Earnings in the second quarter were up over 70% compared to our second quarter 2019 earnings.
We dropped low-margin styles and reduced product choices by over 20%.
The collective benefit of a stronger product offering, higher margin e-commerce sales and fewer low-margin stores enabled us to achieve the highest second quarter retail operating margin in over 10 years.
eCommerce continued to be our highest margin business in the quarter with penetration growing to 38% of our retail sales, up from 27% prior to the pandemic.
Compared to the second quarter of 2019, retail sales were higher despite nearly 60 fewer stores.
We're on track to close over 100 low margin stores this year.
We estimate that the store closures will reduce our retail sales by nearly $90 million this year compared to 2019 but will improve profitability by over $5 million.
Our real estate team is evaluating new store opportunities in the top 20 U.S. markets.
90% of our stores are located in outdoor shopping centers, which makes it more convenient for consumers to shop online and pick up their purchases at our stores.
Over 30% of our online orders in the quarter were supported by our stores compared to less than 12% last year.
Our exclusive brands contributed nearly 50% of our second quarter wholesale sales.
For the year, we're expecting good double-digit growth in wholesale sales and earnings, and growth with nine of our top 10 customers.
Together with our wholesale customers, our global eCommerce sales grew to over $0.5 billion in the first half this year, up over 60% compared to 2019.
We launched our exclusive brand with Target 20 years ago.
Our sales growth in the second quarter was driven by Baby apparel with sales up over 30%.
Earlier estimates had suggested 300,000 to 500,000 fewer children would be born this year in the United States due to the pandemic.
First, we're estimated to decrease as much as 8% to 14% versus 2020.
The latest data from the CDC reflects first this year are down only 5%.
eCommerce sales through our international segment grew by nearly 70% in the first half of this year driven by Canada and Amazon.
Carter's continues to lead the market because of the strength of our brands, unparalleled market distribution and over 19,000 store locations and nearly 20,000 employees worldwide working to provide the very best value and experience in young children's apparel.
Net sales were $746 million, up 45% from last year.
Reported operating income was $108 million compared to $21 million last year, and reported earnings per share was $1.62 compared to $0.19 a year ago.
Building on the 45% increase in net sales, gross profit grew at an even greater rate 57%, to $369 million.
Gross margin improved 370 basis points to 49.4%, a fifth consecutive quarterly record for us.
For reference, this year's second quarter gross margin was 540 basis points over what we achieved in 2019.
Royalty income nearly doubled to $7 million, driven by recovery in demand across our domestic and international licensees.
Adjusted SG&A increased 34% to $265 million, reflecting higher store payroll expenses given store closures a year ago, the restoration of compensation provisions, which were curtailed a year ago, and higher marketing spend.
Given the strong growth in net sales, SG&A leveraged 300 basis points to 35.5% of sales.
Adjusted operating income nearly tripled from $41 million to $110 million, and adjusted operating margin improved 680 basis points to 14.8%, reflecting our gross margin expansion and expense leverage.
On the bottom line, adjusted earnings per share was $1.67, up meaningfully from $0.54 in last year's second quarter.
We ended the quarter with over $1 billion in cash on hand, and our total liquidity was nearly $2 billion when considering the availability under our credit facility.
Quarter-end net inventories declined 8% to $620 million.
Our long-term debt is down over $240 million versus last year when we were partially drawn on our revolver.
Given our strong first half performance, cash flow from operations was $50 million.
As we announced on our last call, our Board of Directors approved the resumption of our quarterly dividend, which was paid at $0.40 per share in the second quarter.
Corporate expenses as a percentage of net sales increased slightly to 3.8%, reflecting higher compensation provisions and consulting fees in support of our productivity initiatives.
Overall, our consolidated adjusted operating margin expanded to 14.8%.
As Mike noted, we have continued to make progress in improving the quality of our store portfolio and have closed nearly 90 stores year-to-date.
Now turning to page 10.
