Children’s clothing retailer Carter’s has reported that its net sales grew by 3.7 per cent year-over-year to $585.3 million in the second quarter, with international and US segment sales up 14.1 per cent and 3.2 per cent, respectively. 

Its operating income decreased $35.4 million to $4 million, an 89.7 per cent decrease, year on year, with its operating margin dropping from 7 per cent to 0.7 per cent. 

This was a reflection of investments in remodelled stores, costs related to improving the company’s operating model, improvement initiatives and leadership transitions. 

The company’s net income was $400,000 in the second quarter of this year, as compared to $27.6 million during the same period last year.

“We are encouraged by improving business trends, particularly in US retail, where store traffic, purchase conversion, and demand for our core baby apparel products all demonstrated momentum in the second quarter,” said Douglas C Palladini, president and CEO of Carter’s. 

“I am disappointed, however, in our decline in profitability in the quarter, affected in part by selective investments in pricing, new stores, and more normalized levels of performance-based compensation. 

“We’ve also begun to see some impact from higher tariffs imposed on products imported into the US. 

“Returning Carter’s to long-term, sustainable, and profitable growth is our highest imperative, and we believe we are making informed and thoughtful investments to accomplish this objective,” said Palladini.