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Home / Business / How Target dismantles Macy & # 39; s, Kohl's J.C. Penney and Sears

How Target dismantles Macy & # 39; s, Kohl's J.C. Penney and Sears



<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Target ( TGT ) proves that it is the United States & nbsp; new department store and it should scare the management teams at department stores such as Macy's ( M ), Kohl & # 39; s ( KSS ), JC Penney ( JCP ) and Sears (what's left of it) whose job for decades was simply to sell consumer apparel and accessories. "Data-reactid =" 1
5 "> Target (TGT) proves that it is the new US department store. And that should scare the management teams into department stores like Macy's (M), Kohl's (KSS), JC Penney (JCP) and Sears (what's left of it) whose jobs for decades were simply selling clothing and accessories to consumers. [19659002] Covered by Target's expanded grocery stores, remodeled stores and online purchases, in-store pickup, shoppers are clearly migrating to the retailer's apparel department. Target said Wednesday that same-store clothing sales skyrocketed 10% in the third quarter – clothing comps rose by a solid 5%.

Target clothing business accounts for more than 20% of annual sales. It is the company's third largest segment, behind food and beauty and necessities.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For a certain perspective on Target's market share in clothing , & nbsp; remember that Kohl notched a terrible & nbsp; 0.4% sales increase in the same store in the third quarter. Leaders blamed the pockets for the clothing selection for the glow that shows, especially women's clothing. JC Penney crashed same-store sales by 9.3% on the back of still-slow clothing sales. "Data-reactid =" 18 "> For some perspective on Targets's market share in clothing, keep in mind that Kohl has noted a terrible 0, 4% sales increase in the same store in the third quarter. Leaders blamed weaknesses in the clothing selection for the glow that shows, especially women's clothing. Over at JC Penney, same-store sales crashed by 9.3% on the back of continued slow sales of clothing.

Better shopping experience

Target finds success in clothes for a number of reasons, not just because people came in to buy groceries. Remember that clothing in general is a discretionary purchase that people must be lured to make. First, Target has increased the number of mannequins it uses in the apparel department to showcase new styles. Furthermore, Target has invested in diverse looking mannequins to entice a wider set of shoppers.

ORANGE, CA – NOVEMBER 17: An increasing number of mannequins wear clothing and shoes throughout the remodeled Target store in Orange, California , Friday 17. November 2017. (Photo by Jeff Gritchen / Digital First Media / Orange County Register via Getty Images)

In many respects, Target's clothing department – in tune with stocking wardrobes and brighter lighting – is simpler and more inviting to shop than a department store. And the prices tend to be cheaper.

"[Target’s apparel comp] speaks to the power of TGT's merchandising, especially when other clothing retailers are struggling," says Nomura Instinet analyst Michael Baker.

Beyond that, the company is just flat out selling better goods. The company has expanded the number of apparel offerings with private label and inked stronger deals with national brands such as Levi's & Champion.

Speculation is rampant that Target is in the running to add Nike to the stores now that the sneaker giant has pulled itself from Amazon. The addition of Nike would give a big blow to Macy's, Kohl and JC Penney, who have been the main outlets for the sportswear brand for several years.

Strength in the clothing – which is one of Target's higher-margin businesses – still has the power to make it into strong quarters this year.

Target shares increased 14% in early trading today to a record high after much stronger than expected earnings. Revenue highlights included:

  • Total sales: $ 18.7 billion vs. 18.22 billion estimates

  • Earnings per share: $ 1.36 versus $ 1.19 estimate (Target: $ 1, 04 to $ 1.24 per share)

  • Same-store turnover: 4.5% increase vs. 3.5% Estimated Increase (Goal Guidance: Up 3.4%)

  • Gross Profit Margin: 29.8% vs. 29% Estimate

  • Full Year Earnings Guidance: $ 6.25 to $ 6.45 versus Estimate $ 6.18 per Share (Targeted Advance Guidance: $ 5.90 to $ 6.20 per Share)

On this time, maybe the department stores should take a page from Target and invite Kroger into their stores. Obviously they could use the traffic of people who cook food every week … and maybe buy a new sweater in the process.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) –sm Mt (0.8em) – sm" type = "text" content = " Brian Sozzi is editor and great anchor of The First Trade [19659027] at Yahoo Finance. Follow him on Twitter @BrianSozzi "data-reactid = "45"> Brian Sozzi is editor of major and co-distributor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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