retail

Baby, Beauty, Essentials Shine Bright For Target


Consumers may be thumbs-down on department stores, but they are feeling all kinds of love for Target. The retailer just released its eighth consecutive quarter of same-store sales gains, defying industry expectations.

And while Target saw gains in each operating unit, it says toys, baby, beauty, essentials and apparel are among the best performers, driven by the appeal of its private-label brands.

The Minneapolis-based company says its first-quarter comparable sales gained 4.8%. And digital channel sales jumped 42%, with same-day fulfillment accounting for more than half of that digital growth. That includes drive-up, order pick up and Shipt, which offers same-day delivery for a $99 annual fee.

Total revenue rose 5% to $17.6 billion, up from $16.8 billion in the same period a year ago. And operating income increased 9% to $1.14 billion, from $1.04 billion in the comparable period of 2018.

To bolster its style credibility and make sure customers are as likely to come in for a beauty binge or a wardrobe refresh as they are for diapers or groceries, the company has been aggressively launching new lines in many categories.

Target execs used the earnings conference call, webcast to investors, as a chance to crow about the impact of the nearly 40 brands it’s added to its portfolio.

Among them: Everspring, a line with 70 natural cleaning products made from bio-based and recycled materials, priced about 20% less than competitors; Versed, a “clean” cosmetics line; Flamingo, a collection of women’s razors; and Sun Squad, a zany assortment of summer-loving products like oversized inflatable dinosaurs, watermelon wallets and pop-up tents that look like baby sharks.

Execs also called out the impact of Target's three new sleepwear and intimate brands, Auden, Stars Above and Colsie -- not just for the products, but for their size inclusivity and ease of in-store shopping.

“We remain extremely impressed with Target’s development of own-brands,” writes Neil Saunders, managing director of GlobalData Retail, in his note on Target’s performance. “The work on apparel has helped to renew the category and has increased shopper penetration in clothing.”

Also, “the development of new household labels -- like the Everspring cleaning line -- has created new points of interest and has captured some sales from mainstream national brands.”

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