These products are made with 100% Oeko-Tex certified cotton, which certifies that the manufacturing processes for our products eliminate exposure to potentially harmful chemicals.
Turning to page 11.
Turning to page 12.
We acquired OshKosh in 2005 as a strategic and complementary brand, given its focus on playwear with its sweet spot in the toddler age range.
This iconic brand has over 125 years of rich history with a well-deserved reputation for quality and value.
Turning to page 13.
Moving to page 14.
Little Planet is also available in over 400 target stores nationwide, and we're planning to launch the brand on Amazon in spring 2022.
page 15 highlights another important investment that we're making in our retail business.
Moving to page 16, and our U.S. Wholesale business.
Overall segment profit increased to $41 million in the quarter, albeit at a lower margin rate as transportation costs were elevated and given favorable changes in inventory reserves, which occurred in last year's second quarter.
On page 17, our Simple Joys brand sold on Amazon continues to be an important presence for Carter's online.
Over the two day June prime event, sales of Simple Joys increased 70% over last year.
Page 18 features some of our recent marketing efforts with Kohl's, one of our most significant customers of the core Carter's brand in the wholesale channel.
Turning to page 19, and second quarter results for our International segment.
We saw strong growth in our International business in the second quarter, where sales nearly doubled to $91 million.
Canada was the largest contributor to our growth as sales in this market increased 75% over last year.
On page 20, our partnership with Riachuelo in Brazil continues to expand.
Riachuelo currently distributes the Carter's brand in 260 of its own department stores and has opened seven stand-alone Carter's stores in Brazil.
Riachuelo is planning on having approximately 25 Carter's stores in Brazil by the end of 2021.
On page 21, one of our most important international markets is the Middle East.
Our partner has nearly 40 stores in the Middle East, and the UAE is home to the largest freestanding Carter's store outside of North America.
On page s 23 and 24, we summarized our adjusted results for the first half of the year.
It's been a great start to 2021 with sales in the first six months, up 31% and significant gross margin expansion and SG&A leverage.
Our first half adjusted operating margin was 15.6% compared to low single-digits last year.
Now turning to our outlook for the balance of the year, beginning on page 26.
As we've demonstrated over the last 18 months or so, we intend to continue to actively manage through whatever the situation turns out to be, and we're well positioned to do so.
Turning to page 27.
Moving to page 28, and our specific thoughts on the outlook for the third quarter and full year.
For the third quarter, we're expecting net sales of approximately $960 million, adjusted operating income of approximately $110 million and adjusted earnings per share of approximately $1.60.
Today, we're raising our sales and earnings outlook for the full year.
We're now projecting net sales growth of approximately 15%, up from our previous view of 10%.
Adjusted operating income is now expected to be approximately $475 million, up from our previous view of about $400 million.
If we achieve our forecast, this would represent record operating income and a very strong operating margin of about 13.5%.
Adjusted earnings per share is expected to grow approximately 75%, up from our prior view of plus 40%.
So finally, on page 29, here's a graphical depiction of our expected performance, dropping in our guidance for full year 2021.

Summary:
Net sales were $746 million, up 45% from last year.
Reported operating income was $108 million compared to $21 million last year, and reported earnings per share was $1.62 compared to $0.19 a year ago.
On the bottom line, adjusted earnings per share was $1.67, up meaningfully from $0.54 in last year's second quarter.
As we announced on our last call, our Board of Directors approved the resumption of our quarterly dividend, which was paid at $0.40 per share in the second quarter.
Canada was the largest contributor to our growth as sales in this market increased 75% over last year.
For the third quarter, we're expecting net sales of approximately $960 million, adjusted operating income of approximately $110 million and adjusted earnings per share of approximately $1.60.
Today, we're raising our sales and earnings outlook for the full year.
We're now projecting net sales growth of approximately 15%, up from our previous view of 10%.
Adjusted earnings per share is expected to grow approximately 75%, up from our prior view of plus 40%.