FINANCE

Private brand joins an exclusive club at Target

BY Marianne Wilson

Target Corp.’s decision to focus on owned and exclusive brands seems to be resonating with shoppers.

The discounter said that its A New Day apparel brand, which just celebrated its first anniversary, has reached an impressive milestone: $1 billion in sales. The label has become Target’s most expansive owned-brand across women’s apparel and accessories, with a continuous roll out of new styles. It joins other billion-dollar Target owned brands Cat & Jack, Threshold. Up & Up, Market Pantry and Room Essentials.

“A New Day is the foundation of our women’s apparel and accessories assortment, and we’re pleased with the love we’ve built in just one year — but we’re not stopping there,” said Mark Tritton, Target’s executive VP and chief merchandising officer. We’re continuing to refine our offerings to bring guests the quality, value and style they’ve come to expect from only-at-Target brands.”

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Giant Food Stores expands its store network

BY Marianne Wilson

Supervalu continues to shed its retail assets.

Giant Food Stores has entered into an agreement with Supervalu Inc., which was acquired by United Natural Foods this past summer, to acquire five corporately-owned Shop ‘n Save locations. Two of the stores are located in West Virginia, one in Virginia, one in Pennsylvania and one in Maryland.

The terms of the deal were not disclosed. Once the sale is completed, Giant plans to convert the Shop ‘n Save stores to its Martin’s Martin’s Food Markets banner.

“This acquisition demonstrates our continued commitment to the long-term growth strategy we announced earlier this year,” said Nicholas Bertram, president, Giant Food Stores. “We look forward to expanding the Martin’s brand along the Interstate 81 Corridor and within the Eastern Panhandle of West Virginia.”

This acquisition comes on the heels of a series of strategic investments that Giant has recently made in its store fleet and family of brands within Pennsylvania, including the introduction of the new Giant Heirloom Market in Philadelphia, the acquisition of Darrenkamp’s Willow Valley Square location and a new e-commerce hub, both in Lancaster, plus new stores planned for the East Stroudsburg and Walnutport communities.

The sale is currently expected to close during the first quarter of 2019, subject to customary closing conditions.

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Office Depot’s emphasis on business services paying off

BY Marianne Wilson

Office Depot’s transformation from a traditional office supplies retailer to more of a business services company appears to be paying off as the company posted income and sales that topped estimates, fueled by big increases in its business solutions division and services divisions.

The office supplies retailer’s net income totaled $60 million, or 11 cents a share, in the third quarter, down from $92 million, or 18 cents a share, in the year-age period. Adjusted per-share earnings came to 13 cents, ahead of estimates of 12 cents.

Sales rose 10.2% to $2.887 billion, also better than expected. Product sales were up 1.1%, while service revenues grew 123.7%, driven primarily by the service revenues contributed by the CompuCom acquisition. Services revenue represented approximately 15% of total company sales, up from 7% last year.

“CompuCom’s unique capabilities are a competitive differentiator allowing us to grow our services business and to attract new customers and distribution partners,” said Gerry Smith, CEO of Office Depot.

Retail sales, however, continued to decline. Sales fell 6% to $1.3 billion in the quarter, which the chain attributed partially to planned store closures.

Office Depot raised its full-year sales guidance to $11.0 billion from $10.8 billion and reiterated its full-year 2019 sales guidance of $11.1 billion.

“We’re making excellent progress on our strategy and we have again delivered strong top line growth and generated significant free cash flow,” said Smith. “A primary focus during this phase of our transformation is to recapture top-line sales growth and strengthen our core, and I’m pleased to report that our Business Solutions Division delivered their best quarter in over a decade, with sales up 6% in total including recent acquisitions, and most importantly, up 1% organically.”

The retailer’s investments in building its services capabilities are also continuing to pay off, according to Smith, with service revenues again growing double digits in both its BSD and retail divisions.

“Overall, we are making great progress on our transformation and remain confident that we have the right strategy in place to drive sustainable, profitable growth in the future,” he said.

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