Christina Hennington: We’re happy to have you here. Okay. Our own rent portfolio on its own would be a Fortune 100 company, more than $30 billion in sales, nearly 1/3 of our total revenue and even more of our gross margin. That’s because we have amazing capabilities that allow us to produce brands our guests genuinely love. Jill, let’s start with one I know you’re particularly excited about, a new brand in toys called Gigglescape.
Jill Sando: Kids related categories are huge for Target, and toys plays a key role in keeping Target relevant with families. National brands like Lego and exclusive brands like Our Generation have made Target one of the biggest toy retailers in America. And the addition of Gigglescape gives consumers one more only at Target reason to shop toys. Gigglescape is important for a few reasons. It’s consumer centric. It’s our first own brand designed specifically for generation alpha and their unique needs. It’s filling white space in our own brand assortment and it has us poised to drive growth in a high margin category and Gigglescape is priced to be accessible to all families. Just a few weeks ago, we launched our stuffed animals, most are priced under $10, and soon we’ll launch books, puzzles, and toys with all items in our Spring assortment priced under $20.
That kind of pricing makes it perfect for gifts and for the spur of the moment purchases because your child is being good today. This is a brand that makes our toys department a destination even when your Target run was inspired by something else and makes Target an even stronger destination for toys.
Christina Hennington: I love them. They’re super cute. Okay. Rick, our frequency categories play such a crucial role in driving trips and with up&up and Dealworthy, we’re giving our guests new reasons to choose Target. Can you tell us about that?
Rick Gomez: Yes. Well, as you know, Christina, we invest a lot of time listening to consumers to better understand their needs and one of the themes that we are consistently hearing is the need for value and affordability. So to address this consumer need, we are relaunching up&up and introducing Dealworthy. Up&up is one of Target’s most popular brands delivering nearly $3 billion in sales, offering over 2,000 everyday items at affordable prices and now we are making it even bigger and even better. We have developed product improvements across 40% of the line. We are also introducing 100s of new items and we are offering great prices with the average item price under $7. We’re also launching Dealworthy. It’s our new low-price brand with items across the store ranging from socks, laundry detergent, phone charges and I can’t stress enough what a great value Dealworthy will be.
The most, most items will be priced under $10 and some of those electronics items will be priced 50% lower than what was previously offered at Target. Dealworthy will be the lowest priced item in each category offering absolutely incredible value.
Christina Hennington: Indeed, our frequency businesses are an important part of driving trips to Target, meeting guests’ critical needs, but our discretionaries categories have the opportunity to do that as well. Jill, can you tell us a little bit about Cat & Jack?
Jill Sando: Yes. Kids apparel is another area where we have outsized market share, and Cat & Jack is a big part of that. This is the kids’ brand that we launched in 2016. Today, it’s a $3 billion brand, the biggest kids’ brand in America. To put that into perspective, consider this. We sell well over 300 million units of Cat & Jack a year, which comes out to about eight Cat & Jack items for every child in America under the age of 12. Now this is part of discretionary category but Cat & Jack is a brand that drives repeat business for Target because of great prices and great quality which parents love and great design that kids love. And when you think about kids’ style, the success of Cat & Jack pays dividends across our portfolio.
It drives trips and sales across the store during key moments like back-to-school and throughout the year as kids grow into new sizes. Cat & Jack also compliments brands like Wild Fable. That’s our juniors brand worn by millions of teens and tweens who started in Cat & Jack. It’s one of the biggest junior’s brands in the country and one we just extended into swim. Wild Fable is a great brand on its own. One fueled by our speed to trend in a very dynamic category, but it also has an important advantage since families are already in the habit of turning to Target for clothes for their kids.
Christina Hennington: Thank you, Jill. Rick, let’s switch gears a little bit and talk about Good & Gather because that’s a brand that’s helped us reimagine our grocery space and experience and really build our credibility in food.
Rick Gomez: Yeah. Absolutely. I’d love to talk about food and beverage. Our food and beverage business delivers over $20 billion in sales and that’s up $8 billion in sales since 2019. That’s because over the last few years we’ve been making big strides improving the food and beverage experience. Now I like to say that we have gone from being a retailer that just sells food to a retailer that truly celebrates food. And in doing that we have made Target a destination for food. Now Good & Gather has played a key role in that. At nearly $4 billion in sales, Good & Gather delivers a great value proposition. Delicious products that the whole family will enjoy, high quality ingredients with no artificial colors, no artificial flavors, no high fructose corn syrup, and importantly, great pricing with most items under $5.
And we’re not done growing the Good & Gather brand. Last fall, we expanded Good & Gather into new incremental spaces that are important to our guests like Good & Gather Baby and Toddler, creating another go to target, another go to category for parents with young children at Target.
Christina Hennington: Well, it’s abundantly clear that our guests rely on our own brands. Jill, you’ve been a part of these launches for so many years in your career. What makes us a leader in this space?
