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Target’s Focus on Merchandising Could Boost Its Comps

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Mar. 1 2019, Published 8:09 a.m. ET

Target’s partnership

On February 28, Target (TGT) announced that it’s teaming up with Vineyard Vines to launch a limited-edition collection. Slated to hit Target’s stores and e-commerce platform on May 18, the Vineyard Vines brand will offer in-vogue apparel, accessories, pets, home décor, and outdoor goods. Also, in order to broaden the brand’s appeal to a wide range of customers, the new items will start at $2. Most of the products will be priced under $35.

Target’s focus on merchandising is driving its comps higher. The company’s exclusive brand launches gained immense popularity among customers. The exclusive kids clothing line, Cat & Jack raked in more than $2 billion in sales during the first year after it launched.

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Amid heightened competition, retailers are focusing on merchandising to attract shoppers to their stores and websites. The brands help expand their category offerings and resonate well with customers due to the exclusivity and differentiation factor attached to them. The products also generate higher margins.

Walmart (WMT) acquired several online brands including Bare Necessities, ELOQUII, Art.com, Bonobos, Moosejaw, ModCloth, and more to boost its online offerings. Target partnered with Lord & Taylor and launched a flagship store. Amazon (AMZN) has launched private label brands including Lark & Ro and Amazon Essentials.

Fourth-quarter results

Target is scheduled to announce its fourth-quarter results on March 5. Analysts expect Target to sustain the momentum in its sales and earnings. Higher traffic led by e-commerce initiatives, expanded offerings, and store remodeling will likely drive the company’s comps. Improved comps and lower taxes are expected to drive double-digit growth in Target’s EPS.

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