiscal 2016) were adjusted for the cumulative effect for prior periods. Refer to the section "Revenue from Contracts with Customers (ASC No. 606)" in Note 2, Basis of Presentation, for changes to the Company's accounting policies due to the adoption of ASC 606.

ASC 606 affected the Company's retail channels as follows:

• Accelerated the recognition of breakage revenue from unredeemed gift cards, which affected net sales, gross profit, income before income taxes, and net income on the Company's statement of operations. Basic and diluted net income per share were affected by $0.01 or less for each reporting period. Related gift card liabilities and income tax liabilities were also affected.

• A portion of the estimated value of goods expected to be returned by customers were reclassified between net sales and cost of goods sold, with no net effect on gross profit, income before income taxes, or net income on the Company's statement of operations. Related reclassifications were also made between other current assets and other current liabilities on the Company's balance sheet.

The effects of retrospective adoption on the Company's consolidated Statement of Operations were as follows:

	Second Quarter			Two Fiscal Quarters			Year		Year
(dollars in thousands, except per share data)	Fiscal 2017			Fiscal 2017			Fiscal 2017		Fiscal 2016
Net sales	$	(366	)	$	(294	)	$	92	$	(637	)
Cost of goods sold	$	(156	)	$	26		$	52	$	(7	)
Income before income taxes	$	(210	)	$	(319	)	$	40	$	(630	)
Net income	$	(132	)	$	(201	)	$	84	(397		)
Basic net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	(0.01	)
Diluted net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	—

The cumulative effect to the Company’s retained earnings at January 2, 2016 was an after-tax increase of approximately $0.6 million.

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The effects of adoption of ASC 606 on the Company’s consolidated balance sheet at December 30, 2017 were as follows:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	49,892	$	3,043	(1)	$	52,935
Total current assets	$	1,017,669	$	3,043		$	1,020,712
Total assets	$	2,067,999	$	3,043		$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	146,510	$	2,624	(2)	$	149,134
Total current liabilities	$	328,624	$	2,624		$	331,248
Deferred income taxes	$	84,848	$	96		$	84,944
Total liabilities	$	1,210,906	$	2,720		$	1,213,626
Retained earnings	885,714		323		(3)	886,037
Total stockholder's equity	$	857,093	$	323		$	857,416
Total liabilities and stockholders' equity	$	2,067,999	$	3,043		$	2,071,042

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

(2) Amount includes a reclassification of approximately $3.0 million for estimated inventory expected to be returned by customers, partially offset by a reclassification of approximately $0.4 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 effects on fiscal 2017 and fiscal 2016 results of operations.         

The retrospective adoption of ASC 606 at the beginning of fiscal 2018 also had the following effects on the Company’s unaudited condensed consolidated balance sheet at July 1, 2017:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	44,527	$	1,875	(1)	$	46,402
Total current assets	$	993,697	$	1,875		$	995,572
Total assets	$	2,031,859	$	1,875		$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	94,644	$	1,816	(2)	$	96,460
Total current liabilities	$	311,984	$	1,816		$	313,800
Deferred income taxes	$	133,251	$	22		133,273
Total liabilities	$	1,281,948	$	1,838		$	1,283,786
Retained earnings	$	780,084	$	37	(3)	$	780,121
Total stockholder's equity	$	749,911	$	37		$	749,948
Total liabilities and stockholders' equity	$	2,031,859	$	1,875		$	2,033,734

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(2) Amount includes a reclassification of approximately $1.9 million for estimated inventory expected to be returned by customers, partially offset by an adjustment of approximately $0.1 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 impact on fiscal 2017 and fiscal 2016 results of operations.

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 second quarter and two quarters ended fiscal 2018 and 2017 were as follows:

	Fiscal quarter ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	209,476	$	25,169	$	234,645
Direct-to-consumer	402,021		—		59,531		461,552
	$	402,021	$	209,476	$	84,700	$	696,197
Royalty income	$	4,426	$	4,957	$	972	$	10,355

	Two fiscal quarters ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	490,309	$	62,882	$	553,191
Direct-to-consumer	785,762		—		113,030		898,792
	$	785,762	$	490,309	$	175,912	$	1,451,983
Royalty income	$	6,011	$	10,802	$	1,536	$	18,349

	Fiscal quarter ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	217,710	$	27,622	$	245,332
Direct-to-consumer	391,457		—		54,962		446,419
	$	391,457	$	217,710	$	82,584	$	691,751
Royalty income	$	4,896	$	5,140	$	1,174	$	11,210

	Two fiscal quarters ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	510,265	$	57,304	$	567,569
Direct-to-consumer	755,299		—		101,710		857,009
	$	755,299	$	510,265	$	159,014	$	1,424,578
Royalty income	$	8,164	$	11,505	$	2,099	$	21,768

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounts Receivable from Customers and Licensees

The components of accounts receivable, net, as of June 30, 2018, December 30, 2017, and July 1, 2017 were as follows:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Trade receivables from wholesale customers, net	$	138,952		$	229,968		$	153,581
Royalties receivable	8,824			9,818			10,107
Tenant allowances and other receivables	12,168			14,511			11,265
Total gross receivables	$	159,944		$	254,297		$	174,953
Less:
Wholesale accounts receivable reserves	(7,427		)	(13,736		)	(9,770		)
Accounts receivable, net	$	152,517		$	240,561		$	165,183

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:        

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Contract liabilities-current:
Unredeemed gift cards	$	11,072	$	11,945	$	9,991
Unredeemed customer loyalty rewards	6,164		7,355		9,835
Total contract liabilities-current *	$	17,236	$	19,300	$	19,826

* Included with Other current liabilities on the Company's consolidated balance sheet.

Composition of Contract Liabilities

Unredeemed gift cards - the Company is obligated to transfer goods in the future to customers who have purchased gift cards. Periodic changes in the gift card contract liability result from the redemption of gift cards by customers and the recognition of estimated breakage revenue for those gift card balances that are not expected to be redeemed. The majority of our gift cards do not have an expiration date; however, all outstanding gift card balances are classified by the Company as current liabilities since gift cards are redeemable on demand by the valid holder. The majority of the Company's gift cards are redeemed within one year of issuance.

Unredeemed loyalty rewards - points and reward certificates earned by customers under the Company’s loyalty programs represent obligations of the Company to transfer goods to the customer upon redemption. Periodic changes in the loyalty program contract liability result from coupon redemptions and expirations. The earning and redemption cycles for our loyalty program are under one year in duration.

NOTE 4 – BUSINESS ACQUISITIONS IN FISCAL 2017

Based on their purchase prices and pre-acquisition operating results and assets, neither of the businesses acquired by the Company in fiscal 2017 met the materiality requirements for preparation and presentation of pro forma financial information, either individually or in the aggregate.

Skip Hop Acquisition

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Carter's, Inc.'s wholly-owned subsidiary, The William Carter Company ("TWCC"), acquired 100% of the voting equity interests of Skip Hop Holdings, Inc. and subsidiaries (collectively "Skip Hop") after the close of business on February 22, 2017. The Skip Hop purchase was deemed to be the acquisition of a business under the provisions of ASC No. 805, Business Combinations ("ASC 805"). The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Skip Hop beginning February 23, 2017.

In the Company's unaudited condensed consolidated balance sheet at July 1, 2017, the preliminary purchase price of approximately $147.3 million, net of $0.8 million cash acquired, was comprised of the following acquired assets and assumed liabilities: $54.2 million of goodwill including an assembled workforce; $92.7 million of intangible assets comprised of a tradename and acquired customer relationships; $54.9 million of tangible assets acquired; and $20.2 million of liabilities in addition to $35.9 million of deferred income tax liabilities.

The measurement period (as defined in ASC 805) for Skip Hop was complete at the end of fiscal 2017 and all measurement period adjustments were reflected in the Company's consolidated balance sheet as of December 30, 2017. As a result of the measurement period adjustments recorded between the acquisition date and the end of fiscal 2017, the net assets acquired consisted of the following: $46.0 million of goodwill including an assembled workforce; $104.1 million of intangible assets comprised of a tradename and acquired customer relationships; $53.9 million of tangible assets acquired; and $20.8 million of liabilities in addition to $36.3 million of deferred income tax liabilities. The adjusted purchase price of approximately $142.5 million, net of $0.8 million of cash acquired.

During the first two quarters of fiscal 2017, the Company incurred approximately $1.8 million in acquisition-related costs for the Skip Hop transaction.

Acquisition of Mexican Licensee

On August 1, 2017, the Company, through certain of its wholly-owned subsidiaries, acquired the outstanding equity of the Company's licensee in Mexico and a related entity (collectively "Carter's Mexico"). Both entities are incorporated under Mexican law. Prior to the acquisition, Carter's Mexico was primarily a licensee and wholesale customer of the Company. The Carter's Mexico purchase was deemed to be the acquisition of a business under the provisions of ASC 805. The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Carter's Mexico beginning August 1, 2017. Carter's Mexico became part of the Company's International reportable segment.

As of December 30, 2017, preliminary values assigned to assets acquired included inventories of approximately $8.3 million, a customer relationships intangible asset of approximately $3.5 million, and goodwill of approximately $6.2 million. Measurement period adjustments made in the first quarter of fiscal 2018 were not material.

The measurement period (as defined in ASC 805) for the acquisition of the licensee in Mexico was completed during the second quarter of fiscal 2018 and all measurement period adjustments were reflected in the Company's consolidated balance sheet as of June 30, 2018. As a result of the measurement period adjustments recorded between the acquisition date and the end of the second quarter of fiscal 2018, the values assigned to assets acquired included inventories of approximately $8.0 million, a customer relationships intangible asset of approximately $3.5 million, and goodwill of approximately $6.3 million.

NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss consisted of the following:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Cumulative foreign currency translation adjustments	$	(27,724	)	$	(21,285	)	$	(23,537	)
Pension and post-retirement obligations (1)	(7,808		)	(7,808		)	(7,116		)
Total accumulated other comprehensive loss	$	(35,532	)	$	(29,093	)	$	(30,653	)

(1) Net of income taxes of $4.4 million, $4.4 million, and $4.2 million, respectively. The deferred income taxes associated with these obligations are subject to adjustments upon the Company's adoption of ASC 2018-02. See Note 16, Pending Adoption of Recent Accounting Pronouncements.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the first and second quarters of both fiscal 2018 and fiscal 2017, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations.

NOTE 6 – GOODWILL AND INTANGIBLE ASSETS

The Company's goodwill and intangible assets were as follows:

		June 30, 2018						December 30, 2017
(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	40,367				40,367		42,223				42,223
Skip Hop goodwill	Indefinite	45,984				45,984		45,997				45,997
Carter's Mexico goodwill	Indefinite	5,634				5,634		5,634				5,634
Total goodwill		$	228,555			$	228,555	$	230,424			$	230,424
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		$	627	3,284		3,550		$	532	3,018
Total tradenames, net		$	366,444	$	627	$	365,817	$	366,083	$	532	$	365,551
Skip Hop customer relationships	15 years	$	47,300	$	3,892	$	43,408	$	47,300	$	2,304	$	44,996
Carter's Mexico customer relationships	10 years	3,031		217		2,814		3,135		135		3,000
Total customer relationships, net		$	50,331	$	4,109	$	46,222	$	50,435	$	2,439	$	47,996

		July 1, 2017
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570			$	136,570
Canada goodwill	Indefinite	40,897				40,897
Skip Hop goodwill	Indefinite	54,242				54,242
Total goodwill		$	231,709			$	231,709
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	42,021		$	38,915	3,106
Total tradenames, net		$	404,554	$	38,915	$	365,639
Skip Hop customer relationships, net	15 years	$	35,900	$	804	$	35,096

Amortization expense for intangible assets subject to amortization was approximately $0.8 million and $0.6 million for the second fiscal quarter ended June 30, 2018 and second fiscal quarter ended July 1, 2017, respectively. For the first two quarters of fiscal 2018 and fiscal 2017, amortization expense was approximately $1.8 million and $0.9 million, respectively. Future amortization expense is estimated to be approximately $3.7 million for each of the next five fiscal years.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – COMMON STOCK

OPEN MARKET SHARE REPURCHASES

The total aggregate remaining capacity under outstanding repurchase authorizations as of June 30, 2018 was approximately $496.5 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:

	Fiscal quarter ended				Two fiscal quarters ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Number of shares repurchased	599,314		587,465		820,627		1,131,409
Aggregate cost of shares repurchased (dollars in thousands)	$	63,899	$	51,605	$	89,093	$	98,236
Average price per share	$	106.62	$	87.84	$	108.57	$	86.82

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 second fiscal quarter and two fiscal quarters ended June 30, 2018, the Company declared and paid cash dividends per share of $0.45 and $0.90, respectively. In the second fiscal quarter and two fiscal quarters ended July 1, 2017, the Company declared and paid cash dividends per share of $0.37 and $0.74, 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 based on a number of factors, including the Company's future financial performance and other investment priorities.

Provisions in the indenture governing the senior notes of TWCC and in TWCC'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. Provisions related to the indenture governing the senior notes are described in the Company's Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.

NOTE 8 – LONG-TERM DEBT

Long-term debt consisted of the following:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(3,222		)	(3,694		)	(4,154		)
Senior notes, net	396,778			396,306			395,846
Secured revolving credit facility	286,000			221,000			266,000
Total long-term debt, net	$	682,778		$	617,306		$	661,846

Secured Revolving Credit Facility

On August 25, 2017, TWCC and a syndicate of lenders entered into a fourth amended and restated secured revolving credit agreement.

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The secured revolving credit facility provides: (i) a term for the facility lasting through August 22, 2022 and (ii) an aggregate credit line of $750 million which includes a $650 million U.S. dollar facility and a $100 million multicurrency facility denominated in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. The $650 million U.S. dollar facility is inclusive of a $100 million sub-limit for letters of credit and a swing line sub-limit of $70 million. The $100 million multicurrency facility is inclusive of a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million.

In addition, the secured revolving credit facility includes the opportunity for incremental borrowing facilities up to $425 million, which is comprised of an incremental $350 million U.S. dollar revolving credit facility and an incremental $75 million multicurrency revolving credit facility. The incremental U.S. dollar revolving credit facility can increase to an unlimited borrowing amount so long as the consolidated first lien leverage ratio (as defined in the secured revolving credit facility) does not exceed 2.25:1.00.

Under the secured revolving credit facility, TWCC and its domestic subsidiaries have granted to the collateral agent, for the benefit of the lenders, valid and perfected first priority security interests in substantially all of their present and future assets, excluding certain customary exceptions, and guarantee the obligations of the borrowers. In addition, The Genuine Canadian Corp., as Canadian borrower, and Carter’s Holdings B.V., as Dutch borrower, have each guaranteed the obligations of the other.

As of June 30, 2018, the Company had $286.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $4.5 million of outstanding letters of credit. As of June 30, 2018, approximately $459.5 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 June 30, 2018, the interest rate 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 June 30, 2018, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which resulted in a weighted-average borrowing rate of 3.38%. All outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.

As of June 30, 2018, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.

Senior Notes

As of June 30, 2018, TWCC had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC. On the Company's consolidated balance sheet, the senior notes are reported net of certain unamortized issuance-related costs, as shown in the table above.

NOTE 9 – STOCK-BASED COMPENSATION

The Company recorded stock-based compensation expense as follows:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in thousands)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Stock options	$	1,112	$	955	$	2,456	$	2,199
Restricted stock:
Time-based awards	3,027		2,832		5,311		5,144
Performance-based awards	1,183		1,080		2,499		2,303
Total	$	5,322	$	4,867	$	10,266	$	9,646

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 10 – INCOME TAXES

As of June 30, 2018, the Company had gross unrecognized income tax benefits of approximately $14.9 million, of which $12.6 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 June 30, 2018 were approximately $1.8 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 2018 or fiscal 2019 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 quarters ended June 30, 2018 and July 1, 2017, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $1.3 million, $1.0 million, and $1.0 million of interest accrued on uncertain tax positions as of June 30, 2018, December 30, 2017, and July 1, 2017, respectively.

For the full fiscal year 2018, the Company estimates that its consolidated effective income tax rate will be approximately 22.0%.

U.S. Tax Reform

The provision for income taxes recognized by the Company during the fiscal fourth quarter of 2017 reflected certain provisional estimates for the accounting of the December 22, 2017 enactment of income tax law changes commonly known as the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act"). The provisional accounting for the 2017 Act is permitted by SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, issued in late December 2017. Subsequent adjustments, if any, to the provisional accounting estimates must be reflected in income tax provisions/benefits during one or more periods in fiscal 2018.

During the fourth quarter of fiscal 2017, the Company recorded a provisional tax expense estimate for the one-time transition tax liability for all of its foreign subsidiaries, resulting in an increase in income tax expense of approximately $10.4 million related to foreign earnings. The one-time transition tax is based on the Company's total post-1986 earnings and profits ("E&P") that the Company previously deferred from United States income taxes. The Company has not yet completed its calculation of the total post-1986 E&P for these foreign subsidiaries. No adjustments were made to this provisional tax expense estimate during the first two quarters of fiscal 2018. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable, but the related cumulative temporary difference as of December 30, 2017 and June 30, 2018 would not result in a material incremental deferred tax liability.

NOTE 11 – FAIR VALUE MEASUREMENTS

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

		June 30, 2018				December 30, 2017				July 1, 2017
(dollars in millions)		Level 1		Level 2	Level 3	Level 1		Level 2	Level 3	Level 1		Level 2	Level 3
Assets
	Investments (1)	$	16.9	—	—	$	16.7	—	—	$	15.3	—	—
Liabilities
	Contingent consideration (2)	—		—	—	—		—	—	—		—	$	3.6

(1) Included in Other assets on the Company's consolidated balance sheet.

(2) Included in Other current liabilities on the Company's consolidated balance sheet.

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. Gains on the investments in marketable securities were $0.2 million for both the second fiscal quarter and the two fiscal quarters ended June 30, 2018, and were $0.5 million and $1.2 million for the fiscal quarter and two fiscal quarters ended July 1, 2017, respectively. These amounts are included in Other expense (income), net on the Company's consolidated statement of operations.

CONTINGENT CONSIDERATION

The estimated fair value of contingent consideration related to the Skip Hop acquisition was based on a weighted payout probability at the measurement date. Facts and circumstances that occurred subsequent to the acquisition indicated that the contingent earn out arrangement would not be achieved, and therefore approximately $3.6 million was credited to the Company's earnings during fiscal 2017.

BORROWINGS

As of June 30, 2018, the fair value of the Company's $286.0 million in outstanding borrowings under its secured revolving credit facility approximated carrying value.

The fair value of the Company's senior notes at June 30, 2018 was approximately $406 million. The fair value of these senior notes with a notional value and carrying value (gross of debt cost) of $400 million was estimated using a quoted price as provided in the secondary market, which considersthe Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12 – EARNINGS PER SHARE

The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:

	Fiscal quarter ended						Two fiscal quarters ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	46,437,093			47,863,618			46,604,599			48,093,155
Dilutive effect of equity awards	509,545			550,726			563,137			552,866
Diluted number of common and common equivalent shares outstanding	46,946,638			48,414,344			47,167,736			48,646,021
Basic net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(276		)	(290		)	(600		)	(659		)
Net income available to common shareholders	$	36,992		$	37,503		$	79,137		$	83,729
Basic net income per common share	$	0.80		$	0.78		$	1.70		$	1.74
Diluted net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(274		)	(288		)	(596		)	(654		)
Net income available to common shareholders	$	36,994		$	37,505		$	79,141		$	83,734
Diluted net income per common share	$	0.79		$	0.77		$	1.68		$	1.72
Anti-dilutive awards excluded from diluted earnings per share computation	332,448			663,531			254,417			596,297

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 13 – 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:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Accrued bonuses and incentive compensation	$	5,231	$	27,566	$	5,959
Accrued employee benefits	10,663		21,735		10,227
Accrued and deferred rent	18,702		18,213		17,767

Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period, were as follows:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Deferred lease incentives	$	75,431	$	75,104	$	74,344

NOTE 14 – 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.

NOTE 15 – SEGMENT INFORMATION

The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated.

	Fiscal quarter ended										Two fiscal quarters ended
(dollars in thousands)	June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales		June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales
Net sales:
U.S. Retail	$	402,021		57.7	%	$	391,457		56.6	%	$	785,762		54.1	%	$	755,299		53.0	%
U.S. Wholesale	209,476			30.1	%	217,710			31.5	%	490,309			33.8	%	510,265			35.8	%
International	84,700			12.2	%	82,584			11.9	%	175,912			12.1	%	159,014			11.2	%
Total net sales	$	696,197		100.0	%	$	691,751		100.0	%	$	1,451,983		100.0	%	$	1,424,578		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales
U.S. Retail (a) (e)	$	45,428		11.3	%	$	42,133		10.8	%	$	74,947		9.5	%	$	71,922		9.5	%
U.S. Wholesale (b) (e)	30,338			14.5	%	35,805			16.4	%	80,610			16.4	%	105,501			20.7	%
International (e)	4,312			5.1	%	7,597			9.2	%	8,073			4.6	%	11,282			7.1	%
Corporate expenses (c) (d)	(23,108		)			(21,224		)			(46,351		)			(45,938		)
Total operating income	$	56,970		8.2	%	$	64,311		9.3	%	$	117,279		8.1	%	$	142,767		10.0	%

(a) Two fiscal quarters ended June 30, 2018 includes insurance recoveries of approximately $0.4 million associated with storm-related store closures in 2017.

(b) Includes approximately $12.8 million of charges related to a customer bankruptcy for the two fiscal quarters ended June 30, 2018.

(c) 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, and audit fees.

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(d) Includes the following charges:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Direct sourcing initiative	$	—	$	0.1	$	—	$	0.3
Acquisition-related costs	$	—	$	0.8	$	—	$	2.5

(e) A total of $0.4 million of certain costs related to inventory acquired from Skip Hop is included in operating income between U.S. Wholesale, U.S. Retail, and International for the fiscal quarter and two fiscal quarters ended July 1, 2017.

NOTE 16 – PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Leases (ASU 2016-02)

In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases-Topic 842, which has been codified in ASC 842, Leases ("ASC 842"). Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. The new standard will be effective for the Company at the beginning of fiscal 2019, including interim periods within the year of adoption. The Company is assessing the implications of applying the practical expedients and accounting policy elections, implementing software to meet the reporting requirements of the new standard, and identifying changes to its business processes and controls to support the adoption of the new standard. The Company believes the adoption will have a material impact on the total assets and total liabilities reported on the Company's consolidated balance sheets, but is not able to quantify the difference at this time. However, the Company does not believe adoption of this standard will have a material impact on the Company's consolidated results of operations or cash flows.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02)

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 permits a company to reclassify the income tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act") on items within accumulated other comprehensive income or loss ("AOCI-L") to retained earnings. Because most items that are charged to AOCI-L are recorded net of applicable income taxes, the subsequent reclassification of these items from AOCI-L to the statement of operations will be at different income tax rates due to the 2017 Act, thereby leaving a "stranded" tax balance within AOCI-L. ASU 2018-02 will allow a company to transfer these "stranded" amounts from AOCI-L to retained earnings. ASU 2018-02 will be effective for the Company at the beginning of fiscal 2019, with early adoption permitted. The Company has amounts in its AOCI-L for defined benefit retirement plans that were recorded net of applicable income taxes, thus the Company anticipates the transfer of "stranded" tax amounts from its AOCI-L to retained earnings upon the adoption of ASU 2018-02. The effect of the adoption of ASU 2018-02 will not be material to the Company's financial position, and the adoption will have no impact on the Company's results of operations or cash flows.

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

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 17 – GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the "Subsidiary Issuer"), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the "Parent"), by certain of the Parent's current domestic subsidiaries (other than TWCC), and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s secured revolving credit facility or certain other debt of the Company or the subsidiary guarantors.

For additional information, refer to the Company's Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.

The condensed consolidating financial information for the Parent, the Subsidiary Issuer, and the guarantor and non-guarantor subsidiaries has been prepared from the books and records maintained by the Company. The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10. The financial information may not necessarily be indicative of the financial position, results of operations, comprehensive income (loss), and cash flows, had the Parent, Subsidiary Issuer, guarantor or non-guarantor subsidiaries operated as independent entities.

Intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for investments in subsidiaries under the equity method. The guarantor subsidiaries are 100% owned directly or indirectly by the Parent and all guarantees are joint, several, and unconditional.

