Carter’s, a North American children’s apparel company, saw a 3.7% increase in net sales to $585.3m in Q2 2025, driven by international and US retail sales growth. However, operating income dropped 89.7% to $4m, leading to a sharp decline in profitability.

The company’s CEO noted positive sales momentum in direct-to-consumer businesses but expressed disappointment in declining profitability due to investments and higher tariffs impacting imported products. Carter’s is monitoring potential new tariffs that could significantly impact imports, estimating a yearly gross pre-tax earnings impact of $125m to $150m.

To mitigate extra costs, Carter’s plans product assortment adjustments, cost-sharing with vendors, shifting production, and price increases. However, uncertainties around new tariff proposals and leadership changes have led the company to suspend its financial guidance for fiscal year 2025.

Read more at Yahoo Finance: Carter’s sees profitability decline while sales rise 3.7% in Q2 2025