Target sets new "Threshold" for home with new private label program

Retail Editor 2, Tim McCord, May 16, 2012

Minneapolis - As an improving economic climate encourages Target shoppers to shop discretionary categories, the discount chain is giving a facelift to its private "Target Home" brand with a name change and a revamping of merchandise.

Dubbed "Threshold," the new house brand is set to launch this fall and roll out further into spring 2013 at stores and online, said Kathryn Tesija, evp, merchandising, during the company's first quarter earnings conference call this morning.

Threshold will stretch across all home furnishings segments that are part of the "Target Home" line, which in home textiles includes bedding, bath, rugs, table linens and kitchen textiles.

"Target Home is already our largest own brand, but we found opportunities to better clarify its positioning and point of views," Tesija continued, calling it the company's "biggest rebranding effort in our history."

She said: "Everything was on the table for this effort," including product, quality, packaging, and positioning.

On a smaller scale, Target engaged in similar effort to redefine its Room Essentials brand a couple of years ago, "and we've been very pleased with the results."

Threshold will debut the fall with an assortment of "entertaining essentials", accent pieces, and decorative accessories with a full extension into the entire home assortment by next year.

The timing for Threshold is "opportune," she said, "as the economy continues to improve and more guests are beginning to feel comfortable about trading from good to better brands."

Yet, earlier in the call, Tesija said wavering economic conditions in recent months have given the retailer cause for some concern in the coming months.

"In the first quarter, research indicated that consumers were feeling a bit more confident in their financial situation, making then somewhat more comfortable about spending across all categories," she stated. "However the consumer optimism about the future reached a peak in February and again began to decline in March and April. In addition, the percent of consumers planning to cut near-term spending increased in April, suggesting the possibility of softer growth in the near-term."

On a positive note, she continued, "recent declines in gas prices may lead to improvements in sentiment and stronger household budgets."

Overall, Target's total business exceeded expectations during the three-month period, ended April 28, with a 1.2% increase in profit to $697 million, or $1.04 per share.

Sales for the U.S. retail segment were up 6.1% to $16.5 billion, with a 5.3% increase in comparable-store sales.

For full-year 2012, Target has raised its guidance by 5 cents and now expects adjusted EPS of $4.60 to $4.80 and GAAP EPS of $4.10 to $4.30.

Target expects to open its first Canadian unit in just over a year from now.



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