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Balance Sheets (unaudited)

As of June 30, 2018

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	99,928	$	13,529	$	69,745	$	—		$	183,202
Accounts receivable, net	—		114,728		31,779		6,010		—			152,517
Intercompany receivable	—		70,001		105,309		60,536		(235,846		)	—
Finished goods inventories	—		385,000		224,323		76,949		(23,009		)	663,263
Prepaid expenses and other current assets	—		19,393		20,202		12,360		—			51,955
Total current assets	—		689,050		395,142		225,600		(258,855		)	1,050,937
Property, plant, and equipment, net	—		141,465		185,123		37,635		—			364,223
Goodwill	—		136,570		45,369		46,616		—			228,555
Tradenames, net	—		223,162		142,655		—		—			365,817
Customer relationships, net	—		—		43,408		2,814		—			46,222
Other assets	—		23,802		2,171		1,802		—			27,775
Intercompany long-term receivable	—		—		438,167		—		(438,167		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	810,329		1,086,715		254,289		—		(2,151,333		)	—
Total assets	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	147,179	$	50,786	$	18,966	$	—		$	216,931
Intercompany payables	—		158,421		72,412		5,013		(235,846		)	—
Other current liabilities	—		13,459		71,482		10,744		—			95,685
Total current liabilities	—		319,059		194,680		34,723		(235,846		)	312,616
Long-term debt	—		682,778		—		—		—			682,778
Deferred income taxes	—		45,690		39,560		505		—			85,755
Intercompany long-term liability	—		438,167		—		—		(438,167		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		81,732		94,721		15,598		—			192,051
Stockholders' equity	810,329		833,338		1,077,363		263,641		(2,174,342		)	810,329
Total liabilities and stockholders' equity	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of December 30, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	129,463	$	10,030	$	39,001	$	—		$	178,494
Accounts receivable, net	—		182,944		40,286		17,331		—			240,561
Intercompany receivable	—		87,702		162,007		58,980		(308,689		)	—
Finished goods inventories	—		296,065		206,556		66,569		(20,468		)	548,722
Prepaid expenses and other current assets	—		17,012		21,354		14,569		—			52,935
Total current assets	—		713,186		440,233		196,450		(329,157		)	1,020,712
Property, plant, and equipment, net	—		147,858		189,511		40,555		—			377,924
Goodwill	—		136,570		45,368		48,486		—			230,424
Tradenames, net	—		223,251		142,300		—		—			365,551
Customer relationships, net	—		—		44,996		3,000		—			47,996
Other assets	—		23,884		2,392		2,159		—			28,435
Intercompany long-term receivable	—		—		441,294		—		(441,294		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	857,416		1,053,224		231,994		—		(2,142,634		)	—
Total assets	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	115,658	$	49,313	$	17,143	$	—		$	182,114
Intercompany payables	—		215,573		91,697		1,419		(308,689		)	—
Other current liabilities	—		11,805		122,989		14,340		—			149,134
Total current liabilities	—		343,036		263,999		32,902		(308,689		)	331,248
Long-term debt	—		617,306		—		—		—			617,306
Deferred income taxes	—		46,619		37,647		678		—			84,944
Intercompany long-term liability	—		441,294		—		—		(441,294		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		71,834		92,570		15,724		—			180,128
Stockholders' equity	857,416		877,884		1,043,872		241,346		(2,163,102		)	857,416
Total liabilities and stockholders' equity	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	127,907	$	11,435	$	34,222	$	—		$	173,564
Accounts receivable, net	—		124,885		35,765		4,533		—			165,183
Intercompany receivable	—		56,526		61,911		25,588		(144,025		)	—
Finished goods inventories	—		346,963		207,368		68,262		(12,170		)	610,423
Prepaid expenses and other current assets	—		16,683		19,483		10,236		—			46,402
Total current assets	—		672,964		335,962		142,841		(156,195		)	995,572
Property, plant, and equipment, net	—		150,796		195,209		36,467		—			382,472
Goodwill	—		136,570		53,635		41,504		—			231,709
Tradenames, net	—		223,339		142,300		—		—			365,639
Customer relationships, net	—		—		35,096		—		—			35,096
Other assets	—		20,901		447		1,898		—			23,246
Intercompany long-term receivable	—		—		411,475		—		(411,475		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	749,948		936,348		167,809		—		(1,854,105		)	—
Total assets	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	151,770	$	47,695	$	17,875	$	—		$	217,340
Intercompany payables	—		82,539		57,034		4,452		(144,025		)	—
Other current liabilities	—		32,973		54,535		8,952		—			96,460
Total current liabilities	—		267,282		159,264		31,279		(144,025		)	313,800
Long-term debt	—		661,846		—		—		—			661,846
Deferred income taxes	—		69,750		63,422		101		—			133,273
Intercompany long-term liability	—		411,475		—		—		(411,475		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,447		92,236		14,184		—			174,867
Stockholders' equity	749,948		762,118		927,011		177,146		(1,866,275		)	749,948
Total liabilities and stockholders' equity	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734

26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	345,813		$	445,836		$	94,369		$	(189,821	)	$	696,197
Cost of goods sold	—			273,857			260,516			41,196			(189,330		)	386,239
Gross profit	—			71,956			185,320			53,173			(491		)	309,958
Royalty income, net	—			8,601			4,599			—			(2,845		)	10,355
Selling, general, and administrative expenses	—			42,423			196,923			32,110			(8,113		)	263,343
Operating income	—			38,134			(7,004		)	21,063			4,777			56,970
Interest expense	—			7,937			1,327			—			(1,327		)	7,937
Interest income	—			(1,329		)	—			(223		)	1,327			(225		)
(Income) loss in subsidiaries	(37,268		)	(4,973		)	(16,836		)	—			59,077			—
Other (income) expense, net	—			(3		)	114			864			—			975
Income (loss) before income taxes	37,268			36,502			8,391			20,422			(54,300		)	48,283
Provision for income taxes	—			4,011			3,418			3,586			—			11,015
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268

27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	352,814		$	434,956		$	71,885		$	(167,904	)	$	691,751
Cost of goods sold	—			260,901			257,168			37,019			(166,584		)	388,504
Gross profit	—			91,913			177,788			34,866			(1,320		)	303,247
Royalty income, net	—			8,905			4,882			—			(2,577		)	11,210
Selling, general, and administrative expenses	—			38,295			193,865			26,292			(8,306		)	250,146
Operating income	—			62,523			(11,195		)	8,574			4,409			64,311
Interest expense	—			7,138			1,377			6			(1,327		)	7,194
Interest income	—			(1,401		)	—			(5		)	1,327			(79		)
(Income) loss in subsidiaries	(37,793		)	7,153			(6,805		)	—			37,445			—
Other (income) expense, net	—			(257		)	280			(567		)	—			(544		)
Income (loss) before income taxes	37,793			49,890			(6,047		)	9,140			(33,036		)	57,740
Provision for income taxes	—			16,506			1,106			2,335			—			19,947
Net income (loss)	$	37,793		$	33,384		$	(7,153	)	$	6,805		$	(33,036	)	$	37,793

28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Operations (unaudited)

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,799		$	872,299		$	178,966		$	(406,081	)	$	1,451,983
Cost of goods sold	—			603,856			511,598			86,797			(392,703		)	809,548
Gross profit	—			202,943			360,701			92,169			(13,378		)	642,435
Royalty income, net	—			15,528			8,419			—			(5,598		)	18,349
Selling, general, and administrative expenses	—			84,239			412,089			63,612			(16,435		)	543,505
Operating income	—			134,232			(42,969		)	28,557			(2,541		)	117,279
Interest expense	—			15,912			2,654			10			(2,654		)	15,922
Interest income	—			(2,671		)	—			(374		)	2,654			(391		)
(Income) loss in subsidiaries	(79,737		)	21,039			(23,424		)	—			82,122			—
Other expense, net	—			18			125			450			—			593
Income (loss) before income taxes	79,737			99,934			(22,324		)	28,471			(84,663		)	101,155
Provision for (benefit from) income taxes	—			17,656			(1,285		)	5,047			—			21,418
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737

29

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,329		$	830,806		$	132,917		$	(345,474	)	$	1,424,578
Cost of goods sold	—			591,535			486,115			74,448			(346,459		)	805,639
Gross profit	—			214,794			344,691			58,469			985			618,939
Royalty income, net	—			17,335			9,007			—			(4,574		)	21,768
Selling, general, and administrative expenses	—			79,227			383,369			52,563			(17,219		)	497,940
Operating income	—			152,902			(29,671		)	5,906			13,630			142,767
Interest expense	—			14,111			2,746			95			(2,654		)	14,298
Interest income	—			(2,840		)	—			(33		)	2,654			(219		)
(Income) loss in subsidiaries	(84,388		)	28,254			(4,358		)	—			60,492			—
Other (income) expense, net	—			(625		)	648			(788		)	—			(765		)
Income (loss) before income taxes	84,388			114,002			(28,707		)	6,632			(46,862		)	129,453
Provision for (benefit from) income taxes	—			43,244			(453		)	2,274			—			45,065
Net income (loss)	$	84,388		$	70,758		$	(28,254	)	$	4,358		$	(46,862	)	$	84,388

CARTER’S, INC.

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268
Foreign currency translation adjustments	(4,677		)	(4,677		)	(4,677		)	(4,677		)	14,031			(4,677		)
Comprehensive income (loss)	$	32,591		$	27,814		$	296		$	12,159		$	(40,269	)	$	32,591

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	37,793	$	33,384	$	(7,153	)	$	6,805	$	(33,036	)	$	37,793
Foreign currency translation adjustments	3,140		3,140		3,140			3,140		(9,420		)	3,140
Comprehensive income (loss)	$	40,933	$	36,524	$	(4,013	)	$	9,945	$	(42,456	)	$	40,933

30

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737
Foreign currency translation adjustments	(6,439		)	(6,439		)	(6,439		)	(6,439		)	19,317			(6,439		)
Comprehensive income (loss)	$	73,298		$	75,839		$	(27,478	)	$	16,985		$	(65,346	)	$	73,298

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	84,388	$	70,758	$	(28,254	)	$	4,358	$	(46,862	)	$	84,388
Foreign currency translation adjustments	4,087		4,087		4,087			4,087		(12,261		)	4,087
Comprehensive income (loss)	$	88,475	$	74,845	$	(24,167	)	$	8,445	$	(59,123	)	$	88,475

31

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CARTER’S, INC.

Condensed Consolidating Statements of Cash Flows (unaudited)

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	109,382		$	(38,837	)	$	32,518		$	—		$	103,063
Cash flows from investing activities:
Capital expenditures	—			(9,291		)	(19,042		)	(3,417		)	—			(31,750		)
Intercompany investing activity	130,651			(3,243		)	3,024			927			(131,359		)	—
Acquisitions of businesses, net of cash acquired	—			—			—			96			—			96
Disposals and recoveries from property, plant, and equipment	—			—			369			4			—			373
Net cash provided by (used in) investing activities	130,651			(12,534		)	(15,649		)	(2,390		)	(131,359		)	(31,281		)
Cash flows from financing activities:
Intercompany financing activity	—			(191,383		)	57,985			2,039			131,359			—
Borrowings under secured revolving credit facility	—			150,000			—			—			—			150,000
Payments on secured revolving credit facility	—			(85,000		)	—			—			—			(85,000		)
Dividends paid	(42,267		)	—			—			—			—			(42,267		)
Repurchases of common stock	(89,093		)	—			—			—			—			(89,093		)
Withholdings from vestings of restricted stock	(6,667		)	—			—			—			—			(6,667		)
Proceeds from exercises of stock options	7,376			—			—			—			—			7,376
Net cash (used in) provided by financing activities	(130,651		)	(126,383		)	57,985			2,039			131,359			(65,651		)
Effect of exchange rate changes on cash	—			—			—			(1,423		)	—			(1,423		)
Net (decrease) increase in cash and cash equivalents	—			(29,535		)	3,499			30,744			—			4,708
Cash and cash equivalents, beginning of period	—			129,463			10,030			39,001			—			178,494
Cash and cash equivalents, end of period	$	—		$	99,928		$	13,529		$	69,745		$	—		$	183,202

32

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	120,884		$	(13,661	)	$	110		$	—		$	107,333
Cash flows from investing activities:
Capital expenditures	—			(10,594		)	(19,719		)	(3,963		)	—			(34,276		)
Intercompany investing activity	136,535			(2,468		)	—			—			(134,067		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	136,535			(157,582		)	(18,973		)	(3,893		)	(134,067		)	(177,980		)
Cash flows from financing activities:
Intercompany financing activity	—			(164,451		)	32,252			(1,868		)	134,067			—
Borrowings under secured revolving credit facility	—			100,000			—			—			—			100,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(35,831		)	—			—			—			—			(35,831		)
Repurchases of common stock	(98,236		)	—			—			—			—			(98,236		)
Withholdings from vestings of restricted stock	(5,590		)	—			—			—			—			(5,590		)
Proceeds from exercises of stock options	3,122			—			—			—			—			3,122
Net cash (used in) provided by financing activities	(136,535		)	(64,451		)	32,252			(20,833		)	134,067			(55,500		)
Effect of exchange rate changes on cash	—			—			—			353			—			353
Net decrease in cash and cash equivalents	—			(101,149		)	(382		)	(24,263		)	—			(125,794		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	127,907		$	11,435		$	34,222		$	—		$	173,564

33

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to our future performance, including, without limitation, statements with respect to our anticipated financial results for any other quarter or period in fiscal 2018 or any other future period, assessment of our performance and financial position, and drivers of our sales and earnings growth. Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or not materialize, or should any of the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Certain of the risks and uncertainties that could cause actual results and performance to differ materially are described under the heading "Risk Factors" in our most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time.

OVERVIEW

We are the largest branded marketer in North America of apparel exclusively for babies and young children. We own two of the most highly recognized and most trusted brand names in the children's apparel industry, Carter's and OshKosh B'gosh (or "OshKosh"), and a leading baby and young child lifestyle brand, Skip Hop.

Established in 1865, our Carter's brand is recognized and trusted by consumers for high-quality apparel for children in sizes newborn to 14 and accessories.

Established in 1895, OshKosh is a well-known brand, trusted by consumers for apparel for children in sizes newborn to 14, with a focus on playclothes for toddlers and young children, and accessories.

We acquired the Skip Hop brand in February 2017. Established in 2003, the Skip Hop brand takes durable childhood necessities, and re-thinks, re-energizes, and re-imagines them to produce higher value, superior quality, and top-performance goods for parents, babies, and toddlers.

We market high-quality products and accessories at an attractive value proposition for consumers, and offer multiple product categories. Our multi-channel international business model - which includes retail stores, eCommerce and wholesale sales channels - enables us to reach a broad range of consumers around the world. We have extensive experience in the young children's apparel and accessories market and focus on delivering products that satisfy our consumers' needs.

The following is a discussion of our results of operations and current financial condition. This should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Form 10-Q and audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.

Segments

Our U.S. Retail segment consists of revenue from sales of products to consumers in the United States, including Carter's, OshKosh, and Skip Hop branded products, through our retail stores and eCommerce sites. Similarly, our U.S. Wholesale segment consists of revenue from sales in the United States of Carter's, OshKosh, and Skip Hop branded products through our wholesale customers. Finally, our International segment consists of income from sales of Carter's, OshKosh, and Skip Hop branded products through our retail and online stores outside the United States, primarily through our retail stores in Canada and Mexico, our eCommerce sites in Canada and China, stores operated by our international partners, and sales to our international wholesale customers.

34

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected statement of operations data expressed as a percentage of consolidated net sales:

	Fiscal quarter ended				Two fiscal quarters ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales
U.S. Retail	57.7	%	56.6	%	54.1	%	53.0	%
U.S. Wholesale	30.1	%	31.5	%	33.8	%	35.8	%
International	12.2	%	11.9	%	12.1	%	11.2	%
Consolidated net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	55.5	%	56.2	%	55.8	%	56.6	%
Gross margin	44.5	%	43.8	%	44.2	%	43.4	%
Royalty income	1.5	%	1.6	%	1.3	%	1.5	%
Selling, general, and administrative expenses	37.8	%	36.2	%	37.4	%	35.0	%
Operating income	8.2	%	9.3	%	8.1	%	10.0	%
Interest expense	1.1	%	0.9	%	1.1	%	1.0	%
Interest income	n/m		n/m		n/m		n/m
Other income, net	0.1	%	(0.1	)%	n/m		(0.1	)%
Income before income taxes	6.9	%	8.3	%	7.0	%	9.1	%
Provision for income taxes	1.6	%	2.9	%	1.5	%	3.2	%
Net income	5.4	%	5.5	%	5.5	%	5.9	%

n/m - rounds to less than 0.1%, therefore not material.

Note: Results may not be additive due to rounding.

COMPARABLE RETAIL SALES METRICS

At the beginning of fiscal 2018, we transitioned to disclosing a total comparable retail sales metric, including both retail stores and eCommerce. This change aligns with how management views and measures our retail business. We believe it reflects our maturing omni-channel strategy and consumers’ increasing opportunity to shop with us both in stores and online.

The method of calculating sales metrics varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as that of other retailers.    

SECOND FISCAL QUARTER AND TWO FISCAL QUARTERS ENDED JUNE 30, 2018 COMPARED TO SECOND FISCAL QUARTER AND TWO FISCAL QUARTERS ENDED JULY 1, 2017

CONSOLIDATED NET SALES

In the second quarter of fiscal 2018, consolidated net sales increased$4.4 million, or 0.6%, to $696.2 million from $691.8 million in the second quarter of fiscal 2017. For the first two quarters of fiscal 2018, consolidated net sales increased$27.4 million, or 1.9%, to $1.5 billion from $1.4 billion in the first two quarters of fiscal 2017. The increases for the fiscal quarter and year-to-date period in fiscal 2018 were primarily driven by growth in our U.S. Retail and International segments, partially offset by a decline in our U.S. Wholesale segment. Changes in foreign currency exchange rates used for translation in the second quarter and first two quarters of fiscal 2018, as compared to the second quarter and first two quarters of fiscal 2017, had a favorable impact on our consolidated net sales of approximately $2.6 million and $5.4 million, respectively.

35

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net sales by segment, and each segment's percentage of consolidated net sales, were as follows:

	Fiscal quarter ended								Two fiscal quarters ended
(dollars in thousands)	June 30, 2018		% of Total		July 1, 2017		% of Total		June 30, 2018		% of Total		July 1, 2017		% of Total
Net sales:
U.S. Retail	$	402,021	57.7	%	$	391,457	56.6	%	$	785,762	54.1	%	$	755,299	53.0	%
U.S. Wholesale	209,476		30.1	%	217,710		31.5	%	490,309		33.8	%	510,265		35.8	%
International	84,700		12.2	%	82,584		11.9	%	175,912		12.1	%	159,014		11.2	%
Total net sales	$	696,197	100.0	%	$	691,751	100.0	%	$	1,451,983	100.0	%	$	1,424,578	100.0	%

Note: Percentages may not be additive due to rounding.

U.S. RETAIL SALES

Store Count Data for Company-Operated Retail Stores in our U.S. Retail segment

	U.S. Retail Stores
Store count at December 30, 2017	830
Openings	23
Closings	(27	)
Store count at June 30, 2018	826
Approximate store count projections for all of fiscal 2018:
Store count at December 30, 2017	830
Openings	60
Closings	(42	)
Projected store count at December 29, 2018	848

Comparable Net Sales for our U.S. Retail segment

Comparable retail net sales increased 0.9% during the second quarter and 1.9% during the first two quarters of fiscal 2018 compared to the corresponding periods in fiscal 2017 primarily due to eCommerce sales growth, partially offset by a decline in comparable retail store net sales.

Sales Results

U.S. Retail segment net sales increased approximately $10.6 million, or 2.7%, in the second quarter of fiscal 2018 to $402.0 million from $391.5 million in the second quarter of fiscal 2017. This increase in net sales primarily reflected a/an:

• Increase of $18.1 million from eCommerce sales;

• Increase of $13.9 million from new retail stores that are not yet comparable;

• Decrease of $13.8 million in comparable retail store sales as a result of lower traffic; and

36

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

• Decrease of $7.5 million due to the effect of store closings.

U.S. Retail segment net sales increased$30.5 million, or 4.0%, in the first two quarters of fiscal 2018 to $785.8 million from $755.3 million in the first two quarters of fiscal 2017. This increase in net sales primarily reflected a/an:

• Increase of $30.2 million from eCommerce sales;

• Increase of $29.8 million from new retail stores that are not yet comparable;

• Decrease of $14.7 million in comparable retail store sales as a result of lower traffic; and

• Decrease of $14.4 million due to the effect of store closings.

U.S. WHOLESALE SALES

U.S. Wholesale segment net sales decreased approximately $8.2 million, or 3.8%, in the second quarter of fiscal 2018 to $209.5 million from $217.7 million in the second quarter of fiscal 2017. This decline reflected a 0.8% decrease in the number of units shipped and a 3.0% decrease in the average price per unit, primarily as a result of reduced demand due to customer bankruptcies.

U.S. Wholesale segment net sales decreased$20.0 million, or 3.9%, in the first two quarters of fiscal 2018 to $490.3 million from $510.3 million in the first two quarters of fiscal 2017. This decline reflected a 4.6% decrease in the number of units shipped which was primarily the result of reduced demand due to customer bankruptcies, partially offset by a 0.7% increase in the average price per unit and contributions from the Skip Hop acquisition that occurred during the first quarter of fiscal 2017.

INTERNATIONAL SALES

International segment net sales increased approximately $2.1 million, or 2.6%, in the second quarter of fiscal 2018 to $84.7 million from $82.6 million in the second quarter of fiscal 2017. Changes in foreign currency exchange rates used for translation had a favorable impact on International segment net sales of approximately $2.6 million in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017.

The $2.1 millionincrease in net sales in our International segment primarily reflected a/an:

• Increase of $4.0 million related to the contribution from our former licensee in Mexico that was acquired in the third fiscal quarter of 2017;

• Increase of $3.2 million from our company-operated retail stores in Canada; and

• Decrease of $4.5 million from international wholesale customers across various markets.

International segment net sales increased$16.9 million, or 10.6%, in the first two quarters of fiscal 2018 to $175.9 million from $159.0 million in the first two quarters of fiscal 2017. Changes in foreign currency exchange rates, primarily between the U.S. dollar and the Canadian dollar, had a favorable impact on International segment net sales of approximately $5.4 million in the first two quarters of fiscal 2018 compared to the first two quarters of fiscal 2017.

The $16.9 millionincrease in net sales in our International segment primarily reflected a/an:

• Increase of $16.4 million related to business acquisitions;

• Increase of $8.5 million from our company-operated retail stores in Canada; and

• Decrease of $7.0 million from international wholesale customers across various markets;

Compared to the second quarter of fiscal 2017, our Canadian comparable retail sales decreased 1.2% in the second quarter of fiscal 2018. Compared to the first two quarters of fiscal 2017, our Canadian total retail comparable sales increased 0.9% in the first two quarters of fiscal 2018.

37

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Store Count Data for Company-Operated Retail Stores in our International Segment

	Canada Retail Stores	Mexico Retail Stores
Store count at December 30, 2017	179	41
Openings	2	1
Closings	—	—
Store count at June 30, 2018	181	42
Approximate store count projections for all of fiscal 2018:
Store count at December 30, 2017	179	41
Openings	8	3
Closings	—	—
Projected store count at December 29, 2018	187	44

GROSS MARGIN AND GROSS PROFIT

Our consolidated gross margin increased from 43.8% in the second quarter of fiscal 2017 to 44.5% in the second quarter of fiscal 2018. Our consolidated gross profit increased$6.7 million, or 2.2%, to $310.0 million in the second quarter of fiscal 2018 from $303.2 million in the second quarter of fiscal 2017. These increases were primarily due to favorable product costs and increased sales in higher margin retail channels, partially offset by lower margins in our wholesale channels due to customer mix.

Our consolidated gross margin increased from 43.4% in the first two quarters of fiscal 2017 to 44.2% for the first two quarters of fiscal 2018. Our consolidated gross profit increased$23.5 million, or 3.8%, to $642.4 million in the first two quarters of fiscal 2018 from $618.9 million in the first two quarters of fiscal 2017. These increases were primarily due to favorable product costs and increased sales in higher margin retail channels, partially offset by lower margins in our wholesale channels due to customer mix.

We include distribution costs in selling, general, and administrative ("SG&A") expenses. Accordingly, our gross margin and gross profit may not be comparable to other entities that include such distribution costs in their cost of goods sold.

ROYALTY INCOME

We license the use of our Carter’s, Just One You, Child of Mine, OshKosh B’gosh, OshKosh, Genuine Kids from OshKosh, Baby B'gosh, Simple Joys, and Precious Firsts brand names. 

Royalty income from these brands for the second quarter of fiscal 2018decreased$0.9 million, or 7.6%, to $10.4 million from $11.2 million in the second quarter of fiscal 2017. The decrease was primarily attributable to insourcing certain formerly licensed products and the absence of royalty income from our former Mexico licensee that we acquired in the third fiscal quarter of 2017.

Royalty income from these brands for the first two quarters of fiscal 2018decreased$3.4 million, or 15.7%, to $18.3 million from $21.8 million in the first two quarters of fiscal 2017. The decrease was attributable to same reasons discussed above.

