Target Set To Sizzle the Market
Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Target (NYSE: TGT), a discount retailer, is all set to sizzle in the coming winter with its new holiday collection in collaboration with Neiman Marcus Group, owner of a luxury department store chain. As I had explained in my last post, this company is one of those active retailers who keep formulating new strategies to deliver value to investors. It recently posted a great quarter and unveiled a number of plans to boost growth. Here is an amazing addition to the queue.
Great Deal with Greater Benefits
This time, with the launch of the new collection, the retailer is targeting even higher as it brings to its portfolio a combination of 24 leading designers, Marc Jacobs and Tory Burch to name a few, to design 50 items which will be displayed in the stores of both players. It is not the first time that the discount retailer is enhancing its offering in collaboration with a high end brand name; it had offered the Missoni collection a year ago, and it proved to be a blockbuster.
The holiday collection is scheduled to hit the market in December and will be priced between $7.99 and $499.99. In fact, this time Neiman Marcus is entering a new market by offering items which are priced lower compared to its normal rates for designer merchandise. This move was very much needed for both the players, since the market is highly competitive and shoppers are cutting on their expenses due to the uncertain macroeconomic climate. Needless to say, luxury retailers are having a tough time, which was affirmed by the recent quarters of many, Fossil (NASDAQ: FOSL) being one of them. The high end watch maker posted depressing results because of low demand from shoppers. It came as a nightmare to investors, with its stock price dropping 50%.
Both the partners, Target and Neiman, cater to a market which is exactly opposite the other. Target attracts consumers who are price sensitive and Neiman, on the other hand, offers luxury products for the affluent. What makes them similar is their emphasis on quality and great designs, which will play a key role in the upcoming merchandise edition.
With the affordable versions of the top designers in place, Target is aiming to enhance its fashion image. Also, the new holiday collection which offers a wide range of designer items for below $100 is expected to be in great demand.
The potential move is going to make Target’s market share even stronger compared to peer J.C. Penney (NYSE: JCP), which has been witnessing declining sales for quite some time. J.C. Penney has been hit hard by Target’s strategies and posted an unattractive recent quarter. This might come as another blow to the retailer and worsen its already shaky position.
Bottom Line
The discount retailer has been strategizing to fight the slowdown in consumer spending by providing innovative offerings at a discount. It has also started taking care of its costs by making its store sizes smaller. Moreover, the company has plans to geographically expand into Canada, which is expected to drive revenue higher in months to come. With these good points already in place, the new partnership looks like the icing on the cake. Investors should definitely keep a close eye on Target, especially considering it has already made investors richer by 17% year to date.
justhimanshu has no positions in the stocks mentioned above. The Motley Fool owns shares of Fossil. Motley Fool newsletter services recommend Fossil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
