The kids didn't do anything wrong here. They are too young to know any better. And that's the problem.
The collection includes some clothing that is mildly Native-inspired, but nothing as offensive as the looks that caused such trouble for Urban Outfitters and Paul Frank Industries. It's the styling in the shoot—the feather headdresses, face paint and dream catcher—that is tasteless.
We've seen this before, and dissected the hipster headdress thing in many ways. But here's an argument that is tailored to this particular situation: No Native designer would put seven-year-old girls in feather headdresses for a photo shoot. The act itself says you're using a culture not your own, without understanding it. And commerce takes two: the seller who misuses another culture's symbols won't get far without a buyer who doesn't see anything wrong.
If neither side cares about what the headdress means, why is it there at all? We fear the answer is simply because it's cute.