SELLING, GENERAL, AND ADMINISTRATIVE ("SG&A") EXPENSES

38

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Consolidated SG&A expenses in the second quarter of fiscal 2018increased$13.2 million, or 5.3%, to $263.3 million from $250.1 million in the second quarter of fiscal 2017. As a percentage of net sales, SG&A expenses increased from 36.2% in the second quarter of fiscal 2017 to 37.8% in the second quarter of fiscal 2018.

The increases in SG&A expenses, as a percentage of net sales, in the second quarter of fiscal 2018 primarily reflected a:

• $5.9 million increase in expenses related to eCommerce operations, including fulfillment costs, as a result of growth and improved service levels;

• $3.6 million increase in expenses related to marketing and brand management;

• $2.0 million in expenses related to our former Mexico licensee, that we acquired in the third fiscal quarter of 2017;

• $1.6 million increase in expenses related to distribution;

• $1.4 million increase in expenses related to Canada retail store operations;

• $1.1 million increase in expenses related to information system upgrades;

• $1.6 million decrease in expenses related to U.S. retail store operations; and

• $1.0 million decrease in performance based compensation expenses.

Consolidated SG&A expenses in the first two quarters of fiscal 2018increased$45.6 million, or 9.2%, to $543.5 million from $497.9 million in the first two quarters of fiscal 2017. As a percentage of net sales, SG&A expenses increased from 35.0% in the first two quarters of fiscal 2017 to 37.4% in the first two quarters of fiscal 2018.

The increases in SG&A expenses, as a percentage of net sales, in the first two quarters of fiscal 2018 primarily reflected a:

• $12.8 million in expenses related to a customer bankruptcy in the first quarter of fiscal 2018;

• $10.9 million increase in expenses related to eCommerce operations, including fulfillment costs, as a result of growth and improved service levels;

• $6.7 million increase in expenses related to marketing and brand management;

• $5.9 million increase in expenses related to acquired businesses;

• $4.5 million increase in expenses related to distribution and freight;

• $3.0 million increase in expenses related to Canada retail store operations;

• $1.5 million increase in employee benefit costs; and

• $2.5 million decrease in expenses related to U.S. retail store operations.

OPERATING INCOME

Consolidated operating income decreased$7.3 million, or 11.4%, to $57.0 million in the second quarter of fiscal 2018 from $64.3 million in the second quarter of fiscal 2017. Consolidated operating income decreased$25.5 million, or 17.9%, to $117.3 million in the first two quarters of fiscal 2018 from $142.8 million in the first two quarters of fiscal 2017.

Consolidated operating margin decreased from 9.3% in the second quarter of fiscal 2017 to 8.2% in the second quarter of fiscal 2018. Consolidated operating margin decreased from 10.0% in the first two quarters of fiscal 2017 to 8.1% in the first two quarters of fiscal 2018.

The table below summarizes the changes in each of our segment's operating results and unallocated corporate expenses between the fiscal periods indicated:

39

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

(dollars in thousands)	U.S. Retail			U.S. Wholesale			International			Unallocated Corporate Expenses			Total
Operating income (loss) for the second quarter of fiscal 2017	$	42,133		$	35,805		$	7,597		$	(21,224	)	$	64,311
Favorable (unfavorable) change in the second quarter of fiscal 2018
Gross profit	12,771			(7,210		)	1,064			86			6,711
Royalty income	(470		)	(183		)	(202		)	—			(855		)
SG&A expenses	(9,006		)	1,926			(4,147		)	(1,970		)	(13,197		)
Operating income (loss) for the second quarter of fiscal 2018	$	45,428		$	30,338		$	4,312		$	(23,108	)	$	56,970

(dollars in thousands)	U.S. Retail			U.S. Wholesale		International		Unallocated Corporate Expenses		Total
Operating income (loss) for the first two quarters of fiscal 2017	$	71,922		105,501		11,282		(45,938	)	$	142,767
Favorable (unfavorable) change in the first two quarters of fiscal 2018
Gross profit	25,783			(10,844	)	8,461		96		23,496
Royalty income	(2,153		)	(703	)	(563	)	—		(3,419		)
SG&A expenses	(20,605		)	(13,344	)	(11,107	)	(509	)	(45,565		)
Operating income (loss) for the first two quarters of fiscal 2018	$	74,947		80,610		8,073		(46,351	)	$	117,279

The following table presents changes in the operating margin for each of our three operating segments expressed in basis points ("bps") relative to net sales. The first table presents the changes between the second quarter of fiscal 2017 and the second quarter of fiscal 2018. The second table presents the changes between the first two quarters of fiscal 2017 and the first two quarters of fiscal 2018.

	U.S. Retail		U.S. Wholesale		International
Operating margin for the second quarter of fiscal 2017	10.8	%	16.4	%	9.2	%
Favorable (unfavorable) bps change in the second quarter of fiscal 2018
Gross profit	180 bps		(230) bps		10 bps
Royalty income	(10) bps		—		(30) bps
SG&A expenses	(120) bps		40 bps		(390) bps
Operating margin for the second quarter of fiscal 2018	11.3	%	14.5	%	5.1	%
	(a)		(b)		(c)

40

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

	U.S. Retail		U.S. Wholesale		International
Operating margin for the first two quarters of fiscal 2017	9.5	%	20.7	%	7.1	%
Favorable (unfavorable) bps change in the first two quarters of fiscal 2018
Gross profit	120 bps		(100) bps		40 bps
Royalty income	(30) bps		(10) bps		(40) bps
SG&A expenses	(90) bps		(320) bps		(250) bps
Operating margin for the first two quarters of fiscal 2018	9.5	%	16.4	%	4.6	%
	(aa)		(bb)		(cc)

(a) U.S. Retail segment operating income increased by $3.3 million, or 7.8%, to $45.4 million in the second quarter of fiscal 2018 from $42.1 million in the second quarter of fiscal 2017. This segment's operating margin increased50 bps from 10.8% in the second quarter of fiscal 2017 to 11.3% in the second quarter of fiscal 2018. The primary drivers of the change in operating margin were a:

• 180 bps increase in gross profit, primarily due to lower product costs and improved price realization;

• 120 bps increase in SG&A expenses, primarily due to a:

• 150 bps increase in expenses related to eCommerce initiatives;

• 50 bps increase in marketing and brand management expenses;

• 10 bps increase in expenses associated with distribution; and

• 70 bps decrease in expenses associated with retail stores.

(aa) U.S. Retail segment operating income increased by $3.0 million, or 4.2%, to $74.9 million in the first two quarters of fiscal 2018 from $71.9 million in the first two quarters of fiscal 2017. This segment's operating margin was 9.5% in both the first two quarters of fiscal 2017 and first two quarters of fiscal 2018. The primary drivers in the operating margin were a:

• 120 bps increase in gross profit, primarily due to lower product costs and improved price realization;

• 30 bps decrease in royalty income due to a reduction in the number of licensees;

• 90 bps increase in SG&A expenses, primarily due to a:

• 130 bps increase in expenses related to eCommerce initiatives;

• 50 bps increase in marketing and brand management expenses;

• 20 bps increase in expenses associated with distribution; and

• 100 bps decrease in expenses associated with retail stores.

(b) U.S. Wholesale segment operating income in the second quarter of fiscal 2018decreased$5.5 million, or 15.3%, to $30.3 million from $35.8 million in the second quarter of fiscal 2017. The segment's operating margin decreased190 bps from 16.4% in the second quarter of fiscal 2017 to 14.5% in the second quarter of fiscal 2018. The primary drivers of the change in operating margin were a:

• 230 bps decrease in gross profit, primarily due to customer sales mix and higher provisions for inventory;

• 40 bps decrease in SG&A expenses, primarily due to a decrease in provisions for accounts receivable, partially offset by selling and distribution costs.

(bb) U.S. Wholesale segment operating income in the first two quarters of fiscal 2018decreased$24.9 million or 23.6%, to $80.6 million from $105.5 million in the first two quarters of fiscal 2017. The segment's operating margin decreased430 bps from 20.7% in the first two quarters of fiscal 2017 to 16.4% in the first two quarters of fiscal 2018. The primary drivers of the change in operating margin were a:

• 100 bps decrease in gross profit, primarily due to customer sales mix and higher provisions for inventory;

41

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

• 320 bps increase in SG&A expenses, primarily due to a:

• 250 bps increase in provision for accounts receivable due to a customer bankruptcy;

• 30 bps increase in distribution and freight expenses; and

• 20 bps increase in marketing and brand management expenses.

(c) International segment operating income decreased by $3.3 million, or 43.2%, to $4.3 million in the second quarter of fiscal 2018 from $7.6 million in the second quarter of 2017. This segment's operating margin decreased410 bps from 9.2% in the second quarter of fiscal 2017 to 5.1% in the second quarter of fiscal 2018. The primary drivers of the change in operating margin were a:

• 30 bps decrease in royalty income due to a reduction in the number of licensees that pay royalties;

• 390 bps increase in SG&A, primarily due to higher new store expenses and distribution costs.

(cc) International segment operating income decreased by $3.2 million, or 28.4%, to $8.1 million in the first two quarters of fiscal 2018 from $11.3 million in the first two quarters of 2017. This segment's operating margin decreased250 bps from 7.1% in the first two quarters of fiscal 2017 to 4.6% in the first two quarters of fiscal 2018. The primary drivers of the change in operating margin were a/an:

• 40 bps increase in gross profit primarily due to favorable product costs;

• 40 bps decrease in royalty income due to a reduction in the number of licensees that pay royalties;

• 250 bps increase in SG&A expenses, primarily due to a:

• 340 bps increase in selling, distribution, and freight costs;

• 50 bps increase in marketing and brand management expenses;

• 100 bps decrease in expenses associated with eCommerce; and

• 40 bps decrease in expenses associated with retail stores.

Unallocated Corporate Expenses

Unallocated corporate expenses increased by $1.9 million, or 8.9%, in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017. Unallocated corporate expenses, as a percentage of consolidated net sales, increased from 3.1% in the second quarter of fiscal 2017 to 3.3% in the second quarter of fiscal 2018.

Unallocated corporate expenses increased by $0.4 million, or 0.9%, in the first two quarters of fiscal 2018 compared to the first two quarters of fiscal 2017, primarily due to increased employee benefit costs. Unallocated corporate expenses, as a percentage of consolidated net sales, was 3.2% in the first two quarters of fiscal 2017 and the first two quarters of fiscal 2018.

INTEREST EXPENSE

Interest expense in the second quarters of fiscal 2018 and 2017 was approximately $7.9 million and $7.2 million, respectively. Weighted-average borrowings for the second quarter of fiscal 2018 were approximately $616.9 million with an effective interest rate of 5.04%, compared to weighted-average borrowings for the second quarter of fiscal 2017 of $595.7 million with an effective interest rate of 4.69%. The increase in weighted-average borrowings during the second quarter of fiscal 2018 was attributable to additional net borrowings under our secured revolving credit facility.

Interest expense in the first two quarters of fiscal 2018 and 2017 was approximately $15.9 million and $14.3 million, respectively. Weighted-average borrowings over the course of the first two quarters of fiscal 2018 were approximately $634.9 million with an effective interest rate of 4.92%, compared to weighted-average borrowings for the first two quarters of fiscal 2017 of $602.1 million with an effective interest rate of 4.62%. The increase in weighted-average borrowings during the first two quarters of fiscal 2018 was attributable to additional net borrowings under our secured revolving credit facility.

The increases in the weighted-average interest rate for the second quarter and first two quarters of fiscal 2018 compared to the second quarter and first two quarters of fiscal 2017 was due primarily to a higher LIBOR rate for the outstanding borrowings on our variable-rate secured revolving credit facility during the 2018 period.

42

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

On our consolidated balance sheet, unamortized debt issuance costs associated with our senior notes are presented as a direct reduction in the carrying value of the associated debt liability for all periods presented. See Note 8, Long-term Debt.

OTHER (INCOME) EXPENSE, NET

Other income, net is comprised primarily of gains and losses on foreign currency transactions and, if utilized during a reporting period, gains and losses on foreign currency forward contracts.

INCOME TAXES

Our consolidated effective income tax rate for the second quarter of fiscal 2018 was 22.8% compared to 34.5% for the second quarter of fiscal 2017. Our consolidated effective income tax rate for the first two quarters of fiscal 2018 was 21.2% compared to 34.8% for the first two quarters of fiscal 2017. The lower effective rate in fiscal 2018 was due mainly to a lower corporate income tax rate and other changes in U.S. tax law enacted in fiscal 2017.

For full year fiscal 2018, we estimate our annual consolidated effective income tax rate will be approximately 22%.

NET INCOME

Our consolidated net income for the second quarter of fiscal 2018decreased by $0.5 million, or 1.4%, to $37.3 million compared to $37.8 million in the second quarter of fiscal 2017. Our consolidated net income for the first two quarters of fiscal 2018decreased by $4.7 million, or 5.5%, to $79.7 million compared to $84.4 million in the first two quarters of fiscal 2017. These changes were due to the factors previously discussed.

FINANCIAL CONDITION, CAPITAL RESOURCES, AND LIQUIDITY

Our ongoing cash needs are primarily for working capital and capital expenditures. We expect that our primary sources of liquidity will continue to be cash and cash equivalents on hand, cash flow from operations, and borrowings available under our secured revolving credit facility. We expect that these sources and access to capital markets will fund our ongoing requirements for the foreseeable future. Further, we do not expect current economic conditions to prevent us from meeting our cash requirements. These sources of liquidity may be affected by events described in our risk factors, as further discussed under the heading "Risk Factors" in our most recently filed Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time.

As of June 30, 2018, the Company had approximately $183.2 million of cash and cash equivalents in major financial institutions, including approximately $69.7 million in financial institutions located outside of the United States. We maintain cash deposits with major financial institutions that exceed the insurance coverage limits provided by the Federal Deposit Insurance Corporation in the United States and by similar insurers for deposits located outside the United States.  To mitigate this risk, we utilize a policy of allocating cash deposits among major financial institutions that have been evaluated by us and third-party rating agencies.

BALANCE SHEET

Net accounts receivable at June 30, 2018 were $152.5 million compared to $165.2 million at July 1, 2017 and $240.6 million at December 30, 2017. The overall decrease of $12.7 million, or 7.7%, at June 30, 2018 compared to July 1, 2017 was a result of lower demand due to customer bankruptcies. Due to the seasonal nature of our operations, the net accounts receivable balance at June 30, 2018 is not comparable to the net accounts receivable balance at December 30, 2017.

Inventories at June 30, 2018 were $663.3 million compared to $610.4 million at July 1, 2017 and $548.7 million at December 30, 2017. The increase of $52.8 million, or 8.7%, at June 30, 2018 compared to July 1, 2017 primarily reflecting business growth. Due to the seasonal nature of our operations, the inventories balance at June 30, 2018 is not comparable to the inventories balance at December 30, 2017.

43

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

CASH FLOW

Net cash provided by operating activities for the first two quarters of fiscal 2018 was $103.1 million compared to net cash provided by operating activities of $107.3 million in the first two quarters of fiscal 2017. This decrease in operating cash flow for the 2018 period was due primarily to lower net income and the timing of working capital changes.

Net cash used in investing activities was $31.3 million for the first two quarters of fiscal 2018 compared to $178.0 million in the first two quarters of fiscal 2017. Cash used for investing activities during the first two quarters of fiscal 2017 included a net amount of $143.7 million for the acquisition of Skip Hop. Capital expenditures were $31.8 million in the first two quarters of fiscal 2018 compared to $34.3 million in the first two quarters of fiscal 2017, reflecting fewer new store openings in the 2018 fiscal period. Capital spending in the first two quarters of fiscal 2018 included approximately $19.2 million for our U.S. and international retail store openings and re-modelings, $6.9 million for information technology initiatives, $4.1 million for distribution and office facilities, and $0.8 million for wholesale fixtures.

We plan to invest approximately $85 million in total capital expenditures for all of fiscal 2018, primarily for our U.S. and international retail store openings and re-modelings, information technology initiatives, and distribution facilities.

Net cash used in financing activities was $65.7 million in the first two quarters of fiscal 2018 compared to $55.5 million in the first two quarters of fiscal 2017. The net increase in cash used for the 2018 period primarily reflected increases in debt payments and higher dividend payments.

SECURED REVOLVING CREDIT FACILITY

Our amended and restated secured revolving credit facility provides liquidity that can be used as needed for ongoing working capital purposes and general corporate purposes. This facility provides for (i) a $650 million U.S. dollar revolving facility (including a $100 million sub-limit for letters of credit and a swing line sub-limit of $70 million) available for borrowings in U.S. dollars and (ii) a $100 million multicurrency revolving facility (including a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million) available for borrowings denominated in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. Our secured revolving credit facility also includes the opportunity for incremental facilities in an aggregate amount not to exceed $425 million (with the aggregate U.S. dollar amount not to exceed $350 million and the aggregate multicurrency amount not to exceed $75 million). The U.S. dollar incremental facility can increase to an unlimited borrowing amount so long as the consolidated first lien leverage ratio (as defined) does not exceed 2.25:1.00.

Under the secured credit facility, our wholly-owned operating subsidiary, The William Carter Company ("TWCC"), and its domestic subsidiaries have granted to the collateral agent, for the benefit of the lenders, valid and perfected first priority security interests in substantially all of their present and future assets, excluding certain customary exceptions, and guarantee the obligations of the borrowers. In addition, The Genuine Canadian Corp., as Canadian borrower, and Carter’s Holdings B.V., as Dutch borrower, have each guaranteed the obligations of the other.

Our secured revolving credit facility matures August 25, 2022.

As of June 30, 2018, we had $286.0 million in outstanding borrowings under our secured revolving credit facility, exclusive of $4.5 million of outstanding letters of credit. As of June 30, 2018, approximately $459.5 million was available for future borrowing. All outstanding borrowings under our secured revolving credit facility are classified as non-current liabilities on our consolidated balance sheet because of the contractual repayment terms under the credit facility. However, these repayment terms also allow us to repay some or all of the outstanding borrowings at any time.

The interest rate margins applicable to our secured revolving credit facility are presently 1.375% for LIBOR 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 June 30, 2018, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which resulted in a weighted-average borrowing rate of 3.38%. There were no Canadian dollar borrowings during the second quarter of fiscal 2018 or the second quarter of fiscal 2017.

44

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

As of June 30, 2018, we were in compliance with the financial and other covenants under our secured revolving credit facility.

SENIOR NOTES

As of June 30, 2018, TWCC had $400.0 million principal amount of senior notes outstanding, bearing interest at a fixed rate of 5.25% per annum, and maturing on August 15, 2021. On our consolidated balance sheet, the $400.0 million outstanding is reported net of $3.2 million, $3.7 million and $4.2 million unamortized issuance-related debt costs at June 30, 2018, December 30, 2017 and July 1, 2017, respectively. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC.

SHARE REPURCHASES

In the first two quarters of fiscal 2018, the Company repurchased and retired 820,627 shares in open market transactions for approximately $89.1 million at an average price of $108.57 per share. In the first two quarters of fiscal 2017, the Company repurchased and retired 1,131,409 shares in open market transactions for approximately $98.2 million, at an average price of $86.82 per share.

The total remaining capacity under all remaining repurchase authorizations as of June 30, 2018 was approximately $496.5 million. Future repurchases may be made in the open market or in privately negotiated transactions, with the level and timing of activity being at management's discretion depending on market conditions, share price, other investment priorities, and other factors. The share repurchase authorizations have no expiration date.

DIVIDENDS

In the first and second quarters of fiscal 2018, we paid quarterly cash dividends of $0.45 per share in each quarter. In the first and second quarters of fiscal 2017, we paid quarterly cash dividends of $0.37 per share in each quarter. Future declarations of quarterly dividends and the establishment of future record and payment dates are at the discretion of our Board of Directors and will be based on a number of factors, including our future financial performance and other investment priorities.

As disclosed in our most recent Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017, provisions in our secured revolving credit facility and indenture governing our senior notes could have the effect of restricting our ability to pay future cash dividends on or make future repurchases of our common stock.

SEASONALITY

We experience seasonal fluctuations in our sales and profitability due to the timing of certain holidays and key retail shopping periods, which generally have resulted in declines in our net sales and gross profit in the first half of our fiscal year versus the second half. Accordingly, our results of operations during any interim period during the fiscal year may not be indicative of the results we expect for the full fiscal year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our critical accounting policies and estimates are described under the heading "Critical Accounting Policies and Estimates" in Item 7 of our most recent Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017. Our critical accounting policies and estimates are those policies that require management's most difficult and subjective judgments and may

45

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

result in the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include: revenue recognition and accounts receivable allowance, inventory, goodwill and tradename, accrued expenses, loss contingencies, accounting for income taxes, foreign currency, employee benefit plans, and stock-based compensation arrangements. There have been no material changes in these critical accounting policies and estimates from those described in our most recent Annual Report on Form 10-K, except for the effects that the adoption of ASC 606, Revenue from Contracts with Customers,had on our policies as disclosed under the header "Adoption of New Accounting Pronouncements At the Beginning of Fiscal 2018" in Note 2, Basis of Presentation, to the accompanying unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Additionally, information related to the pending adoption of recently issued accounting standards is provided in Note 16, Pending Adoption of Recent Accounting Pronouncements, to the accompanying unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

46

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency and Interest Rate Risks

In the operation of our business, we have market risk exposures including those related to foreign currency and interest rates. We employ various strategies to attempt to minimize our exposure to these risks.

Currency Risk

We contract for production with third parties, primarily in Asia. While these contracts are stated in U.S. dollars, there can be no assurance that the cost for the future production of our products will not be affected by exchange rate fluctuations between the U.S. dollar and the local currencies of these contractors. We cannot predict the impact that future currency fluctuations may have on our financial position, results of operations, or cash flows in future periods.

The financial statements of our foreign subsidiaries that are denominated in functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses. Gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars are included in accumulated other comprehensive income (loss).

Fluctuations in currency exchange rates, primarily between the U.S. dollar and the currencies of Canada, Mexico, China, Hong Kong, and the United Kingdom, may affect our results of operations, financial position, and cash flows. Transactions by certain foreign subsidiaries may be denominated in currencies other than that entity's functional currency. Foreign currency transaction gains and losses also include the impact of non-current intercompany loans with foreign subsidiaries that are marked to market. In our statement of operations, these gains and losses are recorded within Other income/expense, net.

As part of our overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, some of our foreign operations may use currency forward contracts to hedge purchases that are made in U.S. dollars, primarily for inventory purchases. As part of this strategy, we primarily use foreign currency forward exchange contracts that have maturities of less than 12 months to provide continuing coverage throughout the hedging period.

Interest Rate Risk

Our operating results are subject to risk from interest rate fluctuations on our secured revolving credit facility, which carries variable interest rates. Our variable rate borrowings outstanding as of June 30, 2018 were $286.0 million. An increase or decrease of 1% in the effective interest rate on that amount would increase or decrease our annual pre-tax interest expense by approximately $2.9 million.

Other Risks

We enter into various purchase order commitments with our suppliers. We generally can cancel these arrangements, although in some instances we may be subject to a termination charge reflecting a percentage of work performed prior to cancellation.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of June 30, 2018.

47

Changes in Internal Control over Financial Reporting

The principal executive officer and principal financial officer also conducted an evaluation of the Company’s internal control

over financial reporting (“Internal Control”) to determine whether any changes in Internal Control occurred during the fiscal

quarter ended June 30, 2018 that have materially affected, or which are reasonably likely to materially affect, Internal

Control.

There were no changes in the Company’s Internal Control that materially affected, or were likely to materially affect, such

control over financial reporting during the fiscal quarter ended June 30, 2018.

PART II

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to various claims and pending or threatened lawsuits in the normal course of our business. The Company is not currently a party to any legal proceedings that it believes would have a material adverse effect on its financial position, results of operations, or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in our Form 10-K for the 2017 fiscal year ended December 30, 2017.

48

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchases

The following table provides information about share repurchases during the second quarter of fiscal 2018:

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)
April 1, 2018 through April 28, 2018	228,414	$105.07	228,414	$536,448,250
April 29, 2018 through May 26, 2018	208,769	$105.24	208,000	$514,559,257
May 27, 2018 through June 30, 2018	162,900	$110.56	162,900	$496,548,806
Total	600,083		599,314

(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 769 shares surrendered between April 1, 2018 and June 30, 2018.

(2) Share purchases during the second quarter of fiscal 2018 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.

49

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

N/A

ITEM 4. MINE SAFETY DISCLOSURES

N/A

ITEM 5. OTHER INFORMATION

N/A

ITEM 6. EXHIBITS

Exhibit Number Description of Exhibits

3.1	Certificate of Incorporation of Carter's, Inc., as amended on May 22, 2017 (incorporated by reference to Exhibit 3.1 of Carter's, Inc.'s Current Report on Form 8-K filed on May 23, 2017).
3.2	Amended and Restated By-Laws of Carter's, Inc. (incorporated by reference to Exhibit 3.2 of Carter's, Inc.'s Current Report on Form 8-K filed on May 23, 2017).
31.1	Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification.
31.2	Rule 13a-15(e)/15d-15(e) and 13a-15(f)/15d-15(f) Certification.
32	Section 1350 Certification.
101	Interactive Data File.

