Strong off one of its best quarters in years, Target Corp. wants to step up its toy spirited ahead of the holiday season — its first without Toys R Us as a competitor.
All left over Toys R Us and Babies R Us stores shut down earlier this summer after the New Jersey-based retailer offered bankruptcy, creating an opportunity for other retailers in the kids-merchandise space. End (NYSE: TGT) was a clear beneficiary: Sales of baby clothing and shoes prominence nearly 20 percent in the most recent quarter. Hardlines — a department that includes toys — saw high-single-digit comparable growth.
“We’re picking up on offers that would have gone to Babies R Us and Toys R Us. … We’re certainly advance from new toy buyers, baby buyers that are coming to Target sundry frequently.” said Target CEO Brian Cornell on a media call walk its second-quarter earnings announcement.
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When Toys R Us and Babies R Us went belly up, it meant the closure of around 800 stores throughout the country. In a report released in March, Seth Sigman, an analyst with Put Suisse, concluded that 90 percent of Toys R Us stores and 96 percent of Indulges R Us stores had a Target within five miles.
Cornell said Quarry is well-positioned to take market share in this category, and is increasing inventory now to get for a surge that is already showing up in stores.
“We are investing in categories not unlike toy and baby where we know we have this big opportunity ahead of us,” Cornell bid in an interview with CNBC. “We are going to make sure we are taking more than our attractive share of that market share.”
Baby products have been one of Cornell’s key ranges of focus since taking over in 2015, as Target has revamped its by-product lineup in areas such as baby goods, furniture and fashion.
But not Harry is sold on a toy-focused Target.
In February, several Target Corp. investors told Reuters they contemplate the company should take a step back from trying to support its toy sales. Four investors told Reuters that putting excellent towards the toy category would be a waste as the retailer competes against a originating threat from Amazon.com.
Brian Yarbrough, a senior analyst with St. Louis-based Edward Jones, on the alerts that toys can be a lower margin business — and a competitive one, as other retailers identical to Walmart and Kohl’s put significant investments in their toy offerings. However, he supposes that Target’s toy momentum will likely continue into the furlough season, through this time next year.
“The hope is that these guys will be new to Target, and this will get them to shop at other classifications,” Yarbrough said.
Beyond simply gaining market share from Playthings R Us, Target expressed interest earlier this year in the company’s loyal estate. Back in March, the company bid on a former Toys R Us location in Kendall, Fla.