Target reports strongest store brand growth ever in Q1
Sales of Target’s owned brands grew 36% in the first quarter of 2021, a record high for the retailer that also reported an 18% jump in same-store sales and a 50% bump in comparable digital sales for the quarter.
The company saw tremendous growth in two key categories during the quarter: home and apparel, citing a 60% jump in apparel sales for the quarter — an area that had a 20% sales dip last year in the first quarter — and a more than 30% increase in home category sales for the quarter. The two categories undoubtedly carry strong store brands for the retailer with its exclusive apparel collections, growing store brand All in Motion and others, and the home category is driven by its Threshold brand and exclusive partnerships like the recent one with Levi’s.
During the earnings call, in fact, right around the point of sharing the category spikes in home and apparel, Christina Hennington, executive vice president and chief growth officer at Target, stopped to make special mention of its own brand success.
“Beyond category strength, I want to pause and also highlight that sales on Target's owned brands grew approximately 36% in the first quarter, the strongest increase we've ever recorded,” she said. “Because of our unique capabilities in product design, development and sourcing, our owned brand products offer an unbeatable combination of design, quality and value. These brands aren't something that our guests pick up while they're at Target, they're a big reason why they shop at Target, which is why we continue to invest in them.”
Hennington said the retailer will continue to focus on these areas, as well as sporting goods and toys, that saw big sales increases for the quarter. She said there’s a trend of American consumers wanting to feel stylish yet mobile and on the go, one that fuels its activewear apparel from All in Motion, but she said consumers also want to feel joy at home. She highlighted how the recent limited-time Hilton Carter plant partnership fosters that joy, and said its brand Pillowfort will be celebrating its 5-year anniversary, soon launching with hundreds of new items.
In fashion, she highlighted the new diversity-focused dress collection, All in Motion men’s apparel and its Goodfellow hair care products.
Brian Cornell, chairman and CEO of Target said “the magic behind our performance, is that great combination of in-store experience, the ease and convenience of digital, but that multi-category portfolio and that unique combination of our own brands and curated national brands, we appeal to a broad group of consumers in different cohorts. And we're picking up share across all of these different areas.”
Target is clearly not sitting idle in the food and beverage categories, however, having just launched a plant-based version of its Good & Gather brand and an indulgent sweets brand called Favorite Day. The retailer said that food and essentials sales grew in the low to mid-single digits for the quarter.
Other highlights from the retailer include a continued surge in digital sales, seeing digital comparable sales grow 50%, on top of 141% growth a year ago. Same-day services (Order Pickup, Drive Up and Shipt) grew more than 90%, led by growth in Drive Up of 123%.
The retailer said more than 95% of Target’s first quarter sales were fulfilled by its stores, and the company gained more than $1 billion in market share in the first quarter, on top of a $1 billion share gain in first quarter 2020.
“Our performance in the first quarter was outstanding on every measure, and showcased the power of putting our stores at the center of our strategy. Store comp sales grew 18% in the quarter, even as they also fulfilled more than three quarters of Target’s digital sales — including more than 90% growth of our same-day services,” Cornell said. “Importantly, market-share gains of more than $1 billion in the first quarter, on top of $1 billion in share gains a year ago, demonstrate Target’s continued relevance with our guests, even as they have many more shopping options compared with a year ago.”