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Target to Add 600 Items to Good & Gather Brand This Fall

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Target Corporation’s (TGT - Free Report) flourishing Good & Gather brand, which debuted almost a year earlier, generated above $1 billion sales in less than a year. The guests’ favorite brand initially got 650 items in its assortment and is coming up with over 600 items in nearly every food category this fall. Considering the latest additions, the brand is expected to become Target’s largest owned brand with around 2,000 items on the list.

The expansion of the Good & Gather brand includes the Signature line featuring 60 premium products with specialty ingredients and flavors. Here, guests can avail pizzas, pasta and coffee similar to what is offered in an Italian cafe. The Good & Gather label offers quality food excluding artificial flavors and sweeteners, synthetic colors, and high-fructose corn syrup. Impressively, Target’s Good and Gather brand is gaining momentum and driving its food-and-beverage unit.

On its second-quarter fiscal 2020 earnings call last month, the company notified that the food-and-beverage business has been outpacing the market and gaining share, with over 30% growth in the year through Aug 19. During second-quarter fiscal 2020, the food and beverage category experienced nearly 20% growth in comp sales. Moreover, the company is benefiting out of its owned and exclusive brands, which have been contributing to robust gross-margin rates.

Target’s commitment to offer a unique shopping experience with safe and convenient options including same-day Order Pickup and Drive Up, and same-day delivery with Shipt is worth mentioning. Customers are responding positively to such shopping tools, making Target a grocery-go-to destination. We note that same-day services (Order Pick Up, Drive Up and Shipt) skyrocketed 273% and accounted for roughly 6 percentage points of total comparable sales (comps) growth during second-quarter fiscal 2020. Sales fulfilled by Shipt were up more than 350% year over year and sales through Drive-Up were up more than 700% during the quarter under review.

Impressively, Target registered comps growth for the 13th straight quarter in fiscal second quarter. Further, digital comps soared 195% and added 13.4 percentage points to comps. It witnessed sturdy market-share gains in all five core-merchandise categories owing to strong demand in the quarter. While electronics sales soared more than 70%, apparel sales rebounded from a 20% decline in the first quarter to double-digit growth in the second quarter. Home and beauty rose by more than 30% and 20%, respectively. Notably, both essentials and food & beverage were up by about 20%.


 

In the wake of rising competition from Amazon (AMZN - Free Report) , Kroger (KR - Free Report) and Walmart (WMT - Free Report) , Target has been consolidating its position in the food-and-beverage space with its robust portfolio of owned and exclusive brands. This Minneapolis, MN-based company’s shares have surged 39.5% in a year and outperformed the industry’s 16.2% rally. Encouragingly, Target currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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