50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

CARTER’S, INC.

July 26, 2018	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer
	(Principal Executive Officer)

July 26, 2018	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

51

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael D. Casey, certify that:

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:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 26, 2018	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard F. Westenberger, certify that:

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:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 26, 2018	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

Each of the undersigned in the capacity indicated hereby certifies that, to his knowledge, this Report on Form 10-Q for the fiscal quarter ended June 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of Carter’s, Inc.

July 26, 2018	/s/ MICHAEL D. CASEY
	Michael D. Casey
	Chief Executive Officer

July 26, 2018	/s/ RICHARD F. WESTENBERGER
	Richard F. Westenberger
	Chief Financial Officer

The foregoing certifications are being furnished solely pursuant to 18 U.S.C. § 1350 and are not being filed as part of the Report on Form 10-Q or as a separate disclosure document.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 20, 2018
Document Information [Abstract]
Entity Registrant Name	CARTERS INC
Entity Central Index Key	0001060822
Current Fiscal Year End Date	--12-29
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		46,470,329

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Current assets:
Cash and cash equivalents	$ 183,202	$ 178,494	$ 173,564
Accounts receivable, net	152,517	240,561	165,183
Finished goods inventories	663,263	548,722	610,423
Prepaid expenses and other current assets	51,955	52,935	46,402
Total current assets	1,050,937	1,020,712	995,572
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	364,223	377,924	382,472
Tradenames, net	365,817	365,551	365,639
Goodwill	228,555	230,424	231,709
Customer relationships, net	46,222	47,996	35,096
Other assets	27,775	28,435	23,246
Total assets	2,083,529	2,071,042	2,033,734
Current liabilities:
Accounts payable	216,931	182,114	217,340
Other current liabilities	95,685	149,134	96,460
Total current liabilities	312,616	331,248	313,800
Long-term debt, net	682,778	617,306	661,846
Deferred income taxes	85,755	84,944	133,273
Other long-term liabilities	192,051	180,128	174,867
Total liabilities	1,273,200	1,213,626	1,283,786
Commitments and contingencies - Note 14
Stockholders' equity:
Preferred stock; par value $.01 per share; 100,000 shares authorized; none issued or outstanding at June 30, 2018, December 30, 2017, and July 1, 2017	0	0	0
Common stock, voting; par value $.01 per share; 150,000,000 shares authorized; 46,565,443, 47,178,346 and 47,971,577 shares issued and outstanding at June 30, 2018, December 30, 2017 and July 1, 2017, respectively	466	472	480
Accumulated other comprehensive loss	(35,532)	(29,093)	(30,653)
Retained earnings	845,395	886,037	780,121
Total stockholders' equity	810,329	857,416	749,948
Total liabilities and stockholders' equity	$ 2,083,529	$ 2,071,042	$ 2,033,734

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 430,834	$ 404,173	$ 384,881
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	46,565,443	47,178,346	47,971,577
Common stock voting; shares outstanding	46,565,443	47,178,346	47,971,577

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Income Statement [Abstract]
Net sales	$ 696,197	$ 691,751	$ 1,451,983	$ 1,424,578
Cost of goods sold	386,239	388,504	809,548	805,639
Gross profit	309,958	303,247	642,435	618,939
Royalty income, net	10,355	11,210	18,349	21,768
Selling, general, and administrative expenses	263,343	250,146	543,505	497,940
Operating income	56,970	64,311	117,279	142,767
Interest expense	7,937	7,194	15,922	14,298
Interest income	(225)	(79)	(391)	(219)
Other expense (income), net	975	(544)	593	(765)
Income before income taxes	48,283	57,740	101,155	129,453
Provision for income taxes	11,015	19,947	21,418	45,065
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Basic net income per common share (USD per share)	$ 0.80	$ 0.78	$ 1.70	$ 1.74
Diluted net income per common share (USD per share)	0.79	0.77	1.68	1.72
Dividend declared per common share (USD per share)	$ 0.45	$ 0.37	$ 0.90	$ 0.74

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Other comprehensive income:
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	$ 32,591	$ 40,933	$ 73,298	$ 88,475

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2018 - 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	47,178,346
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options	$ 7,376	$ 2	7,374	0	0
Exercise of stock options (in shares)		142,087
Withholdings from vesting of restricted stock	(6,667)	$ (1)	(6,666)	0	0
Withholdings from vesting of restricted stock (in shares)		(55,933)
Restricted stock activity	0	$ 1	(1)	0	0
Restricted stock activity (in shares)		121,570
Stock-based compensation expense	10,266	$ 0	10,266	0	0
Repurchase of common stock	(89,093)	$ (8)	(10,973)	0	(78,112)
Repurchase of common stock (in shares)		(820,627)
Cash dividends declared and paid	(42,267)	$ 0	0	0	(42,267)
Comprehensive income	73,298	0	0	(6,439)	79,737
Balance at Jun. 30, 2018	$ 810,329	$ 466	$ 0	$ (35,532)	$ 845,395
Balance (in shares) at Jun. 30, 2018	46,565,443	46,565,443

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Cash flows from operating activities:
Net income	$ 79,737	$ 84,388
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant, and equipment	41,989	39,705
Amortization of intangible assets	1,845	892
Amortization of debt issuance costs	865	749
Stock-based compensation expense	10,266	9,646
Unrealized foreign currency exchange loss (gain), net	202	(555)
Provisions for doubtful accounts receivable from customers	11,511	605
Loss on disposal of property, plant, and equipment, net of recoveries	478	221
Deferred income taxes	1,400	3,109
Effect of changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	76,364	56,610
Finished goods inventories	(117,469)	(91,446)
Prepaid expenses and other assets	129	(13,151)
Accounts payable and other liabilities	(4,254)	16,560
Net cash provided by operating activities	103,063	107,333
Cash flows from investing activities:
Capital expenditures	(31,750)	(34,276)
Acquisitions of businesses, net of cash acquired		(143,704)
Acquisitions of businesses, net of cash acquired	96
Disposals and recoveries from property, plant, and equipment	373	0
Net cash used in investing activities	(31,281)	(177,980)
Cash flows from financing activities:
Borrowings under secured revolving credit facility	150,000	100,000
Payments on secured revolving credit facility	(85,000)	(18,965)
Repurchases of common stock	(89,093)	(98,236)
Dividends paid	(42,267)	(35,831)
Withholdings from vestings of restricted stock	(6,667)	(5,590)
Proceeds from exercises of stock options	7,376	3,122
Net cash used in financing activities	(65,651)	(55,500)
Effect of exchange rate changes on cash and cash equivalents	(1,423)	353
Net increase (decrease) in cash and cash equivalents	4,708	(125,794)
Cash and cash equivalents, beginning of period	178,494	299,358
Cash and cash equivalents, end of period	$ 183,202	$ 173,564

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THE COMPANY

6 Months Ended

Jun. 30, 2018

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 and related products under the Carter's, Child of Mine, Just One You, Precious Firsts, 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 June 30, 2018, the Company operated 1,049 retail stores in the United States, Canada, and Mexico.

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2018

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 and two fiscal quarters ended June 30, 2018 are not necessarily indicative of the results that may be expected for the current fiscal year ending December 29, 2018.

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 30, 2017 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. As disclosed in Note 2, Basis of Presentation, and Note 3, Revenue Recognition, at the beginning of fiscal 2018 the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers,and related amendments (“ASC 606”) using the full retrospective adoption method. The full retrospective method required the Company to apply the standard to the financial statements for the period of adoption as well as to each prior reporting period presented.

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 2018.

Revenue from Contracts with Customers (ASC No. 606)

At the beginning of fiscal 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and all related amendments (“ASC 606”) using the full retrospective adoption method. Refer to Note 3, Revenue Recognition, for additional information.

The Company uses the five-step model to recognize revenue:

1) Identify the contract with the customer

2) Identity the performance obligation(s)

3) Determine the transaction price

4) Allocate the transaction price to each performance obligation if multiple obligations exist

5) Recognize the revenue as the performance obligations are satisfied

Performance Obligations

The Company identifies each distinct performance obligation to transfer goods (or bundle of goods). The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods to the customer. Other than inbound and outbound freight and shipping arrangements, the Company does not use third parties to satisfy its performance obligations in revenue arrangements with customers.

When Performance Obligations Are Satisfied

Wholesale Revenues - The Company typically transfers control upon shipment. However, in certain arrangements where the Company retains the risk of loss during shipment, satisfaction of the performance obligation occurs when the goods reach the customer.

Retail Revenues - For transactions in stores, the Company satisfies its performance obligation at point of sale when the customer takes possession of the goods and tenders payment. The redemption of loyalty points under the Company's rewards program and redemptions of gift cards may be part of a transaction. For purchases made through the Company’s eCommerce channel, revenue is recognized when the goods are physically delivered to the customer.

The Company satisfies its performance obligations with licensees over time as customers have the right to use the intellectual property over the contract period.

Significant Payment Terms

Retail customers tender a form of payment, such as cash or a credit/debit card, at point of sale. For wholesale customers and licensees, payment is due based on established terms.

Returns and Refunds

The Company establishes return provisions for retail customers. It is the Company's policy not to accept returns from wholesale customers.

Significant Judgments

Sale of Goods - The Company relies on shipping terms to determine when performance obligations are satisfied. When goods are shipped to wholesale customers “FOB Shipping Point,” control of the goods is transferred to the customer at the time of shipment if there are no remaining performance obligations. The Company recognizes the revenue once control passes to the customer. For retail transactions, no significant judgments are involved since revenue is recognized at the point of sale when tender is exchanged and the customer receives the goods.

Royalty Revenues - The Company transfers the right-to-use benefit to the licensee for the contract term and therefore the Company satisfies its performance obligation over time. Revenue recognized for each reporting period is based on the greater of: 1) the royalties owed on actual net sales by the licensee and 2) a minimum royalty guarantee, if applicable.

Transaction Price - The transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company may offer sales incentives to wholesale and retail customers, including discounts. For retail transactions, the Company has significant experience with return patterns and relies on this experience to estimate expected returns when determining the transaction price.

Standalone Selling Prices - For arrangements that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation on a relative standalone selling price basis.

Costs Incurred to Obtain a Contract - Incremental costs to obtain contracts are not material to the Company.

Policy Elections

In addition to those previously disclosed, the Company has made the following accounting policy elections and practical expedients:

Portfolio Approach - The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes - The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges - Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money - The Company's payment terms are less than one year from the transfer of goods. Therefore, the Company does not adjust promised amounts of consideration for the effects of the time value of money.

Disclosure of Remaining Performance Obligations - The Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts that are one year or less in term.

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans (ASU 2017-07)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost ("ASU 2017-07").  ASU 2017-07 changes how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer's statement of operations presents service cost arising in the current period in the same statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, are presented on the statement of operations on a line item outside (or below) operating income. ASU 2017-07 affects only the classification of certain costs on the statement of operations, not the determination of costs. Net periodic pension costs related to the Company's frozen defined benefit pension plan and post-retirement medical benefit plan were not material for the second quarter of fiscal 2018, two fiscal quarters of 2018, or prior periods. Prior period results have not been reclassified on the Company's statement of operations due to materiality.

Modifications to Share-based Compensation Awards (ASU 2017-09)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-09, Compensation-Stock Compensation Topic 718-Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies when changes to the terms and conditions of share-based payment awards must be accounted for as modifications. Entities apply the modification accounting guidance if the value, vesting conditions, or classification of an award changes. The Company has not modified any share-based payment awards. Should the Company modify share-based payment awards in the future, it will apply the provisions of ASU 2017-09.

Definition of a Business (ASU 2017-01)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 assists entities in determining if acquired assets constitute the acquisition of a business or the acquisition of assets for accounting and reporting purposes. This distinction is important because goodwill can only be recognized in an acquisition of a business. Prior to ASU 2017-01, if revenues were generated immediately before and after a transaction, the acquisition was typically considered a business. Under ASU 2017-01, entities are required to further assess the substance of the processes they acquire. Should the Company commence or complete an acquisition in future periods, it will apply the provisions of ASU 2017-01.

Statement of Cash Flows (ASU 2016-15)

At the beginning of fiscal 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). ASU 2016-15 represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that, if present, can impact classifications on the statement of cash flows. The guidance requires application using a retrospective transition method. The adoption of ASU 2016-15 only impacted the classification of certain insurance proceeds on the Company's consolidated statement of cash flows for the first two quarters of fiscal 2018.

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REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2018

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.

At the beginning of fiscal 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and related amendments ("ASC 606") using the full retrospective adoption method. Under the full retrospective method, the Company adjusted all periods in fiscal 2017 and fiscal 2016 to reflect the provisions of ASC 606, and retained earnings at January 2, 2016 (beginning of fiscal 2016) were adjusted for the cumulative effect for prior periods. Refer to the section "Revenue from Contracts with Customers (ASC No. 606)" in Note 2, Basis of Presentation, for changes to the Company's accounting policies due to the adoption of ASC 606.

ASC 606 affected the Company's retail channels as follows:

• Accelerated the recognition of breakage revenue from unredeemed gift cards, which affected net sales, gross profit, income before income taxes, and net income on the Company's statement of operations. Basic and diluted net income per share were affected by $0.01 or less for each reporting period. Related gift card liabilities and income tax liabilities were also affected.

• A portion of the estimated value of goods expected to be returned by customers were reclassified between net sales and cost of goods sold, with no net effect on gross profit, income before income taxes, or net income on the Company's statement of operations. Related reclassifications were also made between other current assets and other current liabilities on the Company's balance sheet.

The effects of retrospective adoption on the Company's consolidated Statement of Operations were as follows:

	Second Quarter			Two Fiscal Quarters			Year		Year
(dollars in thousands, except per share data)	Fiscal 2017			Fiscal 2017			Fiscal 2017		Fiscal 2016
Net sales	$	(366	)	$	(294	)	$	92	$	(637	)
Cost of goods sold	$	(156	)	$	26		$	52	$	(7	)
Income before income taxes	$	(210	)	$	(319	)	$	40	$	(630	)
Net income	$	(132	)	$	(201	)	$	84	(397		)
Basic net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	(0.01	)
Diluted net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	—

The cumulative effect to the Company’s retained earnings at January 2, 2016 was an after-tax increase of approximately $0.6 million.

The effects of adoption of ASC 606 on the Company’s consolidated balance sheet at December 30, 2017 were as follows:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	49,892	$	3,043	(1)	$	52,935
Total current assets	$	1,017,669	$	3,043		$	1,020,712
Total assets	$	2,067,999	$	3,043		$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	146,510	$	2,624	(2)	$	149,134
Total current liabilities	$	328,624	$	2,624		$	331,248
Deferred income taxes	$	84,848	$	96		$	84,944
Total liabilities	$	1,210,906	$	2,720		$	1,213,626
Retained earnings	885,714		323		(3)	886,037
Total stockholder's equity	$	857,093	$	323		$	857,416
Total liabilities and stockholders' equity	$	2,067,999	$	3,043		$	2,071,042

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

(2) Amount includes a reclassification of approximately $3.0 million for estimated inventory expected to be returned by customers, partially offset by a reclassification of approximately $0.4 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 effects on fiscal 2017 and fiscal 2016 results of operations.         

The retrospective adoption of ASC 606 at the beginning of fiscal 2018 also had the following effects on the Company’s unaudited condensed consolidated balance sheet at July 1, 2017:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	44,527	$	1,875	(1)	$	46,402
Total current assets	$	993,697	$	1,875		$	995,572
Total assets	$	2,031,859	$	1,875		$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	94,644	$	1,816	(2)	$	96,460
Total current liabilities	$	311,984	$	1,816		$	313,800
Deferred income taxes	$	133,251	$	22		133,273
Total liabilities	$	1,281,948	$	1,838		$	1,283,786
Retained earnings	$	780,084	$	37	(3)	$	780,121
Total stockholder's equity	$	749,911	$	37		$	749,948
Total liabilities and stockholders' equity	$	2,031,859	$	1,875		$	2,033,734

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

(2) Amount includes a reclassification of approximately $1.9 million for estimated inventory expected to be returned by customers, partially offset by an adjustment of approximately $0.1 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 impact on fiscal 2017 and fiscal 2016 results of operations.

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 second quarter and two quarters ended fiscal 2018 and 2017 were as follows:

	Fiscal quarter ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	209,476	$	25,169	$	234,645
Direct-to-consumer	402,021		—		59,531		461,552
	$	402,021	$	209,476	$	84,700	$	696,197
Royalty income	$	4,426	$	4,957	$	972	$	10,355

	Two fiscal quarters ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	490,309	$	62,882	$	553,191
Direct-to-consumer	785,762		—		113,030		898,792
	$	785,762	$	490,309	$	175,912	$	1,451,983
Royalty income	$	6,011	$	10,802	$	1,536	$	18,349

	Fiscal quarter ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	217,710	$	27,622	$	245,332
Direct-to-consumer	391,457		—		54,962		446,419
	$	391,457	$	217,710	$	82,584	$	691,751
Royalty income	$	4,896	$	5,140	$	1,174	$	11,210

	Two fiscal quarters ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	510,265	$	57,304	$	567,569
Direct-to-consumer	755,299		—		101,710		857,009
	$	755,299	$	510,265	$	159,014	$	1,424,578
Royalty income	$	8,164	$	11,505	$	2,099	$	21,768

Accounts Receivable from Customers and Licensees

The components of accounts receivable, net, as of June 30, 2018, December 30, 2017, and July 1, 2017 were as follows:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Trade receivables from wholesale customers, net	$	138,952		$	229,968		$	153,581
Royalties receivable	8,824			9,818			10,107
Tenant allowances and other receivables	12,168			14,511			11,265
Total gross receivables	$	159,944		$	254,297		$	174,953
Less:
Wholesale accounts receivable reserves	(7,427		)	(13,736		)	(9,770		)
Accounts receivable, net	$	152,517		$	240,561		$	165,183

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:        

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Contract liabilities-current:
Unredeemed gift cards	$	11,072	$	11,945	$	9,991
Unredeemed customer loyalty rewards	6,164		7,355		9,835
Total contract liabilities-current *	$	17,236	$	19,300	$	19,826

* Included with Other current liabilities on the Company's consolidated balance sheet.

Composition of Contract Liabilities

Unredeemed gift cards - the Company is obligated to transfer goods in the future to customers who have purchased gift cards. Periodic changes in the gift card contract liability result from the redemption of gift cards by customers and the recognition of estimated breakage revenue for those gift card balances that are not expected to be redeemed. The majority of our gift cards do not have an expiration date; however, all outstanding gift card balances are classified by the Company as current liabilities since gift cards are redeemable on demand by the valid holder. The majority of the Company's gift cards are redeemed within one year of issuance.

Unredeemed loyalty rewards - points and reward certificates earned by customers under the Company’s loyalty programs represent obligations of the Company to transfer goods to the customer upon redemption. Periodic changes in the loyalty program contract liability result from coupon redemptions and expirations. The earning and redemption cycles for our loyalty program are under one year in duration.

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BUSINESS ACQUISITIONS IN FISCAL 2017 (Notes)

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

BUSINESS ACQUISITIONS IN FISCAL 2017

BUSINESS ACQUISITIONS IN FISCAL 2017

Based on their purchase prices and pre-acquisition operating results and assets, neither of the businesses acquired by the Company in fiscal 2017 met the materiality requirements for preparation and presentation of pro forma financial information, either individually or in the aggregate.

Skip Hop Acquisition

Carter's, Inc.'s wholly-owned subsidiary, The William Carter Company ("TWCC"), acquired 100% of the voting equity interests of Skip Hop Holdings, Inc. and subsidiaries (collectively "Skip Hop") after the close of business on February 22, 2017. The Skip Hop purchase was deemed to be the acquisition of a business under the provisions of ASC No. 805, Business Combinations ("ASC 805"). The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Skip Hop beginning February 23, 2017.

In the Company's unaudited condensed consolidated balance sheet at July 1, 2017, the preliminary purchase price of approximately $147.3 million, net of $0.8 million cash acquired, was comprised of the following acquired assets and assumed liabilities: $54.2 million of goodwill including an assembled workforce; $92.7 million of intangible assets comprised of a tradename and acquired customer relationships; $54.9 million of tangible assets acquired; and $20.2 million of liabilities in addition to $35.9 million of deferred income tax liabilities.

The measurement period (as defined in ASC 805) for Skip Hop was complete at the end of fiscal 2017 and all measurement period adjustments were reflected in the Company's consolidated balance sheet as of December 30, 2017. As a result of the measurement period adjustments recorded between the acquisition date and the end of fiscal 2017, the net assets acquired consisted of the following: $46.0 million of goodwill including an assembled workforce; $104.1 million of intangible assets comprised of a tradename and acquired customer relationships; $53.9 million of tangible assets acquired; and $20.8 million of liabilities in addition to $36.3 million of deferred income tax liabilities. The adjusted purchase price of approximately $142.5 million, net of $0.8 million of cash acquired.

During the first two quarters of fiscal 2017, the Company incurred approximately $1.8 million in acquisition-related costs for the Skip Hop transaction.

Acquisition of Mexican Licensee

On August 1, 2017, the Company, through certain of its wholly-owned subsidiaries, acquired the outstanding equity of the Company's licensee in Mexico and a related entity (collectively "Carter's Mexico"). Both entities are incorporated under Mexican law. Prior to the acquisition, Carter's Mexico was primarily a licensee and wholesale customer of the Company. The Carter's Mexico purchase was deemed to be the acquisition of a business under the provisions of ASC 805. The Company's consolidated financial statements reflect the consolidation of the financial position, results of operations and cash flows of Carter's Mexico beginning August 1, 2017. Carter's Mexico became part of the Company's International reportable segment.

As of December 30, 2017, preliminary values assigned to assets acquired included inventories of approximately $8.3 million, a customer relationships intangible asset of approximately $3.5 million, and goodwill of approximately $6.2 million. Measurement period adjustments made in the first quarter of fiscal 2018 were not material.

The measurement period (as defined in ASC 805) for the acquisition of the licensee in Mexico was completed during the second quarter of fiscal 2018 and all measurement period adjustments were reflected in the Company's consolidated balance sheet as of June 30, 2018. As a result of the measurement period adjustments recorded between the acquisition date and the end of the second quarter of fiscal 2018, the values assigned to assets acquired included inventories of approximately $8.0 million, a customer relationships intangible asset of approximately $3.5 million, and goodwill of approximately $6.3 million.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2018

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:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Cumulative foreign currency translation adjustments	$	(27,724	)	$	(21,285	)	$	(23,537	)
Pension and post-retirement obligations (1)	(7,808		)	(7,808		)	(7,116		)
Total accumulated other comprehensive loss	$	(35,532	)	$	(29,093	)	$	(30,653	)

(1) Net of income taxes of $4.4 million, $4.4 million, and $4.2 million, respectively. The deferred income taxes associated with these obligations are subject to adjustments upon the Company's adoption of ASC 2018-02. See Note 16, Pending Adoption of Recent Accounting Pronouncements.

During the first and second quarters of both fiscal 2018 and fiscal 2017, no amounts were reclassified from accumulated other comprehensive loss to the statement of operations.

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

The Company's goodwill and intangible assets were as follows:

		June 30, 2018						December 30, 2017
(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	40,367				40,367		42,223				42,223
Skip Hop goodwill	Indefinite	45,984				45,984		45,997				45,997
Carter's Mexico goodwill	Indefinite	5,634				5,634		5,634				5,634
Total goodwill		$	228,555			$	228,555	$	230,424			$	230,424
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		$	627	3,284		3,550		$	532	3,018
Total tradenames, net		$	366,444	$	627	$	365,817	$	366,083	$	532	$	365,551
Skip Hop customer relationships	15 years	$	47,300	$	3,892	$	43,408	$	47,300	$	2,304	$	44,996
Carter's Mexico customer relationships	10 years	3,031		217		2,814		3,135		135		3,000
Total customer relationships, net		$	50,331	$	4,109	$	46,222	$	50,435	$	2,439	$	47,996

		July 1, 2017
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570			$	136,570
Canada goodwill	Indefinite	40,897				40,897
Skip Hop goodwill	Indefinite	54,242				54,242
Total goodwill		$	231,709			$	231,709
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	42,021		$	38,915	3,106
Total tradenames, net		$	404,554	$	38,915	$	365,639
Skip Hop customer relationships, net	15 years	$	35,900	$	804	$	35,096

Amortization expense for intangible assets subject to amortization was approximately $0.8 million and $0.6 million for the second fiscal quarter ended June 30, 2018 and second fiscal quarter ended July 1, 2017, respectively. For the first two quarters of fiscal 2018 and fiscal 2017, amortization expense was approximately $1.8 million and $0.9 million, respectively. Future amortization expense is estimated to be approximately $3.7 million for each of the next five fiscal years.

