Target Shuffles Brand Deck Hoping for More Customers

Big-box retailer Target Corp. (NYSE: TGT) has recently been getting hit from all sides of the retail market. Amazon snapped up Whole Foods, Wal-Mart has acquired a popular menswear brand, and Target had little response. Until Saturday, when the company said it would dump some brands and add others in hopes of attracting more customers to its stores.

A brand is more than just a label, Target has discovered, and in order for a brand to be successful, it needs to build an emotional attachment to consumers who will buy more of a brand that delivers what they want. Some of Target’s brands failed to meet that goal.

Without being specific about which brands would go, Target’s chief merchandising officer Mark Tritton gave the rationale for adding new brands:

Our brands have been solid performers. Take Cherokee and Circo in our kids’ business, for example—they were performing strongly, even in a difficult market. But we talked to our guests, looked at the data, and we realized that there was this huge opportunity to create a unique personality and own-able, differentiated point of view.

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Last year launched a kids’ apparel line called Cat & Jack that will replace the Cherokee and Circo brands which were growing same-store sales in the single digits. The new Cat & Jack brand was growing same-store sales at a double-digit rate, and as Tritton told The Wall Street Journal, “[Cherokee and Circo] were not underperforming, we just felt they had overstayed their welcome.”

In other words, the brands had become stale, and if there’s not much that will kill sales faster than staleness in the fast-changing world of kids’ clothing fashions. Tritton explained:

Cat & Jack is now one of our biggest owned brands and is a leader in the U.S. kids’ apparel industry. But it’s not just about creating a great product assortment—it’s how we bring the brand to life for our guests in stores, digitally and in our marketing, so that at every touchpoint, our guests understand that this brand’s not just new—it’s created especially for them.

Target could use some fresh success. The year-to-date stock price is down nearly 28% while chief brick-and-mortar rival Wal-Mart has seen shares add 9.5% in the same period, while Amazon’s shares are up about 29%.

The company’s stock closed up about 0.4% on Friday at $52.29 in a 52-week range of $48.56 to $79.33. The consensus 12-month price target on the stock is $58.00.

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