Jill Sando: We have unrivaled design capabilities, amazing talent across our team, hundreds of patents. It is no exaggeration to say that Target pioneered cheap chic. And what we’re doing is so hard to replicate because we didn’t decide to make a play in own brands 5 or even 10 years ago, we’ve been doing this for decades. We’ve had an in-house sourcing capability for 25 years now. Today, it spans 20 offices across 14 countries. Because we own our end-to-end sourcing business, we control our own destiny when you think about issues like country of production and raw material cost. We’re more cost effective with far fewer intermediaries in our network, which allows us to grow our bottom line even as we pass savings on to our guests.
We can adapt quickly to emerging trends, which keeps us relevant, and we’re able to pursue bold sustainability goals, which is important to driving growth by delivering on something that matters so much to millions of consumers. And those sustainability goals will also help ensure both the resiliency of our business model through responsible stewardship of the resources that we rely on and our ability to deliver the quality that our guests rely on.
Rick Gomez: And these capabilities, they really do set Target apart especially considering the scale at which we operate, delivering a steady drumbeat of newness to consumers. In my previous role in the CPG industry, it was a big year if we launched a few dozen new products. But for our food scientists, there’s, you know, that’s a couple weeks’ worth of work. In food and beverage alone this year, we’ll add hundreds of new items to Good & Gather and Favorite Day and that’s on top of the hundreds of new items that we launched last year. We are delivering innovation at scale that is unmatched by others.
Christina Hennington: Well, our capability is certainly our first rate. That human touch fueled by the power of insights can’t be stressed enough.
Jill Sando: That’s right. When we designed All In Motion, our performance brand, the first thing that we did was to engage with 15,000 consumers. We talked to fitness coaches. We attended dozens of workout classes. Because if you’re designing for the consumer, it starts with listening to the consumer. And we’re not just consumer led when we’re launching a product. We’re consumer led in how we continue to grow and develop our own brands because you can’t mistake performance for potential. Cat & Jack has been a runaway success, but we also learned through listing that we had opportunities to make the brand more appealing to more guests. Among other things, that led to the adaptive items we created to help all kids look and feel their best and the expansions we made to our dressy and mid dressy assortment, giving families more reasons to choose Cat & Jack and Target.
Rick Gomez: You know, consumer insight has also helped to continue to develop and grow Favorite Day. We launched the brand during the pandemic, and we’ve seen it drive trips, build baskets, delivering double digit growth year-after-year. So as food and beverage has become a go to category for Target during the holidays, we’ve expanded the role of Favorite Day to offer key seasonal items. You saw that in November and December with gingerbread kits, hot cocoa bombs, a huge range of snack mixes, and just a few weeks ago, Favorite Day was front and center for Valentine’s Day. And we’ll continue to expand Favorite Day into those big seasonal moments that are so important to our guests and important to keeping Target relevant.
Christina Hennington: Well, Jill, this leads to the enhanced approach we take into brand management, including a team under your leadership.
Jill Sando: We launched our brand management capability years ago and created an end-to-end process to successfully launch own brands, and that has enabled an accelerated rollout of own brands over the past five years. And we’ve been evolving our capabilities and are now operating more like a CPG company, the research, the market analysis, looking hard at the white space. That’s shaped our decision making around existing brands like prioritizing threshold as our flagship home brand and then offering a range of styles within it. That’s critical because Target is one of the biggest home retailers in the country and this is making it easier for our consumers to navigate our assortment. And our brand management work was critical to the success of our new kitchenware brand Figmint which debuted last Fall.
This isn’t the first time selling kitchenware as part of an owned brand, but it is our first owned brand devoted solely to kitchenware, and our guests love it. Baskets with Figmint items are 25% larger than our previous owned brand offering and Figmint was one of several factors that helped us accelerate our kitchenware business by more than 500 basis points between Q3 and Q4, taking us from a negative comp to a positive comp. Guests respond to newness and innovation and great design, and Figmint is just one example of that.
Rick Gomez: There’s been a lot of work in food and beverage to sharpen the focus of our brand portfolio. The launch of a flagship brand, Good & Gather, was the first step. We focused Market Pantry on family favorites at our most affordable prices, and we’ve also retired our previous snack and dessert brand, Archer Farms, and replaced it with Favorite Day, a brand with a much stronger identity around indulgent treats for the whole family. All of this helps Target make consumer centric decisions about our assortment like the addition of 50 new F& B items for Easter and dozens more that were launching just in time for the summer season, including a Favorite Day soda. Now it sounds simple, but the thoughtful, deliberate, holistic approach to designing, launching and managing our brands, it’s the difference between rolling out catch all brands and the difference between that and building brands that consumers love because we’re meeting their needs in a really meaningful way.
Christina Hennington: Well, thank you both. I love that. And that’s a perfect note to close on, consumer centricity. That’s a theme running through everything we’ve covered today. New brands like Gigglescape, Figmint, and Dealworthy. Our relaunched up&up and powerhouses like Gather and Cat & Jack. So, thank you, Rick and Jill, for what for that look into our own brand work. It really is incredible. When I think about Target’s right to win in this environment and our ability to meet key consumer needs, our own brands are foundational to so many of our plans. That’s because the investments we made in our capabilities and our team over more than two decades combined to form competitive advantage that few retailers anywhere can match.
