Target's Activewear Brand Hits $1 Billion in Sales, as Retailer Gains Ground in Apparel

  • Activewear line All in Motion is Target's latest brand to generate $1 billion in annual sales.
  • For the past five years, the big-box retailer has used exclusive brands across its merchandise categories to differentiate itself from competitors and to boost profitability.
  • Target has gained market share during the pandemic, but it will learn if that loyalty lasts as shoppers get Covid vaccines and may feel safe returning to malls again.

Target launched its own line of workout clothes and exercise equipment about a year ago. Two months later, the pandemic turned much of the country into stretchy pants-wearing remote workers who converted garages into home gyms and cut back on shopping trips.

"We like to joke about this internally that it's become our guests' favorite work wear, not just workout wear," said Jill Sando, Target's chief merchandising officer for style and owned brands.

All in Motion, a line that includes sports bras, hand weights and yoga mats, has now reached $1 billion in sales, the company said Monday. It is one of 10 Target brands that generated $1 billion or more in sales in fiscal 2020.

Over the past five years, Target has launched more than 30 private-label brands in clothing, home and other categories to try to differentiate itself from competitors and boost profitability. Four of these brands hit $2 billion or more in sales last year: kids apparel brand Cat & Jack; Good & Gather, a food and beverage line; Up & Up, a personal care and household essentials brand; and home decor brand Threshold.

Target's All in Motion line also includes hand weights, yoga mats and other workout accessories and equipment.
Target's All in Motion line also includes hand weights, yoga mats and other workout accessories and equipment.

The growth of these labels has validated Target's strategy and helped it to gain $6 billion in market share in the first three fiscal quarters of the year, based on internal and third-party research. Apparel sales was one of the drivers, increasing by nearly 10% in the fiscal third quarter from a year earlier.

Shares of Target are up 63% over the past year, as of Friday's close. The company's market value is $94.58 billion.

The popularity of Target's same-day services, such as curbside pickup and home deliveries by Shipt, has also been a catalyst that has lifted the retailer's sales and its stock price. Its digital growth inspired Stifel to upgrade Target's rating to "buy" on Monday. It raised the company's target price to $225, which would represent an approximately 16% gain from where it's currently trading.

In coming months, Target will learn if that loyalty will last as shoppers get Covid vaccines and feel safe returning to malls again.

Stacey Widlitz, a retail consultant and founder of SW Retail Advisors, said Target has shown it is savvy at mirroring successful brands and seizing upon weaknesses of other. It expanded its intimates assortment as shopping mall staple Victoria's Secret struggled. It riffed off the popularity of Lululemon with similar looking displays of All in Motion's workout pants.

"They've basically been going around saying, 'Who does it best and who does it worst?'" she said. "'Let's replicate what the winners are doing and take on the losers and do it better.'"

She said its sweet spot is selling basics, such as leggings, tees and button-downs, since customers may not want to pay a premium for a brand name.

With All in Motion, for example, Target sells products for women, men and kids. It has a wider range of sizes, and the company's marketing photos break from the typical mold, featuring models with different body types, with none of them airbrushed.

Most of its workout clothes and accessories cost less than $30, which Sando said is about 75% less on average than similar products sold by competitors. At Gap-owned Athleta and Lululemon, for example, a pair of workout pants can cost $90 or more.

Target's All in Motion line launched just before the pandemic accelerated the popularity of casual clothes and stretchy pants.
Target's All in Motion line launched just before the pandemic accelerated the popularity of casual clothes and stretchy pants.

Sando said the company is confident it can outpace sales of higher-end athleisure and apparel brands. She said it will stick to its formula of developing exclusive products with quality and style, but with more inclusive sizing and lower prices.

Whether the recovery from the pandemic is fast or slow, Citigroup analyst Paul Lejuez said Target can continue to grow. In a recent research note, he said the big-box retailer gained an advantage when it could keep doors open as an essential retailer. Now, he said, competitors that cut across categories — like Pier 1, J.C. Penney, The Children's Place and Victoria's Secret — are permanently closing stores.

Those store closures, which will take place over the next few years, "put significant share up for grabs," he said. He predicted most traffic will likely go to off-mall retailers with convenient locations, such as Target, Kohl's or Walmart.

"While many things that occurred during the pandemic period could be viewed as temporary, the store closures that occurred (or are occurring) represent a permanent shift in the retail landscape," he said in the note.

Target's private label brands as well as partnerships it has struck has turned it into a new mall, of sorts. More of its stores have a dedicated display of Levi's Red Tab jeans and a Disney shop. Ulta Beauty shops will open inside of hundreds of its stores this year. Target also has a large wine selection and appeals to foodies with a new line of gourmet coffees, hand-batch sauces and more.

"The one-stop shopping trend continues because what the customer has learned is that they don't need to go to six different places," Widlitz said. "And they no longer want to go to six different places."

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