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COMMON STOCK

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

COMMON STOCK

COMMON STOCK

OPEN MARKET SHARE REPURCHASES

The total aggregate remaining capacity under outstanding repurchase authorizations as of June 30, 2018 was approximately $496.5 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:

	Fiscal quarter ended				Two fiscal quarters ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Number of shares repurchased	599,314		587,465		820,627		1,131,409
Aggregate cost of shares repurchased (dollars in thousands)	$	63,899	$	51,605	$	89,093	$	98,236
Average price per share	$	106.62	$	87.84	$	108.57	$	86.82

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 second fiscal quarter and two fiscal quarters ended June 30, 2018, the Company declared and paid cash dividends per share of $0.45 and $0.90, respectively. In the second fiscal quarter and two fiscal quarters ended July 1, 2017, the Company declared and paid cash dividends per share of $0.37 and $0.74, 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 based on a number of factors, including the Company's future financial performance and other investment priorities.

Provisions in the indenture governing the senior notes of TWCC and in TWCC'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. Provisions related to the indenture governing the senior notes are described in the Company's Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.

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LONG-TERM DEBT

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consisted of the following:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(3,222		)	(3,694		)	(4,154		)
Senior notes, net	396,778			396,306			395,846
Secured revolving credit facility	286,000			221,000			266,000
Total long-term debt, net	$	682,778		$	617,306		$	661,846

Secured Revolving Credit Facility

On August 25, 2017, TWCC and a syndicate of lenders entered into a fourth amended and restated secured revolving credit agreement.

The secured revolving credit facility provides: (i) a term for the facility lasting through August 22, 2022 and (ii) an aggregate credit line of $750 million which includes a $650 million U.S. dollar facility and a $100 million multicurrency facility denominated in U.S. dollars, Canadian dollars, Euros, Pounds Sterling, or other currencies agreed to by the applicable lenders. The $650 million U.S. dollar facility is inclusive of a $100 million sub-limit for letters of credit and a swing line sub-limit of $70 million. The $100 million multicurrency facility is inclusive of a $40 million sub-limit for letters of credit and a swing line sub-limit of $15 million.

In addition, the secured revolving credit facility includes the opportunity for incremental borrowing facilities up to $425 million, which is comprised of an incremental $350 million U.S. dollar revolving credit facility and an incremental $75 million multicurrency revolving credit facility. The incremental U.S. dollar revolving credit facility can increase to an unlimited borrowing amount so long as the consolidated first lien leverage ratio (as defined in the secured revolving credit facility) does not exceed 2.25:1.00.

Under the secured revolving credit facility, TWCC and its domestic subsidiaries have granted to the collateral agent, for the benefit of the lenders, valid and perfected first priority security interests in substantially all of their present and future assets, excluding certain customary exceptions, and guarantee the obligations of the borrowers. In addition, The Genuine Canadian Corp., as Canadian borrower, and Carter’s Holdings B.V., as Dutch borrower, have each guaranteed the obligations of the other.

As of June 30, 2018, the Company had $286.0 million in outstanding borrowings under its secured revolving credit facility, exclusive of $4.5 million of outstanding letters of credit. As of June 30, 2018, approximately $459.5 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 June 30, 2018, the interest rate 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 June 30, 2018, U.S. dollar borrowings outstanding under the secured revolving credit facility accrued interest at a LIBOR rate plus the applicable base rate, which resulted in a weighted-average borrowing rate of 3.38%. All outstanding Canadian dollar borrowings were repaid during the first quarter of fiscal 2017.

As of June 30, 2018, the Company was in compliance with the financial and other covenants under the secured revolving credit facility.

Senior Notes

As of June 30, 2018, TWCC had outstanding $400 million principal amount of senior notes bearing interest at a fixed rate of 5.25% per annum and maturing on August 15, 2021. The senior notes are unsecured and are fully and unconditionally guaranteed by Carter's, Inc. and certain subsidiaries of TWCC. On the Company's consolidated balance sheet, the senior notes are reported net of certain unamortized issuance-related costs, as shown in the table above.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company recorded stock-based compensation expense as follows:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in thousands)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Stock options	$	1,112	$	955	$	2,456	$	2,199
Restricted stock:
Time-based awards	3,027		2,832		5,311		5,144
Performance-based awards	1,183		1,080		2,499		2,303
Total	$	5,322	$	4,867	$	10,266	$	9,646

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INCOME TAXES

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

As of June 30, 2018, the Company had gross unrecognized income tax benefits of approximately $14.9 million, of which $12.6 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 June 30, 2018 were approximately $1.8 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 2018 or fiscal 2019 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 quarters ended June 30, 2018 and July 1, 2017, interest expense recorded on uncertain tax positions was not significant. The Company had approximately $1.3 million, $1.0 million, and $1.0 million of interest accrued on uncertain tax positions as of June 30, 2018, December 30, 2017, and July 1, 2017, respectively.

For the full fiscal year 2018, the Company estimates that its consolidated effective income tax rate will be approximately 22.0%.

U.S. Tax Reform

The provision for income taxes recognized by the Company during the fiscal fourth quarter of 2017 reflected certain provisional estimates for the accounting of the December 22, 2017 enactment of income tax law changes commonly known as the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act"). The provisional accounting for the 2017 Act is permitted by SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, issued in late December 2017. Subsequent adjustments, if any, to the provisional accounting estimates must be reflected in income tax provisions/benefits during one or more periods in fiscal 2018.

During the fourth quarter of fiscal 2017, the Company recorded a provisional tax expense estimate for the one-time transition tax liability for all of its foreign subsidiaries, resulting in an increase in income tax expense of approximately $10.4 million related to foreign earnings. The one-time transition tax is based on the Company's total post-1986 earnings and profits ("E&P") that the Company previously deferred from United States income taxes. The Company has not yet completed its calculation of the total post-1986 E&P for these foreign subsidiaries. No adjustments were made to this provisional tax expense estimate during the first two quarters of fiscal 2018. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable, but the related cumulative temporary difference as of December 30, 2017 and June 30, 2018 would not result in a material incremental deferred tax liability.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

		June 30, 2018				December 30, 2017				July 1, 2017
(dollars in millions)		Level 1		Level 2	Level 3	Level 1		Level 2	Level 3	Level 1		Level 2	Level 3
Assets
	Investments (1)	$	16.9	—	—	$	16.7	—	—	$	15.3	—	—
Liabilities
	Contingent consideration (2)	—		—	—	—		—	—	—		—	$	3.6

(1) Included in Other assets on the Company's consolidated balance sheet.

(2) Included in Other current liabilities on the Company's consolidated balance sheet.

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. Gains on the investments in marketable securities were $0.2 million for both the second fiscal quarter and the two fiscal quarters ended June 30, 2018, and were $0.5 million and $1.2 million for the fiscal quarter and two fiscal quarters ended July 1, 2017, respectively. These amounts are included in Other expense (income), net on the Company's consolidated statement of operations.

CONTINGENT CONSIDERATION

The estimated fair value of contingent consideration related to the Skip Hop acquisition was based on a weighted payout probability at the measurement date. Facts and circumstances that occurred subsequent to the acquisition indicated that the contingent earn out arrangement would not be achieved, and therefore approximately $3.6 million was credited to the Company's earnings during fiscal 2017.

BORROWINGS

As of June 30, 2018, the fair value of the Company's $286.0 million in outstanding borrowings under its secured revolving credit facility approximated carrying value.

The fair value of the Company's senior notes at June 30, 2018 was approximately $406 million. The fair value of these senior notes with a notional value and carrying value (gross of debt cost) of $400 million was estimated using a quoted price as provided in the secondary market, which considersthe Company's credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following is a reconciliation of basic common shares outstanding to diluted common and common equivalent shares outstanding:

	Fiscal quarter ended						Two fiscal quarters ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	46,437,093			47,863,618			46,604,599			48,093,155
Dilutive effect of equity awards	509,545			550,726			563,137			552,866
Diluted number of common and common equivalent shares outstanding	46,946,638			48,414,344			47,167,736			48,646,021
Basic net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(276		)	(290		)	(600		)	(659		)
Net income available to common shareholders	$	36,992		$	37,503		$	79,137		$	83,729
Basic net income per common share	$	0.80		$	0.78		$	1.70		$	1.74
Diluted net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(274		)	(288		)	(596		)	(654		)
Net income available to common shareholders	$	36,994		$	37,505		$	79,141		$	83,734
Diluted net income per common share	$	0.79		$	0.77		$	1.68		$	1.72
Anti-dilutive awards excluded from diluted earnings per share computation	332,448			663,531			254,417			596,297

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OTHER CURRENT AND LONG-TERM LIABILITIES

6 Months Ended

Jun. 30, 2018

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:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Accrued bonuses and incentive compensation	$	5,231	$	27,566	$	5,959
Accrued employee benefits	10,663		21,735		10,227
Accrued and deferred rent	18,702		18,213		17,767

Other long-term liabilities that exceeded five percent of total liabilities, at the end of any comparable period, were as follows:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Deferred lease incentives	$	75,431	$	75,104	$	74,344

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2018

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.

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The table below presents certain information for our reportable segments and unallocated corporate expenses for the periods indicated.

	Fiscal quarter ended										Two fiscal quarters ended
(dollars in thousands)	June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales		June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales
Net sales:
U.S. Retail	$	402,021		57.7	%	$	391,457		56.6	%	$	785,762		54.1	%	$	755,299		53.0	%
U.S. Wholesale	209,476			30.1	%	217,710			31.5	%	490,309			33.8	%	510,265			35.8	%
International	84,700			12.2	%	82,584			11.9	%	175,912			12.1	%	159,014			11.2	%
Total net sales	$	696,197		100.0	%	$	691,751		100.0	%	$	1,451,983		100.0	%	$	1,424,578		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales
U.S. Retail (a) (e)	$	45,428		11.3	%	$	42,133		10.8	%	$	74,947		9.5	%	$	71,922		9.5	%
U.S. Wholesale (b) (e)	30,338			14.5	%	35,805			16.4	%	80,610			16.4	%	105,501			20.7	%
International (e)	4,312			5.1	%	7,597			9.2	%	8,073			4.6	%	11,282			7.1	%
Corporate expenses (c) (d)	(23,108		)			(21,224		)			(46,351		)			(45,938		)
Total operating income	$	56,970		8.2	%	$	64,311		9.3	%	$	117,279		8.1	%	$	142,767		10.0	%

(a) Two fiscal quarters ended June 30, 2018 includes insurance recoveries of approximately $0.4 million associated with storm-related store closures in 2017.

(b) Includes approximately $12.8 million of charges related to a customer bankruptcy for the two fiscal quarters ended June 30, 2018.

(c) 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, and audit fees.

(d) Includes the following charges:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Direct sourcing initiative	$	—	$	0.1	$	—	$	0.3
Acquisition-related costs	$	—	$	0.8	$	—	$	2.5

(e) A total of $0.4 million of certain costs related to inventory acquired from Skip Hop is included in operating income between U.S. Wholesale, U.S. Retail, and International for the fiscal quarter and two fiscal quarters ended July 1, 2017.

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PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

PENDING ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Leases (ASU 2016-02)

In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases-Topic 842, which has been codified in ASC 842, Leases ("ASC 842"). Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. The new standard will be effective for the Company at the beginning of fiscal 2019, including interim periods within the year of adoption. The Company is assessing the implications of applying the practical expedients and accounting policy elections, implementing software to meet the reporting requirements of the new standard, and identifying changes to its business processes and controls to support the adoption of the new standard. The Company believes the adoption will have a material impact on the total assets and total liabilities reported on the Company's consolidated balance sheets, but is not able to quantify the difference at this time. However, the Company does not believe adoption of this standard will have a material impact on the Company's consolidated results of operations or cash flows.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02)

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 permits a company to reclassify the income tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 Act") on items within accumulated other comprehensive income or loss ("AOCI-L") to retained earnings. Because most items that are charged to AOCI-L are recorded net of applicable income taxes, the subsequent reclassification of these items from AOCI-L to the statement of operations will be at different income tax rates due to the 2017 Act, thereby leaving a "stranded" tax balance within AOCI-L. ASU 2018-02 will allow a company to transfer these "stranded" amounts from AOCI-L to retained earnings. ASU 2018-02 will be effective for the Company at the beginning of fiscal 2019, with early adoption permitted. The Company has amounts in its AOCI-L for defined benefit retirement plans that were recorded net of applicable income taxes, thus the Company anticipates the transfer of "stranded" tax amounts from its AOCI-L to retained earnings upon the adoption of ASU 2018-02. The effect of the adoption of ASU 2018-02 will not be material to the Company's financial position, and the adoption will have no impact on the Company's results of operations or cash flows.

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.

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

6 Months Ended

Jun. 30, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company’s senior notes constitute debt obligations of its wholly-owned subsidiary, The William Carter Company ("TWCC" or the "Subsidiary Issuer"), are unsecured and are fully and unconditionally guaranteed by Carter’s, Inc. (the "Parent"), by certain of the Parent's current domestic subsidiaries (other than TWCC), and, subject to certain exceptions, future restricted subsidiaries that guarantee the Company’s secured revolving credit facility or certain other debt of the Company or the subsidiary guarantors.

For additional information, refer to the Company's Annual Report on Form 10-K for the 2017 fiscal year ended December 30, 2017.

The condensed consolidating financial information for the Parent, the Subsidiary Issuer, and the guarantor and non-guarantor subsidiaries has been prepared from the books and records maintained by the Company. The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10. The financial information may not necessarily be indicative of the financial position, results of operations, comprehensive income (loss), and cash flows, had the Parent, Subsidiary Issuer, guarantor or non-guarantor subsidiaries operated as independent entities.

Intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for investments in subsidiaries under the equity method. The guarantor subsidiaries are 100% owned directly or indirectly by the Parent and all guarantees are joint, several, and unconditional.

Condensed Consolidating Balance Sheets (unaudited)

As of June 30, 2018

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	99,928	$	13,529	$	69,745	$	—		$	183,202
Accounts receivable, net	—		114,728		31,779		6,010		—			152,517
Intercompany receivable	—		70,001		105,309		60,536		(235,846		)	—
Finished goods inventories	—		385,000		224,323		76,949		(23,009		)	663,263
Prepaid expenses and other current assets	—		19,393		20,202		12,360		—			51,955
Total current assets	—		689,050		395,142		225,600		(258,855		)	1,050,937
Property, plant, and equipment, net	—		141,465		185,123		37,635		—			364,223
Goodwill	—		136,570		45,369		46,616		—			228,555
Tradenames, net	—		223,162		142,655		—		—			365,817
Customer relationships, net	—		—		43,408		2,814		—			46,222
Other assets	—		23,802		2,171		1,802		—			27,775
Intercompany long-term receivable	—		—		438,167		—		(438,167		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	810,329		1,086,715		254,289		—		(2,151,333		)	—
Total assets	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	147,179	$	50,786	$	18,966	$	—		$	216,931
Intercompany payables	—		158,421		72,412		5,013		(235,846		)	—
Other current liabilities	—		13,459		71,482		10,744		—			95,685
Total current liabilities	—		319,059		194,680		34,723		(235,846		)	312,616
Long-term debt	—		682,778		—		—		—			682,778
Deferred income taxes	—		45,690		39,560		505		—			85,755
Intercompany long-term liability	—		438,167		—		—		(438,167		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		81,732		94,721		15,598		—			192,051
Stockholders' equity	810,329		833,338		1,077,363		263,641		(2,174,342		)	810,329
Total liabilities and stockholders' equity	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529

As of December 30, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	129,463	$	10,030	$	39,001	$	—		$	178,494
Accounts receivable, net	—		182,944		40,286		17,331		—			240,561
Intercompany receivable	—		87,702		162,007		58,980		(308,689		)	—
Finished goods inventories	—		296,065		206,556		66,569		(20,468		)	548,722
Prepaid expenses and other current assets	—		17,012		21,354		14,569		—			52,935
Total current assets	—		713,186		440,233		196,450		(329,157		)	1,020,712
Property, plant, and equipment, net	—		147,858		189,511		40,555		—			377,924
Goodwill	—		136,570		45,368		48,486		—			230,424
Tradenames, net	—		223,251		142,300		—		—			365,551
Customer relationships, net	—		—		44,996		3,000		—			47,996
Other assets	—		23,884		2,392		2,159		—			28,435
Intercompany long-term receivable	—		—		441,294		—		(441,294		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	857,416		1,053,224		231,994		—		(2,142,634		)	—
Total assets	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	115,658	$	49,313	$	17,143	$	—		$	182,114
Intercompany payables	—		215,573		91,697		1,419		(308,689		)	—
Other current liabilities	—		11,805		122,989		14,340		—			149,134
Total current liabilities	—		343,036		263,999		32,902		(308,689		)	331,248
Long-term debt	—		617,306		—		—		—			617,306
Deferred income taxes	—		46,619		37,647		678		—			84,944
Intercompany long-term liability	—		441,294		—		—		(441,294		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		71,834		92,570		15,724		—			180,128
Stockholders' equity	857,416		877,884		1,043,872		241,346		(2,163,102		)	857,416
Total liabilities and stockholders' equity	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042

As of July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	127,907	$	11,435	$	34,222	$	—		$	173,564
Accounts receivable, net	—		124,885		35,765		4,533		—			165,183
Intercompany receivable	—		56,526		61,911		25,588		(144,025		)	—
Finished goods inventories	—		346,963		207,368		68,262		(12,170		)	610,423
Prepaid expenses and other current assets	—		16,683		19,483		10,236		—			46,402
Total current assets	—		672,964		335,962		142,841		(156,195		)	995,572
Property, plant, and equipment, net	—		150,796		195,209		36,467		—			382,472
Goodwill	—		136,570		53,635		41,504		—			231,709
Tradenames, net	—		223,339		142,300		—		—			365,639
Customer relationships, net	—		—		35,096		—		—			35,096
Other assets	—		20,901		447		1,898		—			23,246
Intercompany long-term receivable	—		—		411,475		—		(411,475		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	749,948		936,348		167,809		—		(1,854,105		)	—
Total assets	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	151,770	$	47,695	$	17,875	$	—		$	217,340
Intercompany payables	—		82,539		57,034		4,452		(144,025		)	—
Other current liabilities	—		32,973		54,535		8,952		—			96,460
Total current liabilities	—		267,282		159,264		31,279		(144,025		)	313,800
Long-term debt	—		661,846		—		—		—			661,846
Deferred income taxes	—		69,750		63,422		101		—			133,273
Intercompany long-term liability	—		411,475		—		—		(411,475		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,447		92,236		14,184		—			174,867
Stockholders' equity	749,948		762,118		927,011		177,146		(1,866,275		)	749,948
Total liabilities and stockholders' equity	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	345,813		$	445,836		$	94,369		$	(189,821	)	$	696,197
Cost of goods sold	—			273,857			260,516			41,196			(189,330		)	386,239
Gross profit	—			71,956			185,320			53,173			(491		)	309,958
Royalty income, net	—			8,601			4,599			—			(2,845		)	10,355
Selling, general, and administrative expenses	—			42,423			196,923			32,110			(8,113		)	263,343
Operating income	—			38,134			(7,004		)	21,063			4,777			56,970
Interest expense	—			7,937			1,327			—			(1,327		)	7,937
Interest income	—			(1,329		)	—			(223		)	1,327			(225		)
(Income) loss in subsidiaries	(37,268		)	(4,973		)	(16,836		)	—			59,077			—
Other (income) expense, net	—			(3		)	114			864			—			975
Income (loss) before income taxes	37,268			36,502			8,391			20,422			(54,300		)	48,283
Provision for income taxes	—			4,011			3,418			3,586			—			11,015
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	352,814		$	434,956		$	71,885		$	(167,904	)	$	691,751
Cost of goods sold	—			260,901			257,168			37,019			(166,584		)	388,504
Gross profit	—			91,913			177,788			34,866			(1,320		)	303,247
Royalty income, net	—			8,905			4,882			—			(2,577		)	11,210
Selling, general, and administrative expenses	—			38,295			193,865			26,292			(8,306		)	250,146
Operating income	—			62,523			(11,195		)	8,574			4,409			64,311
Interest expense	—			7,138			1,377			6			(1,327		)	7,194
Interest income	—			(1,401		)	—			(5		)	1,327			(79		)
(Income) loss in subsidiaries	(37,793		)	7,153			(6,805		)	—			37,445			—
Other (income) expense, net	—			(257		)	280			(567		)	—			(544		)
Income (loss) before income taxes	37,793			49,890			(6,047		)	9,140			(33,036		)	57,740
Provision for income taxes	—			16,506			1,106			2,335			—			19,947
Net income (loss)	$	37,793		$	33,384		$	(7,153	)	$	6,805		$	(33,036	)	$	37,793

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,799		$	872,299		$	178,966		$	(406,081	)	$	1,451,983
Cost of goods sold	—			603,856			511,598			86,797			(392,703		)	809,548
Gross profit	—			202,943			360,701			92,169			(13,378		)	642,435
Royalty income, net	—			15,528			8,419			—			(5,598		)	18,349
Selling, general, and administrative expenses	—			84,239			412,089			63,612			(16,435		)	543,505
Operating income	—			134,232			(42,969		)	28,557			(2,541		)	117,279
Interest expense	—			15,912			2,654			10			(2,654		)	15,922
Interest income	—			(2,671		)	—			(374		)	2,654			(391		)
(Income) loss in subsidiaries	(79,737		)	21,039			(23,424		)	—			82,122			—
Other expense, net	—			18			125			450			—			593
Income (loss) before income taxes	79,737			99,934			(22,324		)	28,471			(84,663		)	101,155
Provision for (benefit from) income taxes	—			17,656			(1,285		)	5,047			—			21,418
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,329		$	830,806		$	132,917		$	(345,474	)	$	1,424,578
Cost of goods sold	—			591,535			486,115			74,448			(346,459		)	805,639
Gross profit	—			214,794			344,691			58,469			985			618,939
Royalty income, net	—			17,335			9,007			—			(4,574		)	21,768
Selling, general, and administrative expenses	—			79,227			383,369			52,563			(17,219		)	497,940
Operating income	—			152,902			(29,671		)	5,906			13,630			142,767
Interest expense	—			14,111			2,746			95			(2,654		)	14,298
Interest income	—			(2,840		)	—			(33		)	2,654			(219		)
(Income) loss in subsidiaries	(84,388		)	28,254			(4,358		)	—			60,492			—
Other (income) expense, net	—			(625		)	648			(788		)	—			(765		)
Income (loss) before income taxes	84,388			114,002			(28,707		)	6,632			(46,862		)	129,453
Provision for (benefit from) income taxes	—			43,244			(453		)	2,274			—			45,065
Net income (loss)	$	84,388		$	70,758		$	(28,254	)	$	4,358		$	(46,862	)	$	84,388

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268
Foreign currency translation adjustments	(4,677		)	(4,677		)	(4,677		)	(4,677		)	14,031			(4,677		)
Comprehensive income (loss)	$	32,591		$	27,814		$	296		$	12,159		$	(40,269	)	$	32,591

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	37,793	$	33,384	$	(7,153	)	$	6,805	$	(33,036	)	$	37,793
Foreign currency translation adjustments	3,140		3,140		3,140			3,140		(9,420		)	3,140
Comprehensive income (loss)	$	40,933	$	36,524	$	(4,013	)	$	9,945	$	(42,456	)	$	40,933

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737
Foreign currency translation adjustments	(6,439		)	(6,439		)	(6,439		)	(6,439		)	19,317			(6,439		)
Comprehensive income (loss)	$	73,298		$	75,839		$	(27,478	)	$	16,985		$	(65,346	)	$	73,298

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	84,388	$	70,758	$	(28,254	)	$	4,358	$	(46,862	)	$	84,388
Foreign currency translation adjustments	4,087		4,087		4,087			4,087		(12,261		)	4,087
Comprehensive income (loss)	$	88,475	$	74,845	$	(24,167	)	$	8,445	$	(59,123	)	$	88,475

Condensed Consolidating Statements of Cash Flows (unaudited)

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	109,382		$	(38,837	)	$	32,518		$	—		$	103,063
Cash flows from investing activities:
Capital expenditures	—			(9,291		)	(19,042		)	(3,417		)	—			(31,750		)
Intercompany investing activity	130,651			(3,243		)	3,024			927			(131,359		)	—
Acquisitions of businesses, net of cash acquired	—			—			—			96			—			96
Disposals and recoveries from property, plant, and equipment	—			—			369			4			—			373
Net cash provided by (used in) investing activities	130,651			(12,534		)	(15,649		)	(2,390		)	(131,359		)	(31,281		)
Cash flows from financing activities:
Intercompany financing activity	—			(191,383		)	57,985			2,039			131,359			—
Borrowings under secured revolving credit facility	—			150,000			—			—			—			150,000
Payments on secured revolving credit facility	—			(85,000		)	—			—			—			(85,000		)
Dividends paid	(42,267		)	—			—			—			—			(42,267		)
Repurchases of common stock	(89,093		)	—			—			—			—			(89,093		)
Withholdings from vestings of restricted stock	(6,667		)	—			—			—			—			(6,667		)
Proceeds from exercises of stock options	7,376			—			—			—			—			7,376
Net cash (used in) provided by financing activities	(130,651		)	(126,383		)	57,985			2,039			131,359			(65,651		)
Effect of exchange rate changes on cash	—			—			—			(1,423		)	—			(1,423		)
Net (decrease) increase in cash and cash equivalents	—			(29,535		)	3,499			30,744			—			4,708
Cash and cash equivalents, beginning of period	—			129,463			10,030			39,001			—			178,494
Cash and cash equivalents, end of period	$	—		$	99,928		$	13,529		$	69,745		$	—		$	183,202

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	120,884		$	(13,661	)	$	110		$	—		$	107,333
Cash flows from investing activities:
Capital expenditures	—			(10,594		)	(19,719		)	(3,963		)	—			(34,276		)
Intercompany investing activity	136,535			(2,468		)	—			—			(134,067		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	136,535			(157,582		)	(18,973		)	(3,893		)	(134,067		)	(177,980		)
Cash flows from financing activities:
Intercompany financing activity	—			(164,451		)	32,252			(1,868		)	134,067			—
Borrowings under secured revolving credit facility	—			100,000			—			—			—			100,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(35,831		)	—			—			—			—			(35,831		)
Repurchases of common stock	(98,236		)	—			—			—			—			(98,236		)
Withholdings from vestings of restricted stock	(5,590		)	—			—			—			—			(5,590		)
Proceeds from exercises of stock options	3,122			—			—			—			—			3,122
Net cash (used in) provided by financing activities	(136,535		)	(64,451		)	32,252			(20,833		)	134,067			(55,500		)
Effect of exchange rate changes on cash	—			—			—			353			—			353
Net decrease in cash and cash equivalents	—			(101,149		)	(382		)	(24,263		)	—			(125,794		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	127,907		$	11,435		$	34,222		$	—		$	173,564

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Revenue from Contracts with Customers (ASC No. 606)

Revenue from Contracts with Customers (ASC No. 606)

At the beginning of fiscal 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and all related amendments (“ASC 606”) using the full retrospective adoption method. Refer to Note 3, Revenue Recognition, for additional information.

