Sluggish Q1 Does Little to Shake Target’s Faith In Product Mix

Following a rather ho-hum first quarter in which overall sales growth at Target was flat, officials with the retailer remain committed to maintaining their product assortment that includes an array of private brand products.

During an investor conference call to discuss Q1 results, Brian Cornell, chairman and CEO of Target, said the retailer has the advantage of a “nice balance” between national brands and its continued strength of the company’s own brand mix.

“We do think we’re uniquely positioned to continue to maneuver through a challenging 2023 through the strength of our multi-category portfolio,” he said. “The national brand partnerships we have that are complemented by our own brands, and the flexibility we built into our system by reducing inventory gives us the ability to flow fresh, new items that are trend-right for our guests.”

Cornell’s comments came just after Target reported first quarter results that saw company-wide sales grow 0.5% to $24.94 billion. While foot traffic was up 0.9%, comparable stores sales were up only 0.7%, with the decline in digital comparable sales serving as a drag on comp sales. Net earnings were $950 million, down 5.8% year-over-year.

Target’s chief executive noted that pressure from inflation and rising interest rates affected the mix of retail spending in the first quarter with a further softening seen in discretionary categories.

As consumers maintain their tight grip on their wallets, a big priority for Target is to create relevance for its shoppers while also delivering better returns for the business, said Christina Hennington, Target’s executive vice president, chief growth officer.

“Because the way we deliver value and our value proposition is about balance, it comes through a lot in the assortment, and our own brands play a particular role here,” she said. “Not only are they great, quality products that have been designed with specific guest needs in mind, they're also incredibly accessible from a price point perspective.”

Hennington pointed to Target’s recently launched new swim assortment, with prices starting at $12, as an example of this effort.

“Our only at-Target Sun Squad brand offers everything needed to be outside this summer with more than 60% of the entire assortment priced under $10 and nearly 90% of the assortment priced under $20,” she said. “But our comprehensive view of affordability extends beyond compelling price points. In particular, our own brand portfolio offers an unmatched combination of quality and price.”

Target’s success in apparel is seen in its proprietary Cat & Jack brand, which to-date has accounted for more than $3 billion in sales. The line of affordable kids clothing includes T-shirts priced at $4, leggings for $5 and dresses and jeans priced at $8. 

“Cat & Jack offers both affordability and style,” Hennington said. “And because we stand behind not just the price but the quality of these items as well, we guarantee all Cat & Jack apparel for one full year with free returns should anything not meet our guests' expectations. This is just another example of how we offer comprehensive value for our guests, giving them affordable options without skimping on quality.”