Target’s apparel sales are on fire. And that’s bad news for everyone else

While Walmart is finding strength in grocery, Target is finding it in apparel.

The retailer said the apparel category reaped the most “dramatic” market share gains in the latest quarter, when it reported earnings on Wednesday. It said apparel sales were up more than 10%, which also helped strengthen Target’s profit margins.

Clearly, Target’s efforts to get back to being known as “cheap chic” are working.

In the fashion department, it has refreshed stores to make individual brands look more like their own mini boutiques, with more mannequins and table displays showing off merchandise. It has launched dozens of in-house apparel brands over the past three years, such as “A New Day” for women, “Auden” for lingerie and Goodfellow & Co. for men. They’re all reasonably priced, with guys’ winter sweaters selling for under $30 and a women’s party skirt for $27.99.

Notably, Target is succeeding at a time when others are struggling to sell clothes.

Teen apparel retailer Forever 21 has filed for bankruptcy. And Kohl’s, when it reported earnings Tuesday, said women’s apparel was its weakest category during the period. Gap’s brands, including what had been its fast-growing Old Navy label, are struggling. Dressbarn is wrapping up liquidation sales at its remaining stores. Amazon keeps trying to grow in fashion but has struggled to persuade shoppers to buy more than basic apparel from its site.

“I think our commitment to our new store operating model, where we have dedicated business owners in that apparel category … is really driving great results,” Target CEO Brian Cornell said on a post-earnings call with analysts. “The combination of the work we’ve done with our own brand assortment, adding some new national brands like Levi’s in select stores, the service that we’re delivering in store, and the inspiration we’re creating online has really come together.”

CONTINUE @ CNBC


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