The Company uses the five-step model to recognize revenue:

1) Identify the contract with the customer

2) Identity the performance obligation(s)

3) Determine the transaction price

4) Allocate the transaction price to each performance obligation if multiple obligations exist

5) Recognize the revenue as the performance obligations are satisfied

Performance Obligations

The Company identifies each distinct performance obligation to transfer goods (or bundle of goods). The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods to the customer. Other than inbound and outbound freight and shipping arrangements, the Company does not use third parties to satisfy its performance obligations in revenue arrangements with customers.

When Performance Obligations Are Satisfied

Wholesale Revenues - The Company typically transfers control upon shipment. However, in certain arrangements where the Company retains the risk of loss during shipment, satisfaction of the performance obligation occurs when the goods reach the customer.

Retail Revenues - For transactions in stores, the Company satisfies its performance obligation at point of sale when the customer takes possession of the goods and tenders payment. The redemption of loyalty points under the Company's rewards program and redemptions of gift cards may be part of a transaction. For purchases made through the Company’s eCommerce channel, revenue is recognized when the goods are physically delivered to the customer.

The Company satisfies its performance obligations with licensees over time as customers have the right to use the intellectual property over the contract period.

Significant Payment Terms

Retail customers tender a form of payment, such as cash or a credit/debit card, at point of sale. For wholesale customers and licensees, payment is due based on established terms.

Returns and Refunds

The Company establishes return provisions for retail customers. It is the Company's policy not to accept returns from wholesale customers.

Significant Judgments

Sale of Goods - The Company relies on shipping terms to determine when performance obligations are satisfied. When goods are shipped to wholesale customers “FOB Shipping Point,” control of the goods is transferred to the customer at the time of shipment if there are no remaining performance obligations. The Company recognizes the revenue once control passes to the customer. For retail transactions, no significant judgments are involved since revenue is recognized at the point of sale when tender is exchanged and the customer receives the goods.

Royalty Revenues - The Company transfers the right-to-use benefit to the licensee for the contract term and therefore the Company satisfies its performance obligation over time. Revenue recognized for each reporting period is based on the greater of: 1) the royalties owed on actual net sales by the licensee and 2) a minimum royalty guarantee, if applicable.

Transaction Price - The transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company may offer sales incentives to wholesale and retail customers, including discounts. For retail transactions, the Company has significant experience with return patterns and relies on this experience to estimate expected returns when determining the transaction price.

Standalone Selling Prices - For arrangements that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation on a relative standalone selling price basis.

Costs Incurred to Obtain a Contract - Incremental costs to obtain contracts are not material to the Company.

Policy Elections

In addition to those previously disclosed, the Company has made the following accounting policy elections and practical expedients:

Portfolio Approach - The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes - The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges - Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money - The Company's payment terms are less than one year from the transfer of goods. Therefore, the Company does not adjust promised amounts of consideration for the effects of the time value of money.

Disclosure of Remaining Performance Obligations - The Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts that are one year or less in term.

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans

Classification of Costs Related to Defined Benefit Pension and Other Post-retirement Benefit Plans (ASU 2017-07)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost ("ASU 2017-07").  ASU 2017-07 changes how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer's statement of operations presents service cost arising in the current period in the same statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, are presented on the statement of operations on a line item outside (or below) operating income. ASU 2017-07 affects only the classification of certain costs on the statement of operations, not the determination of costs. Net periodic pension costs related to the Company's frozen defined benefit pension plan and post-retirement medical benefit plan were not material for the second quarter of fiscal 2018, two fiscal quarters of 2018, or prior periods. Prior period results have not been reclassified on the Company's statement of operations due to materiality.

Modifications to Share-based Compensation Awards

Modifications to Share-based Compensation Awards (ASU 2017-09)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-09, Compensation-Stock Compensation Topic 718-Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies when changes to the terms and conditions of share-based payment awards must be accounted for as modifications. Entities apply the modification accounting guidance if the value, vesting conditions, or classification of an award changes. The Company has not modified any share-based payment awards. Should the Company modify share-based payment awards in the future, it will apply the provisions of ASU 2017-09.

Definition of a Business

Definition of a Business (ASU 2017-01)

At the beginning of fiscal 2018, the Company adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 assists entities in determining if acquired assets constitute the acquisition of a business or the acquisition of assets for accounting and reporting purposes. This distinction is important because goodwill can only be recognized in an acquisition of a business. Prior to ASU 2017-01, if revenues were generated immediately before and after a transaction, the acquisition was typically considered a business. Under ASU 2017-01, entities are required to further assess the substance of the processes they acquire. Should the Company commence or complete an acquisition in future periods, it will apply the provisions of ASU 2017-01.

Statement of Cash Flows

Statement of Cash Flows (ASU 2016-15)

At the beginning of fiscal 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). ASU 2016-15 represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that, if present, can impact classifications on the statement of cash flows. The guidance requires application using a retrospective transition method. The adoption of ASU 2016-15 only impacted the classification of certain insurance proceeds on the Company's consolidated statement of cash flows for the first two quarters of fiscal 2018.

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REVENUE RECOGNITION (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

ASC 606 Initial Application

The effects of retrospective adoption on the Company's consolidated Statement of Operations were as follows:

	Second Quarter			Two Fiscal Quarters			Year		Year
(dollars in thousands, except per share data)	Fiscal 2017			Fiscal 2017			Fiscal 2017		Fiscal 2016
Net sales	$	(366	)	$	(294	)	$	92	$	(637	)
Cost of goods sold	$	(156	)	$	26		$	52	$	(7	)
Income before income taxes	$	(210	)	$	(319	)	$	40	$	(630	)
Net income	$	(132	)	$	(201	)	$	84	(397		)
Basic net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	(0.01	)
Diluted net income per common share	$	(0.01	)	$	(0.01	)	$	—	$	—

The cumulative effect to the Company’s retained earnings at January 2, 2016 was an after-tax increase of approximately $0.6 million.

The effects of adoption of ASC 606 on the Company’s consolidated balance sheet at December 30, 2017 were as follows:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	49,892	$	3,043	(1)	$	52,935
Total current assets	$	1,017,669	$	3,043		$	1,020,712
Total assets	$	2,067,999	$	3,043		$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	146,510	$	2,624	(2)	$	149,134
Total current liabilities	$	328,624	$	2,624		$	331,248
Deferred income taxes	$	84,848	$	96		$	84,944
Total liabilities	$	1,210,906	$	2,720		$	1,213,626
Retained earnings	885,714		323		(3)	886,037
Total stockholder's equity	$	857,093	$	323		$	857,416
Total liabilities and stockholders' equity	$	2,067,999	$	3,043		$	2,071,042

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

(2) Amount includes a reclassification of approximately $3.0 million for estimated inventory expected to be returned by customers, partially offset by a reclassification of approximately $0.4 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 effects on fiscal 2017 and fiscal 2016 results of operations.         

The retrospective adoption of ASC 606 at the beginning of fiscal 2018 also had the following effects on the Company’s unaudited condensed consolidated balance sheet at July 1, 2017:

(dollars in thousands)	As Previously Reported		ASC 606 Adjustments			As Amended for ASC 606
ASSETS
Prepaid expenses and other current assets	$	44,527	$	1,875	(1)	$	46,402
Total current assets	$	993,697	$	1,875		$	995,572
Total assets	$	2,031,859	$	1,875		$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities	$	94,644	$	1,816	(2)	$	96,460
Total current liabilities	$	311,984	$	1,816		$	313,800
Deferred income taxes	$	133,251	$	22		133,273
Total liabilities	$	1,281,948	$	1,838		$	1,283,786
Retained earnings	$	780,084	$	37	(3)	$	780,121
Total stockholder's equity	$	749,911	$	37		$	749,948
Total liabilities and stockholders' equity	$	2,031,859	$	1,875		$	2,033,734

(1) Reclassification of estimated inventory expected to be returned by customers through future sales refund transactions. This amount was reclassified from the returns reserve (current liability) to a current asset. Prior to the Company's adoption of ASC 606, the Company's returns reserve (current liability) was reported net of the estimated inventory expected to be returned by customers through sales refund transactions.

(2) Amount includes a reclassification of approximately $1.9 million for estimated inventory expected to be returned by customers, partially offset by an adjustment of approximately $0.1 million for gift card liabilities.

(3) Cumulative impact of approximately $0.6 million for after-tax adjustments to retained earnings at the beginning of fiscal 2016, offset by ASC 606 impact on fiscal 2017 and fiscal 2016 results of operations.

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 second quarter and two quarters ended fiscal 2018 and 2017 were as follows:

	Fiscal quarter ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	209,476	$	25,169	$	234,645
Direct-to-consumer	402,021		—		59,531		461,552
	$	402,021	$	209,476	$	84,700	$	696,197
Royalty income	$	4,426	$	4,957	$	972	$	10,355

	Two fiscal quarters ended June 30, 2018
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	490,309	$	62,882	$	553,191
Direct-to-consumer	785,762		—		113,030		898,792
	$	785,762	$	490,309	$	175,912	$	1,451,983
Royalty income	$	6,011	$	10,802	$	1,536	$	18,349

	Fiscal quarter ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	217,710	$	27,622	$	245,332
Direct-to-consumer	391,457		—		54,962		446,419
	$	391,457	$	217,710	$	82,584	$	691,751
Royalty income	$	4,896	$	5,140	$	1,174	$	11,210

	Two fiscal quarters ended July 1, 2017
(dollars in thousands)	U.S. Retail		U.S. Wholesale		International		Total
Wholesale channel	$	—	$	510,265	$	57,304	$	567,569
Direct-to-consumer	755,299		—		101,710		857,009
	$	755,299	$	510,265	$	159,014	$	1,424,578
Royalty income	$	8,164	$	11,505	$	2,099	$	21,768

Accounts Receivable from Customers and Licensees

The components of accounts receivable, net, as of June 30, 2018, December 30, 2017, and July 1, 2017 were as follows:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Trade receivables from wholesale customers, net	$	138,952		$	229,968		$	153,581
Royalties receivable	8,824			9,818			10,107
Tenant allowances and other receivables	12,168			14,511			11,265
Total gross receivables	$	159,944		$	254,297		$	174,953
Less:
Wholesale accounts receivable reserves	(7,427		)	(13,736		)	(9,770		)
Accounts receivable, net	$	152,517		$	240,561		$	165,183

Contract Liabilities

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:        

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Contract liabilities-current:
Unredeemed gift cards	$	11,072	$	11,945	$	9,991
Unredeemed customer loyalty rewards	6,164		7,355		9,835
Total contract liabilities-current *	$	17,236	$	19,300	$	19,826

* Included with Other current liabilities on the Company's consolidated balance sheet.

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2018

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:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Cumulative foreign currency translation adjustments	$	(27,724	)	$	(21,285	)	$	(23,537	)
Pension and post-retirement obligations (1)	(7,808		)	(7,808		)	(7,116		)
Total accumulated other comprehensive loss	$	(35,532	)	$	(29,093	)	$	(30,653	)

(1) Net of income taxes of $4.4 million, $4.4 million, and $4.2 million, respectively. The deferred income taxes associated with these obligations are subject to adjustments upon the Company's adoption of ASC 2018-02. See Note 16, Pending Adoption of Recent Accounting Pronouncements.

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets table

The Company's goodwill and intangible assets were as follows:

		June 30, 2018						December 30, 2017
(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	40,367				40,367		42,223				42,223
Skip Hop goodwill	Indefinite	45,984				45,984		45,997				45,997
Carter's Mexico goodwill	Indefinite	5,634				5,634		5,634				5,634
Total goodwill		$	228,555			$	228,555	$	230,424			$	230,424
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		$	627	3,284		3,550		$	532	3,018
Total tradenames, net		$	366,444	$	627	$	365,817	$	366,083	$	532	$	365,551
Skip Hop customer relationships	15 years	$	47,300	$	3,892	$	43,408	$	47,300	$	2,304	$	44,996
Carter's Mexico customer relationships	10 years	3,031		217		2,814		3,135		135		3,000
Total customer relationships, net		$	50,331	$	4,109	$	46,222	$	50,435	$	2,439	$	47,996

		July 1, 2017
(dollars in thousands)	Weighted-average useful life	Gross amount		Accumulated amortization		Net amount
Carter's goodwill	Indefinite	$	136,570			$	136,570
Canada goodwill	Indefinite	40,897				40,897
Skip Hop goodwill	Indefinite	54,242				54,242
Total goodwill		$	231,709			$	231,709
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	42,021		$	38,915	3,106
Total tradenames, net		$	404,554	$	38,915	$	365,639
Skip Hop customer relationships, net	15 years	$	35,900	$	804	$	35,096

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COMMON STOCK (Tables)

6 Months Ended

Jun. 30, 2018

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:

	Fiscal quarter ended				Two fiscal quarters ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Number of shares repurchased	599,314		587,465		820,627		1,131,409
Aggregate cost of shares repurchased (dollars in thousands)	$	63,899	$	51,605	$	89,093	$	98,236
Average price per share	$	106.62	$	87.84	$	108.57	$	86.82

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LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:

(dollars in thousands)	June 30, 2018			December 30, 2017			July 1, 2017
Senior notes at amounts repayable	$	400,000		$	400,000		$	400,000
Less unamortized issuance-related costs for senior notes	(3,222		)	(3,694		)	(4,154		)
Senior notes, net	396,778			396,306			395,846
Secured revolving credit facility	286,000			221,000			266,000
Total long-term debt, net	$	682,778		$	617,306		$	661,846

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2018

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:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in thousands)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Stock options	$	1,112	$	955	$	2,456	$	2,199
Restricted stock:
Time-based awards	3,027		2,832		5,311		5,144
Performance-based awards	1,183		1,080		2,499		2,303
Total	$	5,322	$	4,867	$	10,266	$	9,646

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Assets and liabilities that are remeasured at fair value

The following table summarizes assets and liabilities that are remeasured at fair value each reporting period:

		June 30, 2018				December 30, 2017				July 1, 2017
(dollars in millions)		Level 1		Level 2	Level 3	Level 1		Level 2	Level 3	Level 1		Level 2	Level 3
Assets
	Investments (1)	$	16.9	—	—	$	16.7	—	—	$	15.3	—	—
Liabilities
	Contingent consideration (2)	—		—	—	—		—	—	—		—	$	3.6

(1) Included in Other assets on the Company's consolidated balance sheet.

(2) Included in Other current liabilities on the Company's consolidated balance sheet.

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2018

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:

	Fiscal quarter ended						Two fiscal quarters ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	46,437,093			47,863,618			46,604,599			48,093,155
Dilutive effect of equity awards	509,545			550,726			563,137			552,866
Diluted number of common and common equivalent shares outstanding	46,946,638			48,414,344			47,167,736			48,646,021
Basic net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(276		)	(290		)	(600		)	(659		)
Net income available to common shareholders	$	36,992		$	37,503		$	79,137		$	83,729
Basic net income per common share	$	0.80		$	0.78		$	1.70		$	1.74
Diluted net income per common share (in thousands, except per share data):
Net income	$	37,268		$	37,793		$	79,737		$	84,388
Income allocated to participating securities	(274		)	(288		)	(596		)	(654		)
Net income available to common shareholders	$	36,994		$	37,505		$	79,141		$	83,734
Diluted net income per common share	$	0.79		$	0.77		$	1.68		$	1.72
Anti-dilutive awards excluded from diluted earnings per share computation	332,448			663,531			254,417			596,297

XML

OTHER CURRENT AND LONG-TERM LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2018

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:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Accrued bonuses and incentive compensation	$	5,231	$	27,566	$	5,959
Accrued employee benefits	10,663		21,735		10,227
Accrued and deferred rent	18,702		18,213		17,767

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:

(dollars in thousands)	June 30, 2018		December 30, 2017		July 1, 2017
Deferred lease incentives	$	75,431	$	75,104	$	74,344

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2018

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.

	Fiscal quarter ended										Two fiscal quarters ended
(dollars in thousands)	June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales		June 30, 2018			% of Total Net Sales		July 1, 2017			% of Total Net Sales
Net sales:
U.S. Retail	$	402,021		57.7	%	$	391,457		56.6	%	$	785,762		54.1	%	$	755,299		53.0	%
U.S. Wholesale	209,476			30.1	%	217,710			31.5	%	490,309			33.8	%	510,265			35.8	%
International	84,700			12.2	%	82,584			11.9	%	175,912			12.1	%	159,014			11.2	%
Total net sales	$	696,197		100.0	%	$	691,751		100.0	%	$	1,451,983		100.0	%	$	1,424,578		100.0	%
Operating income (loss):				% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales					% of Segment Net Sales
U.S. Retail (a) (e)	$	45,428		11.3	%	$	42,133		10.8	%	$	74,947		9.5	%	$	71,922		9.5	%
U.S. Wholesale (b) (e)	30,338			14.5	%	35,805			16.4	%	80,610			16.4	%	105,501			20.7	%
International (e)	4,312			5.1	%	7,597			9.2	%	8,073			4.6	%	11,282			7.1	%
Corporate expenses (c) (d)	(23,108		)			(21,224		)			(46,351		)			(45,938		)
Total operating income	$	56,970		8.2	%	$	64,311		9.3	%	$	117,279		8.1	%	$	142,767		10.0	%

(a) Two fiscal quarters ended June 30, 2018 includes insurance recoveries of approximately $0.4 million associated with storm-related store closures in 2017.

(b) Includes approximately $12.8 million of charges related to a customer bankruptcy for the two fiscal quarters ended June 30, 2018.

(c) 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, and audit fees.

(d) Includes the following charges:

	Fiscal quarter ended				Two fiscal quarters ended
(dollars in millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Direct sourcing initiative	$	—	$	0.1	$	—	$	0.3
Acquisition-related costs	$	—	$	0.8	$	—	$	2.5

(e) A total of $0.4 million of certain costs related to inventory acquired from Skip Hop is included in operating income between U.S. Wholesale, U.S. Retail, and International for the fiscal quarter and two fiscal quarters ended July 1, 2017.

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheets (unaudited)

As of June 30, 2018

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	99,928	$	13,529	$	69,745	$	—		$	183,202
Accounts receivable, net	—		114,728		31,779		6,010		—			152,517
Intercompany receivable	—		70,001		105,309		60,536		(235,846		)	—
Finished goods inventories	—		385,000		224,323		76,949		(23,009		)	663,263
Prepaid expenses and other current assets	—		19,393		20,202		12,360		—			51,955
Total current assets	—		689,050		395,142		225,600		(258,855		)	1,050,937
Property, plant, and equipment, net	—		141,465		185,123		37,635		—			364,223
Goodwill	—		136,570		45,369		46,616		—			228,555
Tradenames, net	—		223,162		142,655		—		—			365,817
Customer relationships, net	—		—		43,408		2,814		—			46,222
Other assets	—		23,802		2,171		1,802		—			27,775
Intercompany long-term receivable	—		—		438,167		—		(438,167		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	810,329		1,086,715		254,289		—		(2,151,333		)	—
Total assets	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	147,179	$	50,786	$	18,966	$	—		$	216,931
Intercompany payables	—		158,421		72,412		5,013		(235,846		)	—
Other current liabilities	—		13,459		71,482		10,744		—			95,685
Total current liabilities	—		319,059		194,680		34,723		(235,846		)	312,616
Long-term debt	—		682,778		—		—		—			682,778
Deferred income taxes	—		45,690		39,560		505		—			85,755
Intercompany long-term liability	—		438,167		—		—		(438,167		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		81,732		94,721		15,598		—			192,051
Stockholders' equity	810,329		833,338		1,077,363		263,641		(2,174,342		)	810,329
Total liabilities and stockholders' equity	$	810,329	$	2,400,764	$	1,506,324	$	314,467	$	(2,948,355	)	$	2,083,529

As of December 30, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	129,463	$	10,030	$	39,001	$	—		$	178,494
Accounts receivable, net	—		182,944		40,286		17,331		—			240,561
Intercompany receivable	—		87,702		162,007		58,980		(308,689		)	—
Finished goods inventories	—		296,065		206,556		66,569		(20,468		)	548,722
Prepaid expenses and other current assets	—		17,012		21,354		14,569		—			52,935
Total current assets	—		713,186		440,233		196,450		(329,157		)	1,020,712
Property, plant, and equipment, net	—		147,858		189,511		40,555		—			377,924
Goodwill	—		136,570		45,368		48,486		—			230,424
Tradenames, net	—		223,251		142,300		—		—			365,551
Customer relationships, net	—		—		44,996		3,000		—			47,996
Other assets	—		23,884		2,392		2,159		—			28,435
Intercompany long-term receivable	—		—		441,294		—		(441,294		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	857,416		1,053,224		231,994		—		(2,142,634		)	—
Total assets	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	115,658	$	49,313	$	17,143	$	—		$	182,114
Intercompany payables	—		215,573		91,697		1,419		(308,689		)	—
Other current liabilities	—		11,805		122,989		14,340		—			149,134
Total current liabilities	—		343,036		263,999		32,902		(308,689		)	331,248
Long-term debt	—		617,306		—		—		—			617,306
Deferred income taxes	—		46,619		37,647		678		—			84,944
Intercompany long-term liability	—		441,294		—		—		(441,294		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		71,834		92,570		15,724		—			180,128
Stockholders' equity	857,416		877,884		1,043,872		241,346		(2,163,102		)	857,416
Total liabilities and stockholders' equity	$	857,416	$	2,397,973	$	1,538,088	$	290,650	$	(3,013,085	)	$	2,071,042

