Target own brands play key role in record annual sales
There’s more to come from Target’s own brands in the year ahead. The retailer highlighted its store brands as a key pillar to its huge annual success alongside its annual and fourth-quarter fifinancial results. The company saw an increase in annual sales of $15.3 billion, a 19.8% jump in full-year sales to $92.4 billion, and a whopping 145% increase in digital sales (including delivery and pickup).
In own brands, Christina Hennington, recently named Target's chief growth officer, said the retailer’s private brands represent a third of its sales and four brands have reached $2 billion in sales: Cat & Jack, Up & Up, Threshold and Good & Gather.
In all, Target has more than 30 own brands and Hennington said there will be more to come in the new year, delivering on what shoppers need. She said the strategy, like its hugely successful All in Motion brand, one of 10 brands that earned more than $1 billion in sales, is to listen to shoppers. For All in Motion, the team interviewed 15,000 guests about athleisure apparel, and they were quick to launch, ahead of the athleisure trend booming during the pandemic as work-from-home gear. The tremendous success of Good & Gather also comes from taste tests and talking to shoppers, and with Cat & Jack, the retailer talked with parents and what they need, she said.
Additionally, she said the retailer will look into dedicated partnerships like the Levi’s program and the Ulta beauty shop and just last week's Apple products center.
“Own brands is vital to the success of our business,” she said, adding that they’re not just private brands, but brands Target guests trust and love. They make their own brands work by creating, designing and maintaining these brands, she said.
Hennington also pointed out that Target is doing more to be more relevant to Black shoppers, and that own brands will play a role in providing products that fit their needs. There have been some early exclusive products for Black History Month.
Fourth-quarter performance
Target’s record success was evident in the fourth quarter ended Jan. 30, too, including same-store sales increasing by 20.5%, a mix of 6.9% growth through physical stores and 118% in digital growth. Comparable traffic was up 6.5% and the average ticket was up 13.1%.
Target said more than 95% of its Q4 sales were fulfilled by its stores. Same-day digital services (order pickup, Drive Up and Shipt) grew 212%, led by more than 500% growth in Drive Up. Total revenue of $28.3 billion grew 21.1% compared with last year, driven by sales growth of 21% and a 28.7% increase in other revenue. Operating income was $1.8 billion in the fourth quarter 2020, up 53.2% from $1.2 billion in 2019.
"Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic," said Brian Cornell, chairman and CEO of Target. "With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is more than the 11 prior years combined. As we look ahead to 2021 and beyond, we see continued opportunity to invest in our business and our team, building on the strong foundation we've established to drive market share gains and deliver profitable growth for years to come."
Adding to its store growth, Target opened 30 new stores in 2020, including a record 39 new small-format stores.