Target’s athleisure line hits $1B in sales (and Lulu needs to watch its back)
Bitter as Lululemons... Barely a year after launching, Target's athleisure line "All In Motion" has hit $1B in annual sales. The private label sells things like sports bras, leggings, and yoga mats (pandemic trifecta). And it's quickly catching up to 23-year-old Lululemon, which made $2.3B in sales from January to September 2020.
Cutsey generic name (check)... Private labels like All In Motion, Good & Gather (food), and Cat & Jack (kid's clothes), are profit puppies for Target. They're not Target-branded, but they're Target-owned. Tarjay has launched more than 30 of these brands — and 10 of them are doing more than $1B/year in sales. Private labels are cheaper to supply than external brands, so the profit margin is usually higher. Especially for private label clothing:
- Profit margin: How many cents of profit a company keeps for each dollar of sales. It costs Target less to make/sell its own pants than buy/sell Levi's, so Target's margin is higher for its own brands.
- Clothing has higher margins than food or home goods (that’s why it's always at the front of the store). Companies can price clothes way higher than what they cost to make (not true for pasta).
- The Tarjay Way: Most All in Motion items cost less than $30. But Target would rather sell those than Lulu fits, since it can keep more of the profit.
Big retailers are becoming mini malls... And winning a spot on their shelves is becoming more crucial. Retail-pocalypse drove mall staples like J.C. Penney and Neiman Marcus to bankruptcy last year, while the pandemic accelerated retail closures. That's partly why 25% of US malls are expected to close by 2025. Meanwhile, Target and Walmart are transforming into one-stop-shops for all your needs, from groceries, to home decor, and fashion. That's why Ulta, Levi's, and Disney, have moved into Target – and why Sephora is moving into Kohl's.