As of July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	127,907	$	11,435	$	34,222	$	—		$	173,564
Accounts receivable, net	—		124,885		35,765		4,533		—			165,183
Intercompany receivable	—		56,526		61,911		25,588		(144,025		)	—
Finished goods inventories	—		346,963		207,368		68,262		(12,170		)	610,423
Prepaid expenses and other current assets	—		16,683		19,483		10,236		—			46,402
Total current assets	—		672,964		335,962		142,841		(156,195		)	995,572
Property, plant, and equipment, net	—		150,796		195,209		36,467		—			382,472
Goodwill	—		136,570		53,635		41,504		—			231,709
Tradenames, net	—		223,339		142,300		—		—			365,639
Customer relationships, net	—		—		35,096		—		—			35,096
Other assets	—		20,901		447		1,898		—			23,246
Intercompany long-term receivable	—		—		411,475		—		(411,475		)	—
Intercompany long-term note receivable	—		100,000		—		—		(100,000		)	—
Investment in subsidiaries	749,948		936,348		167,809		—		(1,854,105		)	—
Total assets	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	151,770	$	47,695	$	17,875	$	—		$	217,340
Intercompany payables	—		82,539		57,034		4,452		(144,025		)	—
Other current liabilities	—		32,973		54,535		8,952		—			96,460
Total current liabilities	—		267,282		159,264		31,279		(144,025		)	313,800
Long-term debt	—		661,846		—		—		—			661,846
Deferred income taxes	—		69,750		63,422		101		—			133,273
Intercompany long-term liability	—		411,475		—		—		(411,475		)	—
Intercompany long-term note payable	—		—		100,000		—		(100,000		)	—
Other long-term liabilities	—		68,447		92,236		14,184		—			174,867
Stockholders' equity	749,948		762,118		927,011		177,146		(1,866,275		)	749,948
Total liabilities and stockholders' equity	$	749,948	$	2,240,918	$	1,341,933	$	222,710	$	(2,521,775	)	$	2,033,734

Condensed Consolidating Statements of Operations

Condensed Consolidating Statements of Operations (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	345,813		$	445,836		$	94,369		$	(189,821	)	$	696,197
Cost of goods sold	—			273,857			260,516			41,196			(189,330		)	386,239
Gross profit	—			71,956			185,320			53,173			(491		)	309,958
Royalty income, net	—			8,601			4,599			—			(2,845		)	10,355
Selling, general, and administrative expenses	—			42,423			196,923			32,110			(8,113		)	263,343
Operating income	—			38,134			(7,004		)	21,063			4,777			56,970
Interest expense	—			7,937			1,327			—			(1,327		)	7,937
Interest income	—			(1,329		)	—			(223		)	1,327			(225		)
(Income) loss in subsidiaries	(37,268		)	(4,973		)	(16,836		)	—			59,077			—
Other (income) expense, net	—			(3		)	114			864			—			975
Income (loss) before income taxes	37,268			36,502			8,391			20,422			(54,300		)	48,283
Provision for income taxes	—			4,011			3,418			3,586			—			11,015
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	352,814		$	434,956		$	71,885		$	(167,904	)	$	691,751
Cost of goods sold	—			260,901			257,168			37,019			(166,584		)	388,504
Gross profit	—			91,913			177,788			34,866			(1,320		)	303,247
Royalty income, net	—			8,905			4,882			—			(2,577		)	11,210
Selling, general, and administrative expenses	—			38,295			193,865			26,292			(8,306		)	250,146
Operating income	—			62,523			(11,195		)	8,574			4,409			64,311
Interest expense	—			7,138			1,377			6			(1,327		)	7,194
Interest income	—			(1,401		)	—			(5		)	1,327			(79		)
(Income) loss in subsidiaries	(37,793		)	7,153			(6,805		)	—			37,445			—
Other (income) expense, net	—			(257		)	280			(567		)	—			(544		)
Income (loss) before income taxes	37,793			49,890			(6,047		)	9,140			(33,036		)	57,740
Provision for income taxes	—			16,506			1,106			2,335			—			19,947
Net income (loss)	$	37,793		$	33,384		$	(7,153	)	$	6,805		$	(33,036	)	$	37,793

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,799		$	872,299		$	178,966		$	(406,081	)	$	1,451,983
Cost of goods sold	—			603,856			511,598			86,797			(392,703		)	809,548
Gross profit	—			202,943			360,701			92,169			(13,378		)	642,435
Royalty income, net	—			15,528			8,419			—			(5,598		)	18,349
Selling, general, and administrative expenses	—			84,239			412,089			63,612			(16,435		)	543,505
Operating income	—			134,232			(42,969		)	28,557			(2,541		)	117,279
Interest expense	—			15,912			2,654			10			(2,654		)	15,922
Interest income	—			(2,671		)	—			(374		)	2,654			(391		)
(Income) loss in subsidiaries	(79,737		)	21,039			(23,424		)	—			82,122			—
Other expense, net	—			18			125			450			—			593
Income (loss) before income taxes	79,737			99,934			(22,324		)	28,471			(84,663		)	101,155
Provision for (benefit from) income taxes	—			17,656			(1,285		)	5,047			—			21,418
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	806,329		$	830,806		$	132,917		$	(345,474	)	$	1,424,578
Cost of goods sold	—			591,535			486,115			74,448			(346,459		)	805,639
Gross profit	—			214,794			344,691			58,469			985			618,939
Royalty income, net	—			17,335			9,007			—			(4,574		)	21,768
Selling, general, and administrative expenses	—			79,227			383,369			52,563			(17,219		)	497,940
Operating income	—			152,902			(29,671		)	5,906			13,630			142,767
Interest expense	—			14,111			2,746			95			(2,654		)	14,298
Interest income	—			(2,840		)	—			(33		)	2,654			(219		)
(Income) loss in subsidiaries	(84,388		)	28,254			(4,358		)	—			60,492			—
Other (income) expense, net	—			(625		)	648			(788		)	—			(765		)
Income (loss) before income taxes	84,388			114,002			(28,707		)	6,632			(46,862		)	129,453
Provision for (benefit from) income taxes	—			43,244			(453		)	2,274			—			45,065
Net income (loss)	$	84,388		$	70,758		$	(28,254	)	$	4,358		$	(46,862	)	$	84,388

Condensed Consolidating Statements of Comprehensive Income

Condensed Consolidating Statements of Comprehensive Income (unaudited)

For the fiscal quarter ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	37,268		$	32,491		$	4,973		$	16,836		$	(54,300	)	$	37,268
Foreign currency translation adjustments	(4,677		)	(4,677		)	(4,677		)	(4,677		)	14,031			(4,677		)
Comprehensive income (loss)	$	32,591		$	27,814		$	296		$	12,159		$	(40,269	)	$	32,591

For the fiscal quarter ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	37,793	$	33,384	$	(7,153	)	$	6,805	$	(33,036	)	$	37,793
Foreign currency translation adjustments	3,140		3,140		3,140			3,140		(9,420		)	3,140
Comprehensive income (loss)	$	40,933	$	36,524	$	(4,013	)	$	9,945	$	(42,456	)	$	40,933

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	79,737		$	82,278		$	(21,039	)	$	23,424		$	(84,663	)	$	79,737
Foreign currency translation adjustments	(6,439		)	(6,439		)	(6,439		)	(6,439		)	19,317			(6,439		)
Comprehensive income (loss)	$	73,298		$	75,839		$	(27,478	)	$	16,985		$	(65,346	)	$	73,298

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent		Subsidiary Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	84,388	$	70,758	$	(28,254	)	$	4,358	$	(46,862	)	$	84,388
Foreign currency translation adjustments	4,087		4,087		4,087			4,087		(12,261		)	4,087
Comprehensive income (loss)	$	88,475	$	74,845	$	(24,167	)	$	8,445	$	(59,123	)	$	88,475

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows (unaudited)

For the two fiscal quarters ended June 30, 2018

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	109,382		$	(38,837	)	$	32,518		$	—		$	103,063
Cash flows from investing activities:
Capital expenditures	—			(9,291		)	(19,042		)	(3,417		)	—			(31,750		)
Intercompany investing activity	130,651			(3,243		)	3,024			927			(131,359		)	—
Acquisitions of businesses, net of cash acquired	—			—			—			96			—			96
Disposals and recoveries from property, plant, and equipment	—			—			369			4			—			373
Net cash provided by (used in) investing activities	130,651			(12,534		)	(15,649		)	(2,390		)	(131,359		)	(31,281		)
Cash flows from financing activities:
Intercompany financing activity	—			(191,383		)	57,985			2,039			131,359			—
Borrowings under secured revolving credit facility	—			150,000			—			—			—			150,000
Payments on secured revolving credit facility	—			(85,000		)	—			—			—			(85,000		)
Dividends paid	(42,267		)	—			—			—			—			(42,267		)
Repurchases of common stock	(89,093		)	—			—			—			—			(89,093		)
Withholdings from vestings of restricted stock	(6,667		)	—			—			—			—			(6,667		)
Proceeds from exercises of stock options	7,376			—			—			—			—			7,376
Net cash (used in) provided by financing activities	(130,651		)	(126,383		)	57,985			2,039			131,359			(65,651		)
Effect of exchange rate changes on cash	—			—			—			(1,423		)	—			(1,423		)
Net (decrease) increase in cash and cash equivalents	—			(29,535		)	3,499			30,744			—			4,708
Cash and cash equivalents, beginning of period	—			129,463			10,030			39,001			—			178,494
Cash and cash equivalents, end of period	$	—		$	99,928		$	13,529		$	69,745		$	—		$	183,202

For the two fiscal quarters ended July 1, 2017

(dollars in thousands)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows provided by (used in) operating activities:	$	—		$	120,884		$	(13,661	)	$	110		$	—		$	107,333
Cash flows from investing activities:
Capital expenditures	—			(10,594		)	(19,719		)	(3,963		)	—			(34,276		)
Intercompany investing activity	136,535			(2,468		)	—			—			(134,067		)	—
Acquisition of business, net of cash acquired	—			(144,520		)	746			70			—			(143,704		)
Net cash provided by (used in) investing activities	136,535			(157,582		)	(18,973		)	(3,893		)	(134,067		)	(177,980		)
Cash flows from financing activities:
Intercompany financing activity	—			(164,451		)	32,252			(1,868		)	134,067			—
Borrowings under secured revolving credit facility	—			100,000			—			—			—			100,000
Payments on secured revolving credit facility	—			—			—			(18,965		)	—			(18,965		)
Dividends paid	(35,831		)	—			—			—			—			(35,831		)
Repurchases of common stock	(98,236		)	—			—			—			—			(98,236		)
Withholdings from vestings of restricted stock	(5,590		)	—			—			—			—			(5,590		)
Proceeds from exercises of stock options	3,122			—			—			—			—			3,122
Net cash (used in) provided by financing activities	(136,535		)	(64,451		)	32,252			(20,833		)	134,067			(55,500		)
Effect of exchange rate changes on cash	—			—			—			353			—			353
Net decrease in cash and cash equivalents	—			(101,149		)	(382		)	(24,263		)	—			(125,794		)
Cash and cash equivalents, beginning of period	—			229,056			11,817			58,485			—			299,358
Cash and cash equivalents, end of period	$	—		$	127,907		$	11,435		$	34,222		$	—		$	173,564

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THE COMPANY (Details)	Jun. 30, 2018 store
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of stores	1,049

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REVENUE RECOGNITION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017	Dec. 31, 2016	Jan. 02, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net sales	$ 696,197	$ 691,751	$ 1,451,983	$ 1,424,578
Cost of goods sold	386,239	388,504	809,548	805,639
Income before income taxes	48,283	57,740	101,155	129,453
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Basic net income per common share (USD per share)	$ 0.80	$ 0.78	$ 1.70	$ 1.74
Diluted net income per common share (USD per share)	$ 0.79	$ 0.77	$ 1.68	$ 1.72
Total current assets	$ 1,050,937	$ 995,572	$ 1,050,937	$ 995,572	$ 1,020,712
Total assets	2,083,529	2,033,734	2,083,529	2,033,734	2,071,042
Other current liabilities	95,685	96,460	95,685	96,460	149,134
Total current liabilities	312,616	313,800	312,616	313,800	331,248
Total liabilities	1,273,200	1,283,786	1,273,200	1,283,786	1,213,626
Retained earnings	845,395	780,121	845,395	780,121	886,037
Total retained earnings	845,395	780,121	845,395	780,121	886,037
Total stockholders' equity	810,329	749,948	810,329	749,948	857,416
Total liabilities and stockholders' equity	2,083,529	2,033,734	2,083,529	2,033,734	2,071,042
Unredeemed customer loyalty program points reserve	6,164	9,835	6,164	9,835	7,355
Disaggregation of Revenue
Disaggregated revenue	696,197	1,451,983	691,751	1,424,578
Accounts receivable, gross	159,944	174,953	159,944	174,953	254,297
Accounts receivable, net	152,517	165,183	152,517	165,183	240,561
Contract Liabilities
Unredeemed gift cards	11,072	9,991	11,072	9,991	11,945
Unredeemed customer loyalty program points reserve	6,164	9,835	6,164	9,835	7,355
Total contract liabilities-current	17,236	19,826	17,236	19,826	19,300
Allowance for Doubtful Accounts
Disaggregation of Revenue
Less: reserve	(7,427)	(9,770)	(7,427)	(9,770)	(13,736)
Trade receivables from wholesale customers, net
Disaggregation of Revenue
Accounts receivable, gross	138,952	153,581	138,952	153,581	229,968
Royalties receivable
Disaggregation of Revenue
Accounts receivable, gross	8,824	10,107	8,824	10,107	9,818
Tenant allowances and other receivables
Disaggregation of Revenue
Accounts receivable, gross	12,168	11,265	12,168	11,265	14,511
Wholesale channel
Disaggregation of Revenue
Disaggregated revenue	234,645	553,191	245,332	567,569
Direct-to-consumer
Disaggregation of Revenue
Disaggregated revenue	461,552	898,792	446,419	857,009
Royalty income
Disaggregation of Revenue
Disaggregated revenue	10,355	18,349	11,210	21,768
Retail
Disaggregation of Revenue
Disaggregated revenue	402,021	785,762	391,457	755,299
Retail | Wholesale channel
Disaggregation of Revenue
Disaggregated revenue	0	0	0	0
Retail | Direct-to-consumer
Disaggregation of Revenue
Disaggregated revenue	402,021	785,762	391,457	755,299
Retail | Royalty income
Disaggregation of Revenue
Disaggregated revenue	4,426	6,011	4,896	8,164
Wholesale
Disaggregation of Revenue
Disaggregated revenue	209,476	490,309	217,710	510,265
Wholesale | Wholesale channel
Disaggregation of Revenue
Disaggregated revenue	209,476	490,309	217,710	510,265
Wholesale | Direct-to-consumer
Disaggregation of Revenue
Disaggregated revenue	0	0	0	0
Wholesale | Royalty income
Disaggregation of Revenue
Disaggregated revenue	4,957	10,802	5,140	11,505
International
Disaggregation of Revenue
Disaggregated revenue	84,700	175,912	82,584	159,014
International | Wholesale channel
Disaggregation of Revenue
Disaggregated revenue	25,169	62,882	27,622	57,304
International | Direct-to-consumer
Disaggregation of Revenue
Disaggregated revenue	59,531	113,030	54,962	101,710
International | Royalty income
Disaggregation of Revenue
Disaggregated revenue	$ 972	1,536	$ 1,174	2,099
ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Basic and diluted net income (USD per share)						$ 0.01
Net sales		(366)		(294)	92	$ (637)
Cost of goods sold		(156)		26	52	(7)
Income before income taxes		(210)		(319)	40	(630)
Net income		$ (132)		$ (201)	$ 84	$ (397)
Basic net income per common share (USD per share)		$ (0.01)		$ (0.01)	$ 0.00	$ (0.01)
Diluted net income per common share (USD per share)		$ (0.01)		$ (0.01)	$ 0.00	$ 0.00
Other current assets		$ 46,402		$ 46,402	$ 52,935
Total current assets		995,572		995,572	1,020,712
Total assets		2,033,734		2,033,734	2,071,042
Other current liabilities		96,460		96,460	149,134
Total current liabilities		313,800		313,800	331,248
Deferred income taxes		133,273		133,273	84,944
Total liabilities		1,283,786		1,283,786	1,213,626
Retained earnings		780,121		780,121	886,037
Total retained earnings		780,121		780,121	886,037
Total stockholders' equity		749,948		749,948	857,416
Total liabilities and stockholders' equity		2,033,734		2,033,734	2,071,042
Unredeemed customer loyalty program points reserve		1,900		1,900	3,000
Gift card liabilities		100		100	400
Cumulative Effect on Retained Earnings, Net of Tax						$ 600	$ 600
Contract Liabilities
Unredeemed customer loyalty program points reserve		1,900		1,900	3,000
ASC 606 | As Previously Reported
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Other current assets		44,527		44,527	49,892
Total current assets		993,697		993,697	1,017,669
Total assets		2,031,859		2,031,859	2,067,999
Other current liabilities		94,644		94,644	146,510
Total current liabilities		311,984		311,984	328,624
Deferred income taxes		133,251		133,251	84,848
Total liabilities		1,281,948		1,281,948	1,210,906
Retained earnings		780,084		780,084	885,714
Total retained earnings		780,084		780,084	885,714
Total stockholders' equity		749,911		749,911	857,093
Total liabilities and stockholders' equity		2,031,859		2,031,859	2,067,999
ASC 606 | ASC 606 Adoption Adjustments
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Other current assets		1,875		1,875	3,043
Total current assets		1,875		1,875	3,043
Total assets		1,875		1,875	3,043
Other current liabilities		1,816		1,816	2,624
Total current liabilities		1,816		1,816	2,624
Deferred income taxes		22		22	96
Total liabilities		1,838		1,838	2,720
Retained earnings		37		37	323
Total retained earnings		37		37	323
Total stockholders' equity		37		37	323
Total liabilities and stockholders' equity		$ 1,875		$ 1,875	$ 3,043

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BUSINESS ACQUISITIONS IN FISCAL 2017 (Skip Hop Acquisition) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		10 Months Ended	12 Months Ended
	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017	Dec. 30, 2017	Feb. 23, 2017
Business Acquisition [Line Items]
Goodwill	$ 231,709	$ 228,555	$ 231,709	$ 228,555	$ 231,709	$ 230,424	$ 230,424
Acquisition-related costs		$ 0	800	$ 0	2,500
Skip Hop [Member]
Business Acquisition [Line Items]
Percentage of voting interests acquired								100.00%
Preliminary purchase price						142,500
Cash Acquired						800
Goodwill						46,000	46,000
Intangible Assets						104,100	104,100
Tangible Assets						53,900	53,900
Liabilities Assumed						20,800	20,800
Deferred income tax liabilities						$ 36,300	36,300
Contingent Consideration							$ 3,600
Acquisition-related costs					1,800
Provisional Amounts [Member] | Skip Hop [Member]
Business Acquisition [Line Items]
Preliminary purchase price	147,300
Cash Acquired	800
Goodwill	54,200		54,200		54,200
Intangible Assets	92,700		92,700		92,700
Tangible Assets	54,900		54,900		54,900
Liabilities Assumed	20,200		20,200		20,200
Deferred income tax liabilities	$ 35,900		$ 35,900		$ 35,900

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BUSINESS ACQUISITIONS IN FISCAL 2017 (Acquisition of Mexican Licensee) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Aug. 01, 2017	Jul. 01, 2017
Business Acquisition [Line Items]
Goodwill	$ 228,555	$ 230,424		$ 231,709
Mexican Licensee [Member]
Business Acquisition [Line Items]
Inventory	8,000		$ 8,300
Intangible Assets	3,500		3,500
Goodwill	$ 6,300		$ 6,200

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	$ (35,532)	$ (30,653)	$ (35,532)	$ (30,653)	$ (29,093)
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Cumulative Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	(27,724)	(23,537)	(27,724)	(23,537)	(21,285)
Pension and Post-retirement Liability Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated other comprehensive loss	$ (7,808)	$ (7,116)	(7,808)	(7,116)	(7,808)
Tax impact			$ 4,400	$ 4,200	$ 4,400

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GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	$ 228,555	$ 231,709	$ 228,555	$ 231,709	$ 230,424
Goodwill, Net amount	228,555	231,709	228,555	231,709	230,424
Total, Net amount	365,817	365,639	365,817	365,639	365,551
Amortization costs	800	600	1,800	900
Future amortization expense, 2019	3,700		3,700
Carter's Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	136,570	136,570	136,570	136,570	136,570
Goodwill, Net amount	136,570	136,570	136,570	136,570	136,570
Canada Acquisition Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	40,367	40,897	40,367	40,897	42,223
Goodwill, Net amount	40,367	40,897	40,367	40,897	42,223
Skip Hop Goodwill [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	45,984	54,242	45,984	54,242	45,997
Goodwill, Net amount	45,984	54,242	45,984	54,242	45,997
Carters Mexico [Member]
Goodwill and Other Intangible Assets [Line Items]
Goodwill, Gross amount	5,634		5,634		5,634
Goodwill, Net amount	5,634		5,634		5,634
Carter's Tradename [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	220,233	220,233	220,233	220,233	220,233
Oshkosh Trade Name [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	85,500	85,500	85,500	85,500	85,500
Skip Hop Trade Name [Member]
Goodwill and Other Intangible Assets [Line Items]
Indefinite intangible assets	56,800	56,800	56,800	56,800	56,800
Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Accumulated amortization	627	38,915	627	38,915	532
Intangible assets, Gross amount	366,444	404,554	366,444	404,554	366,083
Indefinite-lived trademarks	365,817	365,639	365,817	365,639	365,551
Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Gross amount	3,911	42,021	3,911	42,021	3,550
Finite intangible assets, Accumulated amortization	627	38,915	627	38,915	532
Finite-Lived Intangible Assets, Net	3,284	3,106	3,284	3,106	3,018
Customer Relationships [Member]
Goodwill and Other Intangible Assets [Line Items]
Finite intangible assets, Gross amount	50,331		50,331		50,435
Finite intangible assets, Accumulated amortization	4,109		4,109		2,439
Finite-Lived Intangible Assets, Net	46,222		$ 46,222		47,996
Skip Hop Customer Relationships [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life			15 years
Finite intangible assets, Gross amount	47,300	35,900	$ 47,300	35,900	47,300
Finite intangible assets, Accumulated amortization	3,892	804	3,892	804	2,304
Finite-Lived Intangible Assets, Net	43,408	$ 35,096	$ 43,408	$ 35,096	44,996
Carters Mexico Customer Relationships [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life			10 years
Finite intangible assets, Gross amount	3,031		$ 3,031		3,135
Finite intangible assets, Accumulated amortization	217		217		135
Finite-Lived Intangible Assets, Net	$ 2,814		$ 2,814		$ 3,000
Minimum | Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life			5 years
Maximum | Other Tradenames [Member]
Goodwill and Other Intangible Assets [Line Items]
Weighted-average useful life			20 years

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COMMON STOCK (Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Stockholders' Equity Note [Abstract]
Remaining capacity under authorization	$ 496,500		$ 496,500
Number of shares repurchased (shares)	599,314	587,465	820,627	1,131,409
Aggregate cost of shares repurchased	$ 63,899	$ 51,605	$ 89,093	$ 98,236
Average price per share (USD per share)	$ 106.62	$ 87.84	$ 108.57	$ 86.82
Dividend declared per common share (USD per share)	$ 0.45	$ 0.37	$ 0.90	$ 0.74

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LONG-TERM DEBT (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Debt Instrument [Line Items]
Long-term debt	$ 682,778	$ 617,306	$ 661,846
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term debt	400,000	400,000	400,000
Less unamortized issuance-related costs for senior notes	(3,222)	(3,694)	(4,154)
Senior notes, net	396,778	396,306	395,846
Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 286,000	$ 221,000	$ 266,000

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LONG-TERM DEBT (Details)		3 Months Ended	6 Months Ended
	Aug. 25, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Dec. 30, 2017 USD ($)	Aug. 22, 2017 USD ($)	Jul. 01, 2017 USD ($)
Debt Instrument [Line Items]
Long-term debt		$ 682,778,000	$ 682,778,000	$ 617,306,000		$ 661,846,000
Outstanding letters of credit		$ 4,500,000	$ 4,500,000
LIBOR [Member]
Debt Instrument [Line Items]
Interest rate (as a percentage)		1.375%	1.375%
LIBOR [Member] | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		1.125%
LIBOR [Member] | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		1.875%
Base Rate [Member] | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		0.125%
Base Rate [Member] | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		0.875%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt		$ 286,000,000	$ 286,000,000	221,000,000		266,000,000
Available for future borrowing		$ 459,500,000	$ 459,500,000
Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Description of variable rate basis			LIBOR
Revolving Credit Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Interest rate (as a percentage)		0.375%	0.375%
Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount		$ 400,000,000	$ 400,000,000
Debt issuance costs		3,222,000	3,222,000	3,694,000		4,154,000
Long-term debt		$ 400,000,000	$ 400,000,000	$ 400,000,000		$ 400,000,000
Interest rate (as a percentage)		5.25%	5.25%
United States of America, Dollars | Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Effective interest rate (as a percentage)		3.38%	3.38%
Amended Credit Facility [Member]
Debt Instrument [Line Items]
Consolidated leverage ratio	2.25
Amended Credit Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					$ 750,000,000
Maximum borrowing capacity	$ 425,000,000
Amended Credit Facility [Member] | United States Dollar Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					650,000,000
Maximum borrowing capacity	350,000,000
Amended Credit Facility [Member] | United States Dollar Credit Facility [Member] | Letters of Credit [Member]
Debt Instrument [Line Items]
Short-term debt					100,000,000
Amended Credit Facility [Member] | United States Dollar Credit Facility [Member] | Swing Line [Member]
Debt Instrument [Line Items]
Short-term debt					70,000,000
Amended Credit Facility [Member] | Multicurrency Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, face amount					100,000,000
Maximum borrowing capacity	$ 75,000,000
Amended Credit Facility [Member] | Multicurrency Revolving Credit Facility [Member] | Letters of Credit [Member]
Debt Instrument [Line Items]
Short-term debt					40,000,000
Amended Credit Facility [Member] | Multicurrency Revolving Credit Facility [Member] | Swing Line [Member]
Debt Instrument [Line Items]
Short-term debt					$ 15,000,000

