Carter's, Inc. (NYSE:CRI) Q2 2020 Earnings Conference Call - Final Transcript
Jul 24, 2020 • 08:30 am ET
Ladies and gentlemen, welcome to Carter's Second Quarter 2020 Earnings Conference Call.
On the call today are Mr. Michael Casey, Chairman and Chief Executive Officer; Mr. Richard Westenberger, Executive Vice President and Chief Financial Officer; Mr. Brian Lynch, President; and Mr. Sean McHugh, Vice President and Treasurer.
After today's prepared remarks, we will take questions as time allows. Carter's issued its second quarter 2020 earnings press release earlier this morning. A copy of the release and presentation materials for today's call have been posted on the Investor Relations section of the company's website at ir.carters.com.
Before we begin, let me remind you that statements made on this conference call and in the company's presentation materials about the company's outlook, plans and future performance are forward-looking statements. Actual results may differ materially from those projected. For a discussion of factors that could cause actual results to vary from those contained in the forward-looking statements, please refer to the company's most recent annual and quarterly reports filed with the Securities and Exchange Commission and the presentation materials posted on the company's website.
On this call, the company will reference various non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the GAAP financial measurements is provided in the company's earnings release and presentation materials. [Operator Instructions]
And now I'd like to turn the call over to Mr. Casey. Please begin, sir.
Michael D. Casey
Thanks very much. Good morning, everyone. Thank you for joining us on the call. Before we walk you through the presentation on our website, I'd like to share some thoughts on our business with you.
Our performance in the second quarter was meaningfully better than we expected. As you may recall for the safety of consumers and our employees we closed our stores in mid-March, and they remained closed for nearly 80% of the second quarter. Historically, our stores have provided the largest source of revenue to our business and from a market perspective in the United States nearly 80% of children's apparel was purchased in the stores last year, only 20% of children's apparel was bought online, thankfully following our store closures in March, we saw a surge in online demand for our brands. We also saw a significant demand for our exclusive brands with Target, Walmart and Amazon and other essential retailers that we're able to remain open.
In the second quarter, we improved our marketing strategy, which enabled better price realization and a higher gross profit margin. We reduced spending and inventories below prior year levels and significantly improved liquidity with a highly successful bond offering, the day after our previous update with you in May. So the pandemic has weighed on the growth we had planned this year, the impact to-date has been far less than we expected.
In terms of business trends, we saw the largest drop in sales and earnings in April. We returned to profitability in May with sales about 80% of last year. In June, our consolidated sales improved to about 90% of