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Target’s Signature Categories Beat Overall Business in Fiscal 2Q

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Aug. 23 2016, Updated 11:04 a.m. ET

Signature Categories comparable sales

Target’s (TGT) Signature Categories include Style, Baby, Kids, and Wellness. Target’s Signature Categories outpaced the total business by 3 percentage points in fiscal 2Q16, with particular strength in Kids and Style, according to Brian Cornell, Target’s CEO and chairman.

In Kids for 2Q16, the July rollout of the Cat & Jack brand led to double-digit growth in sales, compared to the sales of the Circo and Cherokee brand in fiscal 2Q15. Within the Style category, women’s apparel saw a mid-single-digit comparable sales increase in fiscal 2Q16. This was particularly due to double-digit growth in its Xhilaration brand and growth in Who What Wear, juniors, and swim.

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LA25 test stores to improve guest experience

For Costco Wholesale (COST), hard lines like sporting goods, garden and patio, automotive, and toys sales saw mid-single-digit growth in fiscal 1Q16. Dollar General (DG) also saw seasonal growth in nonconsumable items such as home products.

In order to meet consumer expectations, other mass merchandisers such as Macy’s (M), Nordstrom (JWN), and Kroger (KR) are also remodeling to improve performance across the chain. Target completed its remodeling of LA25 test stores in fiscal 2Q16. These LA25 stores have made changes in the food area, after which grocery sales have increased by 2–3 percentage points compared to sales in normal stores. This new food area provides guests a new grocery shopping experience.

Value-focused for Signature Categories

Target’s guests have loved key trends in the swim area such as high necks, strapping, and sports details. Hence, the company is expanding this range of assortment for the coming fall by inviting more guests to enjoy these fashion-forward collaborative items.

In addition, the company is launching new back-to-school and back-to-college campaigns, which are second in importance to the fourth-quarter holiday season. These initiatives will help to provide direct delivery of supplies from kids’ class lists and provide tools to make college shopping convenient. As part of its back-to-college campaign, Target will provide free bus transportation from campus.

Target makes up 1.0% of the PowerShares S&P 500 Quality Portfolio (SPHQ).[1. Updated on August 17, 2016.]

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