And it’s not just a competitive moat we’re talking about here because we’re not hunkering down playing defense. This work is our springboard into the future. And through the incredible value our own brands offer across each of our key categories and the compelling newness they’re adding to our entire assortment, we’ll continue to deepen our relationships with our guests and we’ll give all consumers compelling reasons to choose Target. Now I’ll hand it off to Cara Sylvester, who’ll tell us more about how we’re getting these products in front of consumers and engaging with our guests and potential guests more broadly. Thank you. Cara?
Cara Sylvester: Thanks, Christina. And hello, everyone. Today, I’m excited to talk about our guest experience. And you might ask, Cara, how do we define guest experience at Target? Well, we think of it as the way we engage across America. From simply saying hello to consumers in a warm Target way, to deepening the relationships we have with existing Target guests, to how we create moments of discovery, connection, and joy that invite people to choose Target again and again. But before we look back at the previous year and preview what’s ahead, I wanna ground us in a consumer point of view. Because to understand how Target designs its guest experience, we should start with how people are shopping today. As you heard from Christina, gone are the days when people would follow a consistent and well-defined path from discovery to purchase.
Today, shopping is nonlinear and simply a part of the general ecosystem of our lives. Instead of a standalone experience that feels planned or predictable, shopping has become immersive, always on, and fully integrated into how we all go about our days. A large portion of U.S. consumers, about 40%, start their purchase online, and 20% start on social platforms. And those are just the people who are actively looking to shop. Many more are enticed to shop by the inspiration they find scrolling their social feeds for hours every day. This is expansive retail. Nontraditional entry points, seamless transition between stores, online and social, and fully in tune with what shoppers want and need. To meet these shoppers where they are, we spend a lot of time getting to know what matters to them and seeing the Target experience through their eyes.
Our guest base is broad and diverse. In fact, 96% of U.S. adults have shopped Target at some point in their life. Yet, we know that your shopping experience and mine are gonna look and feel very different based on a variety of factors. Our families, our interests, our budgets, our schedule, and simply what brings us joy. Expectations also differ by category. If you’re on a grocery run, you’re looking for reliability and value. And if I’m shopping for one of my daughter’s birthdays, I’m looking for inspiration and fun. These nuances are especially important for Target given our diverse multi category portfolio. Yet even though shopping journeys vary, after gathering feedback from millions of guests about what they care about and how Target fits into their lives, there are a few important truths that unite our guests and shape how we design our experience.
First, Target guests love to shop. They consistently list shopping as one of their favorite activities, more so than your average consumer. 90% of guests tell us they’re looking for quality products. They also want a meaningful connection with the brand and they’re ahead of the curve when it comes to keeping up with trends. Second, our guests are whenever, wherever, however shoppers using multiple channels to create the experience that fits into their lives. They’re in the driver’s seat when it comes to creating the experience that works best for them, and we have to meet them where, when, and how they need us. Finally, one more important fact that it defines Target guests, they are loyal, really loyal. Our most engaged guest account for a greater share of sales than we see at other competitors, showing that the connection we have with guests is sticky and drives growth and profitability.
Quite simply, guests look to Target for inspiration, to find on trend high quality items at a great price and to have some fun. Are we affordable? Yes. Are we fast and convenient? Absolutely. Can you check off everything on your list no matter how you prefer to shop? You bet. But there are other retailers who can say the same. What makes Target different, what makes guests consistently choose us over any other retailer is how we make them feel when they interact with us. How we design our experience to elevate ordinary moments into extraordinary ones with a carefully curated assortment, bursts of discovery and delight, and plenty of human connection along the way. There, of course, are the big splashes of the Target brand that grab headlines, generate buzz, and make people smile, like our Halloween Ghoul, Lewis, who took the season by storm, or the ugly squirrel sweater that we created in 48 hours to pay homage to the version worn by Taylor and Travis over the holidays, or turning the Las Vegas sphere into a huge holiday snow globe complete with bull’s eye in residence.
But there are also millions of smaller everyday moments that strengthen the bonds we have with our guests, making their lives a little bit easier and a little bit brighter. So, when visiting one of our stores in San Antonio, Texas last year, I kept hearing about a team member who I needed to meet. In fact, even some guests stopped me and said I absolutely needed to meet her. And they were right. She was somebody I absolutely needed to meet, and I wanted you to meet her too. Let me introduce you to Amelia. VIDEO CALL
Cara Sylvester: Yeah. So, I love that video because it captures who we are as a brand and what we aim to deliver across our entire guest experience. Our team brings so much empathy to their work. And it’s not just the face-to-face interactions at checkout or in the aisles. Empathy is infused into how we design every part of the guest experience. Drive Up’s a perfect example. The reason guests love Drive Up the Target because it’s a service reflects what’s most important to them. It’s easy. Swing by, we’ll bring out your order to you or even pick up your return. It’s fast. Just tell us you’re on your way. We’ll be ready when you are. No pick-up windows to worry about because we work on your schedule. It’s fun at a Starbucks to make your trip that much more relaxing and its all free.
