Target is back to its ‘cheap chic’ roots but has to keep momentum

“I think about the work we did years ago with Cat & Jack — thinking about how important it is for us to connect with babies, kids, with those moms,” Cornell told CNBC earlier this month from inside one of the retailer’s recently remodeled locations in downtown Minneapolis. “And now we’ve taken some of that learning, and the team’s just gotten better and better.”

The company has rolled out 17 of its own brands, including A New Day for women’s clothing, Heyday for electronics accessories, and Opalhouse for whimsical home decor, since the start of 2017 and is on track to add eight more by the end of 2019. Cat & Jack, arguably one of the retailer’s most well-known brands today, reached $2 billion in sales just one year after its launch in 2016, selling trendy clothing for kids.

“We feel great about … the new brands that we’ve launched, but we’re going to do a lot more in ’19 and ’20,” Cornell said.

For Target, these in-house brands and one-on-one collaborations with popular names such as Hunter and Lilly Pulitzer, more recently, also help fuel profit margins and give the retailer more control over inventory in stores. This has been especially important as Target pours more money into its supply chain to speed things like online delivery, which weighs on the bottom line.

“Now we’re back to Tar-Jay,” Moody’s analyst Charlie O’Shea told CNBC. “As a retailer today, you have to give the consumer a reason to come into your store or click on a website, and exclusive brands are No. 1 in that process. I would guess that Target’s brands so far are doing better than the company thought they would.”

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