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STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 5,322	$ 4,867	$ 10,266	$ 9,646
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,112	955	2,456	2,199
Time-based restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	3,027	2,832	5,311	5,144
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,183	$ 1,080	$ 2,499	$ 2,303

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INCOME TAXES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Income Tax Disclosure [Abstract]
Gross unrecognized tax benefits	$ 14,900
Unrecognized tax benefits that if recognized would impact effective tax rate	12,600
Reserves for unrecognized tax benefits	1,800
Interest accrued on uncertain tax positions	$ 1,300	$ 1,000	$ 1,000
Effective income tax rate	22.00%
Tax Cuts And Jobs Act Of 2017, Incomplete Accounting, Transition Tax For Accumulated Foreign Earnings, Provisional Income Tax Expense		10,400
Business Acquisition [Line Items]
Deferred income taxes	$ 85,755	$ 84,944	$ 133,273

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FAIR VALUE MEASUREMENTS Fair Value measurements (Hierarchy) (Details) - USD ($)	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Fair Value, Inputs, Level 1 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments	$ 16,900	$ 16,700	$ 15,300
Contingent Consideration	0	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments	0	0	0
Contingent Consideration	0	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments	0	0	0
Contingent Consideration	$ 0	$ 0	$ 3,600

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Investments) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Fair Value Disclosures [Abstract]
Gain (Loss) on Investments	$ 0.2	$ 0.5	$ 0.2	$ 1.2

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Contingent Consideration) (Details) $ in Millions	12 Months Ended
	Dec. 30, 2017 USD ($)
Skip Hop [Member]
Business Acquisition, Contingent Consideration [Line Items]
Contingent Consideration Credit	$ 3.6

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Borrowings) (Details) - USD ($)	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 682,778,000	$ 617,306,000	$ 661,846,000
Secured revolving credit facility [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	286,000,000	221,000,000	266,000,000
Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	400,000,000	$ 400,000,000	$ 400,000,000
Debt Instrument, face amount	400,000,000
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	$ 406,000,000

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding	46,437,093	47,863,618	46,604,599	48,093,155
Dilutive effect of equity awards	509,545	550,726	563,137	552,866
Diluted number of common and common equivalent shares outstanding	46,946,638	48,414,344	47,167,736	48,646,021
Basic net income per common share (in thousands, except per share data):
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Income allocated to participating securities	(276)	(290)	(600)	(659)
Net income available to common shareholders	$ 36,992	$ 37,503	$ 79,137	$ 83,729
Basic net income per common share (USD per share)	$ 0.80	$ 0.78	$ 1.70	$ 1.74
Diluted net income per common share (in thousands, except per share data):
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Income allocated to participating securities	(274)	(288)	(596)	(654)
Net income available to common shareholders	$ 36,994	$ 37,505	$ 79,141	$ 83,734
Diluted net income per common share (USD per share)	$ 0.79	$ 0.77	$ 1.68	$ 1.72
Anti-dilutive shares (in shares)	332,448	663,531	254,417	596,297

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Current Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Other Liabilities Disclosure [Abstract]
Accrued bonuses and incentive compensation	$ 5,231	$ 27,566	$ 5,959
Accrued employee benefits	10,663	21,735	10,227
Accrued and deferred rent	$ 18,702	$ 18,213	$ 17,767

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OTHER CURRENT AND LONG-TERM LIABILITIES (Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017
Other Liabilities Disclosure [Abstract]
Deferred lease incentives	$ 75,431	$ 75,104	$ 74,344

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SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Segment Reporting Information [Line Items]
Net sales	$ 696,197	$ 691,751	$ 1,451,983	$ 1,424,578
Operating Income (Loss)	$ 56,970	$ 64,311	$ 117,279	$ 142,767
Operating income (loss) as percentage of segment net sales	8.20%	9.30%	8.10%	10.00%
Provisions for doubtful accounts receivable from customers			$ 11,511	$ 605
Direct sourcing initiative	$ 0	$ 100	0	300
Wholesale
Segment Reporting Information [Line Items]
Provisions for doubtful accounts receivable from customers			12,800
Retail
Segment Reporting Information [Line Items]
Insurance Recoveries			400
Wholesale, Retail and International Segment [Member] | Skip Hop [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)		400		400
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	$ 696,197	$ 691,751	$ 1,451,983	$ 1,424,578
Percentage of total net sales	100.00%	100.00%	100.00%	100.00%
Operating Segments [Member] | Wholesale
Segment Reporting Information [Line Items]
Net sales	$ 209,476	$ 217,710	$ 785,762	$ 755,299
Percentage of total net sales	30.10%	31.50%	54.10%	53.00%
Operating Income (Loss)	$ 45,428	$ 42,133	$ 74,947	$ 71,922
Operating income (loss) as percentage of segment net sales	11.30%	10.80%	9.50%	9.50%
Operating Segments [Member] | Retail
Segment Reporting Information [Line Items]
Net sales	$ 402,021	$ 391,457	$ 490,309	$ 510,265
Percentage of total net sales	57.70%	56.60%	33.80%	35.80%
Operating Income (Loss)	$ 30,338	$ 35,805	$ 80,610	$ 105,501
Operating income (loss) as percentage of segment net sales	14.50%	16.40%	16.40%	20.70%
Operating Segments [Member] | International
Segment Reporting Information [Line Items]
Net sales	$ 84,700	$ 82,584	$ 175,912	$ 159,014
Percentage of total net sales	12.20%	11.90%	12.10%	11.20%
Operating Income (Loss)	$ 4,312	$ 7,597	$ 8,073	$ 11,282
Operating income (loss) as percentage of segment net sales	5.10%	9.20%	4.60%	7.10%
Corporate [Member]
Segment Reporting Information [Line Items]
Corporate expenses	$ (23,108)	$ (21,224)	$ (46,351)	$ (45,938)

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Balance Sheets) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 30, 2017	Jul. 01, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 183,202	$ 178,494	$ 173,564	$ 299,358
Accounts receivable, net	152,517	240,561	165,183
Intercompany receivable	0	0	0
Finished goods inventories	663,263	548,722	610,423
Prepaid expenses and other current assets	51,955	52,935	46,402
Total current assets	1,050,937	1,020,712	995,572
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	364,223	377,924	382,472
Goodwill	228,555	230,424	231,709
Tradenames, net	365,817	365,551	365,639
Customer relationships, net	46,222	47,996	35,096
Other assets	27,775	28,435	23,246
Intercompany long-term receivable	0	0	0
Intercompany long-term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	2,083,529	2,071,042	2,033,734
Current liabilities:
Accounts payable	216,931	182,114	217,340
Intercompany payables	0	0	0
Other current liabilities	95,685	149,134	96,460
Total current liabilities	312,616	331,248	313,800
Long-term debt, net	682,778	617,306	661,846
Deferred income taxes	85,755	84,944	133,273
Intercompany long-term liability	0	0	0
Intercompany long-term note payable	0	0	0
Other long-term liabilities	192,051	180,128	174,867
Total stockholders' equity	810,329	857,416	749,948
Total liabilities and stockholders' equity	2,083,529	2,071,042	2,033,734
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	(235,846)	(308,689)	(144,025)
Finished goods inventories	(23,009)	(20,468)	(12,170)
Prepaid expenses and other current assets	0	0	0
Total current assets	(258,855)	(329,157)	(156,195)
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	0	0	0
Goodwill	0	0	0
Tradenames, net	0	0	0
Customer relationships, net	0	0	0
Other assets	0	0	0
Intercompany long-term receivable	(438,167)	(441,294)	(411,475)
Intercompany long-term note receivable	(100,000)	(100,000)	(100,000)
Investment in subsidiaries	(2,151,333)	(2,142,634)	(1,854,105)
Total assets	(2,948,355)	(3,013,085)	(2,521,775)
Current liabilities:
Accounts payable	0	0	0
Intercompany payables	(235,846)	(308,689)	(144,025)
Other current liabilities	0	0	0
Total current liabilities	(235,846)	(308,689)	(144,025)
Long-term debt, net	0	0	0
Deferred income taxes	0	0	0
Intercompany long-term liability	(438,167)	(441,294)	(411,475)
Intercompany long-term note payable	(100,000)	(100,000)	(100,000)
Other long-term liabilities	0	0	0
Total stockholders' equity	(2,174,342)	(2,163,102)	(1,866,275)
Total liabilities and stockholders' equity	(2,948,355)	(3,013,085)	(2,521,775)
Parent [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0	0
Intercompany receivable	0	0	0
Finished goods inventories	0	0	0
Prepaid expenses and other current assets	0	0	0
Total current assets	0	0	0
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	0	0	0
Goodwill	0	0	0
Tradenames, net	0	0	0
Customer relationships, net	0	0	0
Other assets	0	0	0
Intercompany long-term receivable	0	0	0
Intercompany long-term note receivable	0	0	0
Investment in subsidiaries	810,329	857,416	749,948
Total assets	810,329	857,416	749,948
Current liabilities:
Accounts payable	0	0	0
Intercompany payables	0	0	0
Other current liabilities	0	0	0
Total current liabilities	0	0	0
Long-term debt, net	0	0	0
Deferred income taxes	0	0	0
Intercompany long-term liability	0	0	0
Intercompany long-term note payable	0	0	0
Other long-term liabilities	0	0	0
Total stockholders' equity	810,329	857,416	749,948
Total liabilities and stockholders' equity	810,329	857,416	749,948
Subsidiary Issuer [Member]
Current assets:
Cash and cash equivalents	99,928	129,463	127,907	229,056
Accounts receivable, net	114,728	182,944	124,885
Intercompany receivable	70,001	87,702	56,526
Finished goods inventories	385,000	296,065	346,963
Prepaid expenses and other current assets	19,393	17,012	16,683
Total current assets	689,050	713,186	672,964
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	141,465	147,858	150,796
Goodwill	136,570	136,570	136,570
Tradenames, net	223,162	223,251	223,339
Customer relationships, net	0	0	0
Other assets	23,802	23,884	20,901
Intercompany long-term receivable	0	0	0
Intercompany long-term note receivable	100,000	100,000	100,000
Investment in subsidiaries	1,086,715	1,053,224	936,348
Total assets	2,400,764	2,397,973	2,240,918
Current liabilities:
Accounts payable	147,179	115,658	151,770
Intercompany payables	158,421	215,573	82,539
Other current liabilities	13,459	11,805	32,973
Total current liabilities	319,059	343,036	267,282
Long-term debt, net	682,778	617,306	661,846
Deferred income taxes	45,690	46,619	69,750
Intercompany long-term liability	438,167	441,294	411,475
Intercompany long-term note payable	0	0	0
Other long-term liabilities	81,732	71,834	68,447
Total stockholders' equity	833,338	877,884	762,118
Total liabilities and stockholders' equity	2,400,764	2,397,973	2,240,918
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	13,529	10,030	11,435	11,817
Accounts receivable, net	31,779	40,286	35,765
Intercompany receivable	105,309	162,007	61,911
Finished goods inventories	224,323	206,556	207,368
Prepaid expenses and other current assets	20,202	21,354	19,483
Total current assets	395,142	440,233	335,962
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	185,123	189,511	195,209
Goodwill	45,369	45,368	53,635
Tradenames, net	142,655	142,300	142,300
Customer relationships, net	43,408	44,996	35,096
Other assets	2,171	2,392	447
Intercompany long-term receivable	438,167	441,294	411,475
Intercompany long-term note receivable	0	0	0
Investment in subsidiaries	254,289	231,994	167,809
Total assets	1,506,324	1,538,088	1,341,933
Current liabilities:
Accounts payable	50,786	49,313	47,695
Intercompany payables	72,412	91,697	57,034
Other current liabilities	71,482	122,989	54,535
Total current liabilities	194,680	263,999	159,264
Long-term debt, net	0	0	0
Deferred income taxes	39,560	37,647	63,422
Intercompany long-term liability	0	0	0
Intercompany long-term note payable	100,000	100,000	100,000
Other long-term liabilities	94,721	92,570	92,236
Total stockholders' equity	1,077,363	1,043,872	927,011
Total liabilities and stockholders' equity	1,506,324	1,538,088	1,341,933
Non-Guarantors Subsidiaries [Member]
Current assets:
Cash and cash equivalents	69,745	39,001	34,222	$ 58,485
Accounts receivable, net	6,010	17,331	4,533
Intercompany receivable	60,536	58,980	25,588
Finished goods inventories	76,949	66,569	68,262
Prepaid expenses and other current assets	12,360	14,569	10,236
Total current assets	225,600	196,450	142,841
Property, plant, and equipment, net of accumulated depreciation of $430,834, $404,173, and $384,881, respectively	37,635	40,555	36,467
Goodwill	46,616	48,486	41,504
Tradenames, net	0	0	0
Customer relationships, net	2,814	3,000	0
Other assets	1,802	2,159	1,898
Intercompany long-term receivable	0	0	0
Intercompany long-term note receivable	0	0	0
Investment in subsidiaries	0	0	0
Total assets	314,467	290,650	222,710
Current liabilities:
Accounts payable	18,966	17,143	17,875
Intercompany payables	5,013	1,419	4,452
Other current liabilities	10,744	14,340	8,952
Total current liabilities	34,723	32,902	31,279
Long-term debt, net	0	0	0
Deferred income taxes	505	678	101
Intercompany long-term liability	0	0	0
Intercompany long-term note payable	0	0	0
Other long-term liabilities	15,598	15,724	14,184
Total stockholders' equity	263,641	241,346	177,146
Total liabilities and stockholders' equity	$ 314,467	$ 290,650	$ 222,710

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Income Statement) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Condensed Income Statements, Captions [Line Items]
Net sales	$ 696,197	$ 691,751	$ 1,451,983	$ 1,424,578
Cost of goods sold	386,239	388,504	809,548	805,639
Gross profit	309,958	303,247	642,435	618,939
Selling, general, and administrative expenses	263,343	250,146	543,505	497,940
Royalty income, net	10,355	11,210	18,349	21,768
Operating income	56,970	64,311	117,279	142,767
Interest expense	7,937	7,194	15,922	14,298
Interest income	(225)	(79)	(391)	(219)
(Income) loss in subsidiaries	0	0	0	0
Other expense (income), net	975	(544)	593	(765)
Income before income taxes	48,283	57,740	101,155	129,453
Provision for income taxes	11,015	19,947	21,418	45,065
Net income	37,268	37,793	79,737	84,388
Consolidation, Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	(189,821)	(167,904)	(406,081)	(345,474)
Cost of goods sold	(189,330)	(166,584)	(392,703)	(346,459)
Gross profit	(491)	(1,320)	(13,378)	985
Selling, general, and administrative expenses	(8,113)	(8,306)	(16,435)	(17,219)
Royalty income, net	(2,845)	(2,577)	(5,598)	(4,574)
Operating income	4,777	4,409	(2,541)	13,630
Interest expense	(1,327)	(1,327)	(2,654)	(2,654)
Interest income	1,327	1,327	2,654	2,654
(Income) loss in subsidiaries	59,077	37,445	82,122	60,492
Other expense (income), net	0	0	0	0
Income before income taxes	(54,300)	(33,036)	(84,663)	(46,862)
Provision for income taxes	0	0	0	0
Net income	(54,300)	(33,036)	(84,663)	(46,862)
Parent [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	0	0	0	0
Cost of goods sold	0	0	0	0
Gross profit	0	0	0	0
Selling, general, and administrative expenses	0	0	0	0
Royalty income, net	0	0	0	0
Operating income	0	0	0	0
Interest expense	0	0	0	0
Interest income	0	0	0	0
(Income) loss in subsidiaries	(37,268)	(37,793)	(79,737)	(84,388)
Other expense (income), net	0	0	0	0
Income before income taxes	37,268	37,793	79,737	84,388
Provision for income taxes	0	0	0	0
Net income	37,268	37,793	79,737	84,388
Subsidiary Issuer [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	345,813	352,814	806,799	806,329
Cost of goods sold	273,857	260,901	603,856	591,535
Gross profit	71,956	91,913	202,943	214,794
Selling, general, and administrative expenses	42,423	38,295	84,239	79,227
Royalty income, net	8,601	8,905	15,528	17,335
Operating income	38,134	62,523	134,232	152,902
Interest expense	7,937	7,138	15,912	14,111
Interest income	(1,329)	(1,401)	(2,671)	(2,840)
(Income) loss in subsidiaries	(4,973)	7,153	21,039	28,254
Other expense (income), net	(3)	(257)	18	(625)
Income before income taxes	36,502	49,890	99,934	114,002
Provision for income taxes	4,011	16,506	17,656	43,244
Net income	32,491	33,384	82,278	70,758
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	445,836	434,956	872,299	830,806
Cost of goods sold	260,516	257,168	511,598	486,115
Gross profit	185,320	177,788	360,701	344,691
Selling, general, and administrative expenses	196,923	193,865	412,089	383,369
Royalty income, net	4,599	4,882	8,419	9,007
Operating income	(7,004)	(11,195)	(42,969)	(29,671)
Interest expense	1,327	1,377	2,654	2,746
Interest income	0	0	0	0
(Income) loss in subsidiaries	(16,836)	(6,805)	(23,424)	(4,358)
Other expense (income), net	114	280	125	648
Income before income taxes	8,391	(6,047)	(22,324)	(28,707)
Provision for income taxes	3,418	1,106	(1,285)	(453)
Net income	4,973	(7,153)	(21,039)	(28,254)
Non-Guarantors Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	94,369	71,885	178,966	132,917
Cost of goods sold	41,196	37,019	86,797	74,448
Gross profit	53,173	34,866	92,169	58,469
Selling, general, and administrative expenses	32,110	26,292	63,612	52,563
Royalty income, net	0	0	0	0
Operating income	21,063	8,574	28,557	5,906
Interest expense	0	6	10	95
Interest income	(223)	(5)	(374)	(33)
(Income) loss in subsidiaries	0	0	0	0
Other expense (income), net	864	(567)	450	(788)
Income before income taxes	20,422	9,140	28,471	6,632
Provision for income taxes	3,586	2,335	5,047	2,274
Net income	$ 16,836	$ 6,805	$ 23,424	$ 4,358

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Condensed Financial Statements, Captions [Line Items]
Net income	$ 37,268	$ 37,793	$ 79,737	$ 84,388
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	32,591	40,933	73,298	88,475
Consolidation, Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	(54,300)	(33,036)	(84,663)	(46,862)
Foreign currency translation adjustments	14,031	(9,420)	19,317	(12,261)
Comprehensive income	(40,269)	(42,456)	(65,346)	(59,123)
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	37,268	37,793	79,737	84,388
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	32,591	40,933	73,298	88,475
Subsidiary Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	32,491	33,384	82,278	70,758
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	27,814	36,524	75,839	74,845
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	4,973	(7,153)	(21,039)	(28,254)
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	296	(4,013)	(27,478)	(24,167)
Non-Guarantors Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net income	16,836	6,805	23,424	4,358
Foreign currency translation adjustments	(4,677)	3,140	(6,439)	4,087
Comprehensive income	$ 12,159	$ 9,945	$ 16,985	$ 8,445

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GUARANTOR UNAUDITED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Cash Flows) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	$ 103,063	$ 107,333
Cash flows from investing activities:
Capital expenditures	(31,750)	(34,276)
Intercompany investing activity	0	0
Acquisitions of businesses, net of cash acquired	96
Disposals and recoveries from property, plant, and equipment	373	0
Acquisition of business, net of cash acquired		(143,704)
Net cash used in investing activities	(31,281)	(177,980)
Cash flows from financing activities:
Intercompany financing activity	0	0
Borrowings under secured revolving credit facility	150,000	100,000
Payments on secured revolving credit facility	(85,000)	(18,965)
Dividends paid	(42,267)	(35,831)
Repurchases of common stock	(89,093)	(98,236)
Withholdings from vestings of restricted stock	(6,667)	(5,590)
Proceeds from exercises of stock options	7,376	3,122
Net cash used in financing activities	(65,651)	(55,500)
Effect of exchange rate changes on cash and cash equivalents	(1,423)	353
Net increase (decrease) in cash and cash equivalents	4,708	(125,794)
Cash and cash equivalents, beginning of period	178,494	299,358
Cash and cash equivalents, end of period	183,202	173,564
Consolidation, Eliminations [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	(131,359)	(134,067)
Acquisitions of businesses, net of cash acquired	0
Disposals and recoveries from property, plant, and equipment	0
Acquisition of business, net of cash acquired		0
Net cash used in investing activities	(131,359)	(134,067)
Cash flows from financing activities:
Intercompany financing activity	131,359	134,067
Borrowings under secured revolving credit facility	0	0
Payments on secured revolving credit facility	0	0
Dividends paid	0	0
Repurchases of common stock	0	0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash used in financing activities	131,359	134,067
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Parent [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	0	0
Cash flows from investing activities:
Capital expenditures	0	0
Intercompany investing activity	130,651	136,535
Acquisitions of businesses, net of cash acquired	0
Disposals and recoveries from property, plant, and equipment	0
Acquisition of business, net of cash acquired		0
Net cash used in investing activities	130,651	136,535
Cash flows from financing activities:
Intercompany financing activity	0	0
Borrowings under secured revolving credit facility	0	0
Payments on secured revolving credit facility	0	0
Dividends paid	(42,267)	(35,831)
Repurchases of common stock	(89,093)	(98,236)
Withholdings from vestings of restricted stock	(6,667)	(5,590)
Proceeds from exercises of stock options	7,376	3,122
Net cash used in financing activities	(130,651)	(136,535)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Subsidiary Issuer [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	109,382	120,884
Cash flows from investing activities:
Capital expenditures	(9,291)	(10,594)
Intercompany investing activity	(3,243)	(2,468)
Acquisitions of businesses, net of cash acquired	0
Disposals and recoveries from property, plant, and equipment	0
Acquisition of business, net of cash acquired		(144,520)
Net cash used in investing activities	(12,534)	(157,582)
Cash flows from financing activities:
Intercompany financing activity	(191,383)	(164,451)
Borrowings under secured revolving credit facility	150,000	100,000
Payments on secured revolving credit facility	(85,000)	0
Dividends paid	0	0
Repurchases of common stock	0	0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash used in financing activities	(126,383)	(64,451)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	(29,535)	(101,149)
Cash and cash equivalents, beginning of period	129,463	229,056
Cash and cash equivalents, end of period	99,928	127,907
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	(38,837)	(13,661)
Cash flows from investing activities:
Capital expenditures	(19,042)	(19,719)
Intercompany investing activity	3,024	0
Acquisitions of businesses, net of cash acquired	0
Disposals and recoveries from property, plant, and equipment	369
Acquisition of business, net of cash acquired		746
Net cash used in investing activities	(15,649)	(18,973)
Cash flows from financing activities:
Intercompany financing activity	57,985	32,252
Borrowings under secured revolving credit facility	0	0
Payments on secured revolving credit facility	0	0
Dividends paid	0	0
Repurchases of common stock	0	0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash used in financing activities	57,985	32,252
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	3,499	(382)
Cash and cash equivalents, beginning of period	10,030	11,817
Cash and cash equivalents, end of period	13,529	11,435
Non-Guarantors Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	32,518	110
Cash flows from investing activities:
Capital expenditures	(3,417)	(3,963)
Intercompany investing activity	927	0
Acquisitions of businesses, net of cash acquired	96
Disposals and recoveries from property, plant, and equipment	4
Acquisition of business, net of cash acquired		70
Net cash used in investing activities	(2,390)	(3,893)
Cash flows from financing activities:
Intercompany financing activity	2,039	(1,868)
Borrowings under secured revolving credit facility	0	0
Payments on secured revolving credit facility	0	(18,965)
Dividends paid	0	0
Repurchases of common stock	0	0
Withholdings from vestings of restricted stock	0	0
Proceeds from exercises of stock options	0	0
Net cash used in financing activities	2,039	(20,833)
Effect of exchange rate changes on cash and cash equivalents	(1,423)	353
Net increase (decrease) in cash and cash equivalents	30,744	(24,263)
Cash and cash equivalents, beginning of period	39,001	58,485
Cash and cash equivalents, end of period	$ 69,745	$ 34,222